Pamplin Media Group – A state bank for the Castor state?
Advocates say the Oregon State Bank project could support community banks, credit unions and the cannabis industry.
Oregon Senator Jeff Golden (D-Ashland) this session proposed legislation that would reintroduce a concept of state banking for Oregon.
Senate Bill 339 would create the Oregon State Bank and provide greater support for community banks and credit unions. If established, the state bank would be guided by an advisory board of directors in its management and operation, and would be subject to mandatory audit by the secretary of state. As of Monday, the bill had made no progress beyond the Finance and Revenue Committee, where it was referred on January 19.
In addition to accepting deposits, the bank would be allowed to make, buy, guarantee and hold certain loans.
The Democratic senator said the bank would be primarily involved in participation agreements with community banks and credit unions. It would be modeled after the Bank of North Dakota, which was established in 1919 and, according to Golden, has always been profitable for the state.
Golden noted that North Dakota had fewer foreclosures and business bankruptcies during the Great Recession than any other state in the country, and he thanked the Bank of North Dakota for its efforts to minimize foreclosures. It offers lower interest rate loans to students compared to traditional banks, and partners with community banks and credit unions to help start new businesses owned by low-income people.
The Washington Post reported that small businesses in North Dakota had obtained more Paycheck Protection Program (PPP) loans compared to the state workforce than other states, with more than $ 5,000. per private sector worker as of May 8, 2020. The Post’s analysis highlighted North Dakota’s small size and nimble bank. The bank had already deployed two successor local programs to the PPP intended to help businesses restart and rebuild themselves. According to the Post, the bank also offered deferrals on its $ 1.1 billion student loan portfolio.
While opponents cite concerns about the safety of public dollars, the Bank of North Dakota model proves those concerns to be unfounded, Golden said.
The Bank of North Dakota’s website states that the institution does not compete with existing financial institutions and does not offer credit card or ATM services to the general public. Students can receive loans directly from the bank, and they are not targeted for other loans or retail accounts. The bank is also authorized to help other financial institutions provide finance to stimulate economic development.
“I thought it would be a good thing for Oregonians and the economy in many ways,” said Golden, who joined the legislature in 2018 and pleaded for a final Portland Municipal Bank session that did not passed. “From what I understand Washington State is getting ready to seriously consider a state bank.”
Golden has been an advocate for a state bank since 2011, when advocates presented the first legislative proposal. Among them were Barbara Dudley, senior policy adviser to the Working Families Party, and a senior researcher at Portland State University Civil Service Center.
Dudley said the idea originated in early 2009, as the Great Recession was wreaking havoc on Oregon’s economy. They reached out to the Bank of North Dakota to learn more about its model and spoke with community bankers from both states.
“It really got us going because the bankers in the community were excited about it,” she said. “The idea is really to strengthen local banks, which is often lost in the reshuffle because popular language makes it look like a retail bank, but the intention is to partner with community banks and cooperatives. credit so that they can lend often do not have the capital to do.
Mergers and acquisitions of community banks by large national financial institutions mean that the number of community banks in Oregon is now lower than the number of 90 community banks in North Dakota.
Dudley noted that community banks are especially crucial for rural towns and small towns. The previous bill was introduced by the late Representative Bob Jenson, a Republican who represented eastern Oregon. Republicans in central and eastern Oregon were interested in it because of the bankruptcy of Wall Street banks and the challenge of reviving the economy after the recession, she said.
Honestly, (passage of SB 339) depends on how deep this recession is. There is still a lot of potential money coming out of the federal government and no one knows if the economy, once it slackens again, will. will heat up or continue to wither away, ”she said. “A state-owned bank would operate in partnership with community banks that are also skin-in-the-game and lend to startups and other local businesses. If we want real economic development in Oregon, we need to focus on Main Street.
SB 339 is now pending before the State Finance and Revenue Committee. If the bill passes, the State Bank of Oregon will begin operating on January 1, 2023. Golden has acknowledged that the legislature is dealing with larger issues, including the COVID-19 pandemic and wildfire recovery and relief , and the State Bank of Oregon bill could not move forward.
However, the growing momentum behind a workable banking system for the cannabis industry could help garner support for the State Bank of Oregon, which would be able to accept deposits from these companies as it would not be part of the system. federal banking.
“Right now we have huge amounts of money flowing from people in the cannabis industry because they can’t bank it, and that poses crime and public safety issues. .I don’t know why we aren’t more serious in reviewing this, ”Golden said.
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