Does NH need a state bank?

September 22, 2015

On Tuesday, September 22 the Commerce and Consumer Affairs Committee will discuss a bill to establish a state bank in New Hampshire.

A state bank isn’t like a private bank. According to the bill – HB 672 – the state bank of New Hampshire would hold public funds and partner with local banks and credit unions to back business loans. The bank could also handle mortgages. Ideally a state bank promotes development and returns any revenue to the state.

Supporters of a state bank point to the success of the Bank of North Dakota, the only state-owned bank in the U.S. North Dakota was not as hard-hit by the recession of 2008, in part because the state bank did not take as many lending risks as private banks. The Bank of North Dakota also returns a profit to the state each year, $60 million or more.

However, North Dakota is different from New Hampshire in that the state’s economy is driven by agriculture and oil production. That may have had as much to do with North Dakota’s success during the recession as a state bank.

After analyzing HB 672, the New Hampshire Department of Treasury wrote, “this bill may likely increase state expenditures, although not necessarily revenues.”

Other opponents of a New Hampshire state bank note that organizations such as the business finance authority, the community development finance authority, and the municipal bond bank already handle business development funding for the state.

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Valerie

September 23, 2015

As one of the lead supporters (and a member of LFDA) of HB 672 to establish a state bank, I would suggest that LFDA do more research into the subject. While I appreciate their reporting on the subject, there is a lot more to be understood. At the hearing on September 22, 2015, there was strong testimony given as to the benefits of a state owned bank. It would change the way that public funds are managed. A public bank could generate new, non-tax revenues. Bank profits would be returned directly to the general fund for the benefit of its only shareholder-the people of NH. It could support economic development and job creation using those funds that would otherwise be diverted by Wall Street into foreign investments and unproductive, speculative "financial products". By offering low cost loans in place of expensive bond issues, a public bank could lower debt costs for local government and whatever interest is paid would be returned to the people. It could also privide letters of credit for tax-exempt bonds at lower interest rates. A public bank could increase lending capabilities through the community banks that provide most small business loans. Imaging starting a new business and being offered a 1% loan for your first 5 years of business? What this legislation is promoting is the creation of a state bank that would have the license to create money through loans, and receive the interest paid on those loans, which could then be added back into the general fund instead of continuing to pay as much as 75 million dollars a year in interest alone. (source www.PublicBankingInstitute.org) Can you Imagine what we could accomplish, and the growth and productivity we would gain if we were to keep that 77 million a year? I invite you all to attend the conference "Banking on New Hampshire; Where's the Money?" Dec 5,6, 2015 at the Radisson Hotel in Manchester. www.bankingonnewhampshire.org (NH legislators free tickets.) Rep. Valerie Fraser Belknap 1

Does NH need a state bank?

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