Calls for Public Banking

Spurred by the recession, bank bailouts and the difficulty consumers are having getting loans, a USAToday.com article this morning says, members of the “Occupy movement” and others are stepping up calls for a public banking option similar to the one that’s been in North Dakota since just after the turn of the century.

North Dakota currently has the nation's only state-run bank, enacting its model in 1919. Supporters point out that the state is also the only one to have had a budget surplus since the economic crisis began, and an unemployment rate below 4%. All state agencies deposit their funds in the Bank which then uses that money to support economic development, make student loans and partner with community banks to make small-business and farm loans. Deposits are backed not by the FDIC, but by the state, USAToday reports.

The Public Banking Institute, a non-profit group formed last January to advocate for public banking, reported 14 states have considered legislation to either create some form of a state-run bank or study whether it is feasible. Illinois HB 2064 is one of those bills, but none of our local tri-states are among that group.