Vermont is currently considering massive changes in the way it conducts banking by instituting a public bank of its own.
The proposal would give Vermont Economic Development Authority a banking license and allocate it 10% of taxes collected by the state, rather than the current scenario where large banks outside of the state hold (and use) Vermont’s money. With Vermont in control of its own finances, the state could use the money to fund projects that benefit the state and local economies, including granting loans to Vermonters.
More than 20 Vermont towns met this month to weigh the merits of public banking and the response was extremely favorable. By a margin of about 2:1, Vermonters advocated for public banking.
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Unfortunately, as usual with politics, it’s never that easy. Each town’s votes only serve as an endorsement to their elected officials for what they would like to see happen. If state politicians were indeed committed to representing their constituents interests, then the legislation would pass with flying colors. Instead, private interest is lobbying hard to block the idea, so their corporate money and clout could prove more influential to legislators.
In fact, that’s why supporters of public banking turned to the town meetings in the first place. The idea was to show that when Wall Street’s money and connected politicians were removed from the debate, most Vermonters do want public banking. At least now, politicians with ties to the banking industry cannot pretend not to know the will of the people.
Preliminary calculations conducted by Vermonters for a New Economy indicate that public banking would be a boon for the state. The group estimates that the program would create more than 2,500 jobs and generate about $350 million annually. Considering that Vermont is a state with only 600,000 citizens, that’s a 1.26% boost in overall growth.
Vermont citizens also liked the idea of severing ties with Wall Street banks. For example, many Vermonters are disappointed to learn that their money is held by banks that are currently lobbying for the Keystone Pipeline, a project understandably opposed by residents in one of the nation’s greenest states. Additionally, though the bank would turn big profits, that wouldn’t be the sole motivation. For that reason, the state bank would not make risky, economy-crashing investments like the big-name corporate banks.
“A public bank for Vermont would create jobs and allow Vermonters to take control over our financial destiny at a time when everyone agrees that Wall Street’s corporate commercial banking model is deeply flawed at best,” said Rob Williams, a Vermont resident who supports the proposal.
Those afraid of whether public banking will actually work need look no further than North Dakota. The Peace Garden State is a pioneer in public banking, first establishing the institution 99 years ago. The Bank of North Dakota exists to help the state fund large projects, as well as offer inexpensive loans to students, businesses and farmers. Between 2000-2009, the bank pushed $300 million in earnings back to the state’s treasury. The financial stability and cushion that public banking affords the state has been credited with making North Dakota one of the states to best weather the recession in the past five years.