Would the state of Oregon be better off if it was its own banker? Ann Kramer thinks so.
Kramer, chair of the board of the Gorge Grown Food network, an organization trying to promote a regional food system in the Columbia Gorge, writes on the Blue Oregon site that having a state bank could help “recharge Oregon’s economy.”
“The State of Oregon collects and spends lots of money,” Kramer says. “Did you ever wonder where that money goes? Right now, much of it sits in the TBTF [‘Too Big to Fail’] banks and they receive the benefits. In fact, we use the TBTF banks for lots of government services — even paying them to administer the OR SNAP program (food stamps). Instead, a state bank could provide these services, saving us millions as well as interest income returning to state coffers.”
The State Bank of Oregon, she adds, also could team up with local Oregon banks to make low-cost loans to agriculture, small business, economic development and students. “This availability of credit has all but disappeared from the TBTF banks, but with a State Bank of Oregon, small businesses and farms, which are the backbone of [Oregon’s] economy, could once again get back to work!”
Kramer’s model, the Bank of North Dakota, was established in 1919 in response to a populist revolt over the high rates of interest that big out-of-state banks were charging farmers. It was given the mission of “promoting agriculture, commerce and industry” in the state.
“It was never intended for BND to compete with or replace existing banks,” the bank’s website says. “Instead, Bank of North Dakota was created to partner with other financial institutions and assist them in meeting the needs of the citizens of North Dakota.”
Eric Hardmeyer, president of BND, explained last year in an interview with Mother Jones magazine how, by being cautious in its investments, the state bank managed to avoid the disastrous impacts of the real estate bubble: “We’re a fairly conservative lot up here in the upper Midwest and we didn’t do any subprime lending, and we have the ability to get into the derivatives markets and put on swaps and callers and caps and credit default swaps and just chose not to do it, really chose a Warren Buffett mentality — if we don’t understand it, we’re not going to jump into it.”
The BND, which has about $4 billion under its management, acts as the repository for all state taxes and fees and pays back the profit it makes in the form of dividends to the state treasury. “Probably this year we’ll make somewhere north of $60 million, and we will turn over about half of our profits back to the state general fund,” Hardmeyer said. “And so over the last 10, 12 years, we’ve turned back a third of a billion dollars just to the general fund to offset taxes or to aid in funding public sector types of needs.”
When the state faces a budget shortfall it can call on the bank for help. Hardmeyer recounted how, after the dot-com bubble burst in the early 2000s, the state fixed its $40 million deficit: “The governor just simply said all right, we’re going to turn back 1% of all general fund agencies, and the Bank of North Dakota, you will declare another dividend to make up the balance. And so we did that.”
Inspired by the success of the Bank of North Dakota, 11 other states are now looking into the idea of starting their own version, and Kramer thinks Oregon should be one of them. It’s hard for me to come up with a good reason why it shouldn’t.
This article appears in Aug 26 – Sep 1, 2010.
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arrrgggghhh, socialism! tyranny! despotism! look at those poor bastards up there in north dakota with their low unemployment and funny accents.
if you think an idea from the home state of marge gundersun and people who think of wood chippers as a convenient solution to an inconvenient corpse is gonna fly here, you hate america more than i thought mr. miller
State Banks, State Health Care, State Housing… these all lead to an Oligarchy.
Its funny, I see so many Keep Local Habit stickers who also want state funded everything. The problem with this a simple cake-and-eat-it-too problem.
I believe people need to decide which society they wish to live in and then do it.
One can have one of three concepts:
1- Big Oil (BP), Big Retail (WalHell), Big Banks (Chase) etc and allow them to take all the profits for the few.
2- State Banks (USSR), State Retail (China), State Oil (Chavez) and allow them to to take all the profits for the state officials.
3- Local Banks (Botc), Local Retail (Downtown Bend) and Local Oil (BioDiesel) and allow a free market, supported by local people to dictate which profit recipient best benefit the community and themselves.
