Representative Bob Hasegawa proposes state-owned Bank of Washington

Many experts say that the key to economic recovery lies in small business growth, but many of these very businesses are having a hard time accessing capital as traditional financial institutions become increasingly risk-averse.

Could this be the time for a new kind of bank? One state legislator thinks so.

Imagine controlling our money and investing to stimulate the economy. Imagine financing student aid, infrastructure, industry and community development. Imagine providing access to capital for small businesses, or otherwise leveraging our resources instead of having to do it with tax incentives. Imagine keeping our resources local instead of exporting them as profits, never to be seen again—that’s what this bank could do.”

That's how Rep. Bob Hasegawa (D-Seattle), vice chair of the House Finance Committee, describes HB 3162, which would create the State Bank of Washington. Under this bill all state funds would be deposited at this bank and would be guaranteed by the state.

The State Bank of Washington would promote agriculture, education, community development, economic development, commerce and industry.

As we weather this depression, the lack of accessible capital for small businesses is worsening the economic hardships that hundreds of working families are going through. Small businesses are the economic drivers that help Washington’s commerce run smoothly, but when they cannot access the capital they need, the consequences result in chain reactions that invariably end up hurting most, if not all, working families, small businesses and family farms in our state.

Currently, the State Treasurer invests the state's operating cash in short-term, interest bearing accounts in public depositories. This provides the state with a return while preserving the state’s ability to access the funds. Public depositories are banks and thrifts that are approved to hold state and local government deposits. They may be small community banks or large national banks.

If Washington had a state-owned bank, the Treasurer would deposit state funds into it. This way the state bank could lend money, assume debt and invest in private companies just like a private bank does. This could lead to greater returns on the state funds. It could also provide access to capital to businesses that desperately need it to not only stay afloat, but to thrive.

The state could assume risk and could make money, which would lead to greater sums that could be reinvested in loans or provided to the General Fund.

Here's Hasegawa again:

My bill is modeled after the Bank of North Dakota, the only state-owned bank in the nation. By the way, North Dakota isn’t going through a financial crisis right now and the Bank of North Dakota is credited with being a large part of the reason for that.

Creating a Bank of Washington would require an amendment to the state Constitution, meaning some Republicans would have to support the idea.

HB 3162 was referred to the House Financial Institutions & Insurance Committee, but since it has not been scheduled for a hearing, it is unlikely to go anywhere.