SALEM, Ore.–Oregon has become the latest states in which the formation of a state bank is being proposed.
Oregon Sen. Jeff Golden (D-Ashland) has proposed legislation that would establish the Bank of the State of Oregon and, according to proponents, provide more significant support for community banks and credit unions. If created, the legislation calls for the state bank to be guided by an advisory board of directors in its management and operation, and would be subject to a mandatory audit by the secretary of state.
The bill remains in committee.
According to Golden, the bank would primarily be involved in participation agreements with community banks and credit unions and would be modeled on the Bank of North Dakota, which was established in 1919 and, according to Golden, has been consistently profitable for the state, KOIN reported.
Golden told the news outlet North Dakota had fewer home foreclosures and business failures during the Great Recession than any state in the nation, and he credited the Bank of North Dakota for its efforts to minimize foreclosures. It provides lower-interest loans for students than traditional banks and partners with community banks and credit unions to help launch new businesses owned by people with lower incomes.
The Model
While opponents cite concerns about the security of public dollars, the Bank of North Dakota model proves those concerns to be without merit, Golden said, according to KOIN.
“I thought it would be a great thing for Oregonians and the economy in a number of ways,” said Golden, who joined the legislature in 2018 and pushed for a Municipal Bank of Portland last session that didn’t pass, according to KOIN. “My understanding is that Washington State is moving forward to pretty serious consideration of a state bank.”
KOIN reported Golden has been an advocate for a state bank since 2011 when advocates introduced the first legislative proposal.
Mergers and acquisitions of community banks by large, national financial institutions means Oregon’s community banks now number in the low teens compared to the 90 community banks in North Dakota, the report stated.