There are times and conversations when more government or socialized spending seem to be prudent. I disagree. I believe when those times appear are the times when we do not have independent business leaders who are being good stewards of the community in which they live but rather, they are serving shareholders for simple greed.
I can think of a time when a state program has not disintegrated into an over bureaucratic hierarchy of middle and upper management goofs (90%) who are managing 10% of the labor force to do the actual work. It always seems to degrade.. but at that point, since it is ‘law’ or ‘the system’, it just stays and morphs around like an athletes foot fungus.
Please. Vote to support your local businesses. Vote every day with the dollar you spend and hold them accountable, kindly, with constructive guidance towards community good. If it goes ‘state’, we’re that much closer to the United States of Socialism.
Creativity and passions will be lost.
Sounds like a great idea! This system has worked wonders for the people of my country!
I’ve wondered that myself, our children went through the WIC program and the vouchers (checks) were from some bank in Georgia. Why are we supporting some general fund back East?
Great aericle,now you’re talking.this will put us one step closer to removing the shackle that is the Federal Reserve bank cartel.
I agree 100 percent, however it will only solve the problems for the state. On the federal level we must return the money power to the people and issue our money debt free. The Chicago plan for monetary reform I believe from 1933 is a start. Lets return to a healthy and sound monetary system for the benefit of all not private bankers. Some think we are living in a free market well I hate to say that a monopoly of the issuing of money by private corporations is NO FREE MARKET. “It’s not what backs our money, It’s WHO controls its quantity.”
I agree ONE HUNDRED PERCENT. I wish more people understood this solution. However, it will only help the states. On the federal level we must fix our habit of issuing all our money as debt. We need to return the money power back to the people and issue our money debt free. I would probably start with some of the recommendations from 1933’s Chicago plan for Monetary reform. If we continue to issue money as debt we will always have a debt problem and a national debt. Some don’t even understand that the national debt is our money. You can not pay down the national debt without putting some deflationary pressure on the economy. “It’s not what backs our money, It’s WHO controls its quantity!”
Oregon Senator Ron Wyden (D) voted against bailing out the banks – twice.
Central and Eastern Oregon Representative Greg Walden (R) twice voted to loot the public treasury with bailouts for the International Bankers and Insurers, and not only continues to agitate for more bailouts for the richest two percent of the population through extending the so-called “Bush Tax Cuts” but openly advocates taking the US Treasury Bonds – “Backed by the Full Faith and Confidence of The United States” – held in trust by the Social Security Administration and giving them to the richest of the rich, the top two percent of the population… The Global Elite and The International Bankers.
Kinda' makes you wonder who Greg Walden works for, Central and Eastern Oregon, or The Global Elite and The International Bankers and Insurers?
Once the Federal Reserve Bank was created, people of the government needing money would only borrow from the Federal reserve Bank. The Federal Reserve bank only had to go to the Treasury Department and get money printed at printing costs, and then loaned the money out at full face value, thus making enormous profits and putting this nation into enormous debt.
National Debt Not a Legal Debt
The debt that is known as the National Debt of so many trillion dollars is simply the result of borrowing from the Federal Reserve Bank, the money that the Treasury Department prints for them, which is used to print for the country. In other words, instead of being printed for the United States, it is printed for the foreign bankers and the United states borrows from them and owes them the National Debt, and the National Debt is so high now that your grandchildren will never be able to pay it off.you must understand that when the Federal Reserve bank, the privately owned Federal Reserve bank, was given authority to print Federal Reserve notes instead of the Treasury Department writing the Treasury Notes as directed by the U.S. Constitution, these Federal Reserve notes were not printed to be given out to the economy, in the way as the Treasury Notes of the Treasury Department. Rather, they were loaned to the U.S. government and then circulated into society, and society was required to pay back interest on the IRS notes and that amount of interest accumulated to the point of approximately 13.5 trillion dollars at this time, to where, if everything in the United States were sold, over 3/4 of the debt would still be owed. http://www.youtube.com/watch?v=vFqbTP-BqUw&feature=related