http://www.mpbn.net/Home/tabid/36/ctl/ViewItem/mid/3478/ItemId/16101/Default.aspxTwo Democratic lawmakers teamed up with local business owners this morning to unveil a proposal to create a Maine state bank, although the plan is not being welcomed by the state's mainstream banking community. Barbara Cariddi has more.
The legislation was announced along with a report outlining the problems Maine small businesses are facing with credit issues, says state representative Diane Russsell (right) of Portland. "What if we took our tax payer dollars out of Wall Street and invested right here on Main Street?" she said.
The bill she's sponsoring, LD 1452, will, she says, allow the state to move nearly half a billion dollars in assets held by out-of-state banks, into a Maine state bank, establishing a partnership with community banks to expand small business lending.
"Small business owners repeatedly talk about how they don't have access to affordable credit," she said. "Let's leverage our taxpayer money through partnership loans to knock some percentage points off a loan so we can get more money circulating into the local economy, spur economic growth, entrepreneurialism and job growth."
Link to the bill:
http://www.mainelegislature.org/legis/bills/bills_125th/billtexts/HP106601.aspState Bank proposal targets jobs creation, retention
http://www.wcsh6.com/news/article/156753/314/State-Bank-proposal-targets-jobs-creation-retentionRepresentative Diane Russell (D) Portland, is presenting the plan to the Legislature.
The State Bank would be modeled after the Bank of North Dakota which started 90 years ago to aid farmers who were struggling with rising interest rates.
The State Bank would not be competition for Maine's existing financial institutions but would rather work with banks to provide business owners with better access to a line of credit.
Some business owners, including Cheryl Oliver at Back Bay Bicycle in Portland say they've experienced new restrictions to their loans. Oliver's business is seasonal and until recently she says banks were flexible with her payments based on the season
Should the state be in the banking business?
http://new.bangordailynews.com/2011/04/22/business/lawmaker-proposes-state-bank-to-aid-business/?ref=latestAccording to the Bank of North Dakota’s website, the bank is not a member of the Federal Deposit Insurance Corporation. Instead, all BND deposits are guaranteed by the full faith and credit of the state of North Dakota. And while all state funds and funds of state institutions are required by law to be deposited in the BND, other deposits are accepted from any source, unlike Russell’s proposal.
BND opened with $2 million of capital. Currently, the bank has more than $270 million in capital. North Dakota began using bank profits in 1945 when money was first transferred into the general fund, according to the site, and since then, capital transfers have become the norm to augment state revenues. Since 1945, BND has returned more than $555 million to the general fund.
BND spokesman James Barnhardt said at least 20 to 30 states have looked at North Dakota’s model in hopes of doing something similar, though he wasn’t sure if any of them have actually moved beyond studies to implementation, though the website said BND is the only state-owned bank in the nation.
BND works in partnership with financial institutions, said Barnhardt, and enhances their ability to make loans. There are certain reasons the bank works well in that state, he said, including a propensity of agriculture businesses, large geography and small population. And while many point to the bank as a prime reason for North Dakota’s strong economy, other aspects such as oil and natural gas resources and booming ag sectors are in the mix as well, he said.