llinois State Legislators Advance Public Banking Bill

A bill providing that Illinois state funds be deposited into a public bank, to be called the Community Bank of Illinois, had its first reading on January 14, 2015, then went to the Financial Institutions on March 10 where, after hearings featuring well-known Chicago activist Amara Enyia and others, the bill moved forward to the Illinois General Assembly.

Illinois Representative Mary Flowers and her colleagues have been pushing this bill for at least five years now. It would establish a state bank with the specific purpose of boosting farmers, small businesses, infrastructure, and other public goods. The bank would also serve as a clearinghouse for other banks, and would allow the CBI to make loans directly to the state's General Revenue Fund in times of budgetary shortfall.

 

Flowers' position on the handling of revenues from state-approved medical marijuana operations, and her calling to account public officials' choice of where to deposit and invest public monies will sound familiar to public banking supporters:

 

Chicago-area State Representative Mary Flowers has House Joint Resolution 24 that would create the Return Illinois to Prosperity Commission. The commission would be tasked with researching how to bring about a state bank. But Flowers says right now the state’s medical marijuana industry is stuck dealing with cash only.

“We will not be able to put this money into the banks where we have our money in the state of Illinois because it’s under the federal government and we’re not allowed to do so. So that’s another reason why it’s more important now than ever before that we have our own state bank.”

Federal law prohibits banks from taking deposits from marijuana companies. As for the objections from previous years, Flowers recognizes the concerns. She says some of the main questions in previous years was with all the problems facing Illinois how can we trust a state run bank?

“Well, you know, how do you trust any of your elected officials? You put responsible people in and you hold them accountable. Put a period right there. But in the meantime, how do you trust Wall Street? They’re the ones that’s borrowing, but we still put money in their banks, in the big corporations’ banks.”

Flowers says a state bank could allow the government to borrow from the bank instead of raising taxes. The measure could come up for a hearing in a House committee Tuesday.

 

Amara Enyia sounded every bit the public banking advocate when she explained the bank to the media:

 

So the concept of a public bank is the notion of the bank as a public utility, a bank that works for the interests of the city of Chicago. Its allegiance is to the taxpayers. What that means is, we have the money to invest our own dollars into, for example, extending lines of credit to small businesses, to extending for homeowners who want to get loans for homes and repairs on their buildings if you're a landlord. These are the sorts of things that it's very difficult to get private financing from traditional banking institutions. The other [benefit] is infrastructure—having the money to execute infrastructure projects, [such as] our streets, our sewage systems, all those sorts of projects at low interest rates. Right now, the interest rates are sky high and, with that interest, the city never sees any of those dollars. We're just paying it out to these other financial entities, so imagine if that interest is actually recirculating back into our economy. It reduces the cost of these projects, but it also means that our money is recirculating back, which is in the interest of the public, the taxpayers.

 

She concludes, "This is something that has worked in North Dakota. They've found that the Bank of North Dakota is actually outperforming all of the Wall Street banks."

 

The bill had its third reading on March 25.


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