Debate to discuss merits of a state bank for Washington
By collecting interest on loans for public construction projects, lenders on Wall Street bring in $1.5 billion each year from Washington state public agencies, such as the State Department of Transportation.
If Washington owned the bank that loaned the money, the state would be collecting the interest on the loan and could use that money to fund other public projects. That’s the idea being promoted by the Washington Public Bank Coalition, a group formed in 2011 and based on a public bank established in North Dakota a century ago.
The group wants to keep state money “in the family” and cut out the “banksters” on Wall Street. Besides, they say, too often public agencies aren’t able to get the loans they need because Wall Street isn’t giving out those loans.
David Spring of the Public Bank Coalition said that following the economic crash of 2008, public infrastructure projects have had to compete in a pool of too few available loans.
A public bank would not be tethered to market fluctuations, he said. With a startup investment of $100 million, Spring speculated that after 20 to 30 years a state bank could generate $1 billion annually.
Spring has been working for years to build such a project, but he believes the time is right, since legislators are ever more desperate to save money.
Critics of the state bank proposal, including State Treasure James McIntire, say the loans are available, and that the state’s current system isn’t broken, it just needs to be made more efficient.
The two sides will face off Sept. 27. Members of the Washington Public Bank Coalition and Rep. Bob Hasegawa, D-Seattle, will debate McIntire at a south Seattle forum.
McIntire, who is running for re-election, proposes consolidating funding applications under one agency, called Washington Infrastructure Financing Authority. The single entity would accept applications for multiple funding sources.
In an interview with Real Change, Washington’s Assistant Treasurer Wolfgang Opitz said a state bank isn’t necessary. Funding sources for public projects exist. The state simply needs to create a single place where it can go to get it.
“It saves time, speeds up projects, gets them on the ground with greater certainty and gets them done faster,” Opitz said of the infrastructure financing authority model.
The method doesn’t necessarily save money, he said, but it streamlines the loan application process.
It’s less risky than creating a bank, which Opitz dismissed as driven by current public sentiment against big banks.
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