When the prairie populists of the North Dakota Non-Partisan League swept to power a century ago, with their promise to take on the plutocrats, one of the first orders of business was the establishment of state-run bank.
They did just that. And in just a few years the Bank of North Dakota will celebrate a 100th anniversary of assuring safe stewardship of state funds, providing loans at affordable rates and steering revenues toward the support of public projects.
After the 2008 financial meltdown, and the failure of Congress to regulate “too-big-to-fail” banks, activists and progressive legislators across the country began to explore the idea of replicating—or even expanding upon—the North Dakota model in other states.
But would the voters go for that?
Vermonters for a New Economy decided to test the idea.
This year, the group urged citizens to petition to place the public-banking question on the agendas of town meetings across the state—distributing information outlining a proposal to turn the Vermont Economic Development Authority (VEDA) into a state bank. Under the plan, the group explained, “the State of Vermont would deposit its revenues into the state bank. The bank would use these funds in ways that would create economic sustainability in Vermont by partnering with community banks to make loans and engaging in other activities that would leverage state funds to promote economic well-being in the state. The interest from these loans would be returned to the bank instead of out of state interests and would be available for further investment in the local economy or could be transferred to the state general fund. The bank would not invest in the risky financial instruments that the megabanks seem to love. The bank’s activities would be open and available for public inspection.”
Last week, at least twenty Vermont town meetings took up the issue and voted “yes.”
In many cases, the votes were overwhelming.
Vermont is not the only state where public banking proposals are in play. But the town meeting endorsements are likely to provide a boost for a legislative proposal to provide the VEDA with the powers of a bank.
The bill would create a “10 Percent for Vermont” program that would “deposit 10 percent of Vermont’s unrestricted revenues in the VEDA bank and allow VEDA to leverage this money, in the same way that private banks do now, to fund…unfunded capital needs” outlined in a recent study by the University of Vermont’s Gund Institute for Ecological Economics. The legislation would also develop programs, often in conjunction with community banks, “to create loans which would help create economic opportunities for Vermonters.”
Among the most outspoken advocates for the public-banking initiative is Vermont State Senator Anthony Pollina, a veteran Vermont Progressive Party activist and former gubernatorial candidate, who argues that it “doesn’t make any sense for us to be sending Vermont’s hard-earned tax dollars to some bank on Wall Street which couldn’t care less about Vermont or Vermonters when we could keep that money here in the state of Vermont where we would have control over it and therefore more of it would be invested here in the state.”
Read Next: John Nichols on why we need a bank at the post office.