Real Community Investment – A State-Owned Bank for Maryland

Maria Allwine
Baltimore Sun

Want to get our state’s economy moving again?  Want a long-term healthy solution rather than the usual quick fix that will only fail in the next crisis?  Want the state of Maryland to lead the way on real community investment that sustains and strengthens our already-existing neighborhoods?  The answer has been around for a long time – 90 years to be exact.

A state-owned bank funded with our tax revenues and pension contributions is essential to the long-term health of our state.  This bank would be the repository for all state collected taxes and fees and would plow that money back into the state through loans in education, agriculture, energy, community investment and other areas.

To completely change how and where Maryland invests in energy, our state bank would borrow from the Federal Reserve at the same 1% as commercial banks and use that money to bring wind and solar power to mass market and jump start bringing our ageing energy infrastructure into the 21st century.  Owners of property where wind/solar generators would be located would be loaned money at a premium rate with part of that premium paid to the bank until loan repayment.  This would generate immediate energy cost savings as utilities purchasing this energy would pay premiums for it at first but would realize cost savings in the long run in the form of a stable more decentralized energy grid.  And that’s just the beginning.

Maryland’s state bank, with democratic direction of investment as its credo, would loan directly to small businesses in our local communities. It would also fund loans to consumer and worker cooperatives, worker-owned businesses, and offer student loans and affordable mortgages, which would have an immediate and direct impact on access to higher education and neighborhoods ravaged by foreclosures.  This type of intensive local lending will create jobs by giving businesses the capital they need (and which they are still not getting from commercial banks) to expand and hire and is arguably the single most important thing Maryland could do to turn our economy around and reorient it toward local sustainability.

Maryland’s state bank would also collect revenue by acting as a “banker’s bank”, providing services to private banks (such as check clearing) and would contribute significantly to Maryland’s general fund, helping to alleviate the budget gap.  If necessary, the bank can act as the state’s rainy day fund.

You might rightly be wondering where this idea came from and if it’s feasible.  North Dakota, the only state in the country with budget surpluses and a booming economy, has had such a bank for 90 years and is a primary reason why the state is in such good fiscal shape.  North Dakota has the approximate population of Baltimore city – 600,000.  Over the last 10 years, their state bank has returned a third of a billion dollars back to the state’s general fund to offset taxes and help with funding public sector needs and that’s in addition to its lending on the projects mentioned above.

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