Have you even wished you were a part-owner of a big bank? There are lots of advantages to owning a bank. Banks take in interest on loans, they build up profits from all their operations, they really rake in the money when they handle the issuance of bonds, and if they are run by smart management they can make a lot of friends by providing loans and other services at reasonable terms. Well, the people of North Dakota have all those advantages because they own a state bank. It saves them an amazing amount of money every year, and even though political right-wingers are in charge in the state, they can’t eliminate the state-owned bank because it is simply too popular.
Proposals are being floated right now to establish a California State Bank to handle marijuana transactions, as the federal authorities keep private banks from engaging in such “criminal” activity, even though marijuana is legal in California. And this is probably a good idea. But an even better idea is to set up a large state-owned bank to provide financial services to state government, and other public institutions, to save billions of dollars a year that now go to the privateers for their own private profit.
The private bank/state government connection has always been rife with corruption. Bankers steer campaign funds to officials and get favored treatment in return. Some officials (or their relatives or business associates) get special loan opportunities; donations to favorite (and often secretly mis-run and looted) charitable organizations; and sometimes stock, board positions, or other gifts. Those making investment decisions, often appointed rather than elected officials, can have their judgement clouded by payola. For every conviction for these crimes, hundreds of additional similar crimes have occurred that did not result in convictions.
If you search for articles and books on the State Bank concept, you will find many, all the way back into the 19th century. But very few such banks have existed, not because they don’t work, but because they do. They keep money out of the hands of private bankers, and in the eyes of the bankers this is unthinkable. When bills to do this come up in a legislature, the bankers spread the money around, call in favors, hire detectives to get the goods on legislators, and otherwise bring all their influence to bear to kill the bills.
In California, we have had some pretty good Treasurers, able to handle the technical aspects of the job and willing to use the political power of the position to work toward some good goals. (John Chiang, just retiring from the position, is a good example, and is much admired.) But even the best of them are kept from pushing for a state bank by the undoubted political power and ruthlessness of the private bank-owners.
One of the issues I will push the hardest in my campaign for State Treasurer in the June 5th 2018 election is the need for a California State Bank. I don’t accept donations from corporations, bankers, or their political action committees. I look at every political question with this question in mind, “what is good for the working class?” And a state bank would be good for the working class. I will have much more to say on this issue as the campaign goes on.
-Kevin Akin