In Hawaii, Another Try for a Public Bank

HI-USA-113399_comp_3.jpgAfter a couple of years off the public banking map, Hawaii is back on--and this time the emphasis is on "creating a state-owned bank to assist homeowners who are having trouble making their mortgage payments." So reports Jason Ubay of Pacific Business News, who adds:

House Bill 326 . . . proposes that several state departments led by the Department of Commerce and Consumer Affairs Division of Financial Institutions study the state's laws and report back to the Legislature before the start of the 2016 and 2017 legislative sessions. The report would determine the amount of state money needed to be transferred to the state-owned bank, and include legislation to establish a short-term purchase program for residential properties with mortgage problems.


PBI co-founder and former Executive Director Marc Armstrong was one of the people who planted the seeds back in 2012, with his piece in the Hawaii Reporter, "Hawaii Needs a Public Bank." In that piece, Armstrong argued:

The striking truth about the proposed State Bank of Hawaii is that it could be a reliable money maker and a job creator for the state in perpetuity. The well-respected Center for State Innovation projects that over a ten year period a State Bank of Hawaii would generate $71 million dollars of non-tax revenue for Hawaii's General Fund, and about 3,000 new jobs.

At that time, the state legislature was considering HB 1840, to investigate the feasibility of a state-owned bank. The new legislation isn't really any different, but legislators are focusing on combating foreclosure, and that might be a good strategy. According to CoreLogic's December 2014 National Foreclosure Report, Hawaii has a 2.7 percent mortgage delinquency rate, one of the highest in the nation, just underneath New Jersey, New York, and Florida. North Dakota, home of the nation's only state-owned bank, has one of the lowest delinquency rates, .4 percent.

According to Ubay, one of the bill's sponsors,  Isaac W. Choy (D-Manoa-Moiliili) asked a pretty on-point rhetorical question about the purpose of creating banks--and then offered an answer:

"Why do you make a bank? Choy asked. "It's real simple — to lend money to areas of the economy to support, as far as state policy is concerned, and they would have a hard time getting commercial loans."

(Map courtesy of

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