As Seattle lawmakers discussed pulling the city’s money from Wells Fargo to protest the bank’s support of the Dakota Access Pipeline, one idea got some applause: What about creating a taxpayer-owned bank in Washington state?
City Councilman Mike O’Brien floated the idea at a committee meeting last Wednesday while wondering where the city should park its money if it divests from Wells Fargo.
"I still think the best solution ultimately is a public-owned bank," he said. The crowd paused, then cheered.
It turns out, there's a bill in Olympia would create just that: a bank owned by Washington taxpayers, where the state government would deposit tax dollars.
"Instead of paying profits to bankers, we could be borrowing from, and repaying, ourselves," he said in a statement.
There is a precedent for this. North Dakota, the very state where the oil pipeline dispute is unfolding, has the nation’s only state-owned bank. It opened in 1919 with the goal of providing better interest rates to farmers.
David Flynn, an economics professor at the University of North Dakota, said some residents of the conservative leaning state have philosophical objections to their government's involvement in banking.
For one, the state is on the hook to insure the money in the bank. That stands in contrast to most private banks, where the insurer is the Federal Deposit Insurance Corporation.
But, he said, there are advantages.
“The profits of the bank of North Dakota are available to the institution to use in the future, or could be taken by the state for other state spending priorities," he said.
In other words, it’s the state, instead of Wall Street, profiting off loans. Regular citizens can do their checking there, too.
Flynn said interest in North Dakota's public bank model flares up every few years, but no state has followed suit.
Some states already have institutions that fill similar roles — for instance, agencies that partner with private banks to provide economic-development loans.
But proponents in Washington are forging ahead. Their bill is up for a state Senate committee hearing on Tuesday, Feb. 7.