Members of the Washington Legislature have been discussing the creation of a public bank since 2020, and it may be proposed again in 2027. LWVWA supports the idea, so we may be asked to weigh in on it during the coming session. But what is a public bank?
In principle, it’s a nonprofit bank that works for a city, county, or state to promote economic development through loans at below-market rates, and that uses its profits to increase government funds. This is how it works in North Dakota, the only state to have a State Bank, according to its president and CEO, Don Morgan.
North Dakota has 91 community banks and credit unions, and the State Bank works through all of them, enabling them to fund approved projects that would otherwise be beyond their reach, or at rates more favorable for the borrowers. The projects must serve to support agriculture, commerce, or industry, and may relate to such things as housing, infrastructure, education, disaster relief, and environmental restoration. The State Bank’s capital comes mainly from a portion of the State monies deposited in it, which it leverages in its operations.
Mr. Morgan believes that the success of his bank, which was founded in 1919, has resulted from the structure of its governance and the expertise of its executives. The structure makes the bank independent of politics while providing for public oversight, and its executives have used good judgment in selecting promising projects to finance, working symbiotically with its 91 partners. Obviously, a public bank doesn’t compete with private banks for their dealings with individual depositors or borrowers and for many other banking functions, because it has nothing to do with them. It does take government business away from the huge national and international banks, such as Chase or Bank of America, which can be expected to oppose any move to create public banking.
Mr. Morgan spoke at a recent meeting of Washingtonians for Public Banking and Indivisible Bellingham. A video of his presentation is available on
YouTube.