This week, the Maryland House of Delegates' Economic Matters Committee will hold hearings on HB0794, which amends section 1-212 of Maryland's Code to authorize political entities in the state to establish public banks, and calls for the study and evaluation of a Maryland State Bank.
"Public Banking Institutions - Authorization and Task Force" is sponsored by Delegate Ana Sol Gutierrez (picture on left courtesy of Latin Post), representing Maryland's 18th district. It authorizes "a political subdivision to establish a public banking institution within the jurisdiction of the political subdivision and act as an incorporator to establish the public banking institution; establishing the Maryland State Banking Task Force to review and evaluate the creation of a Maryland State Bank; requiring that on or before December 1, 2016, the Task Force shall report its findings and recommendations to the Governor and specified committees of the General Assembly; etc."
It also amends Section 1–212 of Annotated Code of Maryland to read: "A POLITICAL SUBDIVISION MAY ESTABLISH A PUBLIC BANKING INSTITUTION WITHIN THE JURISDICTION OF THE POLITICAL SUBDIVISION," and mandates an evaluation of a proposed Maryland State Bank to
(i) support the economic development of the State by increasing access to capital for businesses and farms within the State in partnership with local financial institutions;
(ii) provide stability to the local financial sector without entering into competition with community banks, credit unions, or other financial institutions for the deposit of private funds;
(iii) reduce the costs paid by the State for basic banking services; and
(iv) return profits, beyond those necessary to accomplish the mission and sound operations of the Bank, to the General Fund of the State.
Private banks have not been kind to Maryland. Through excessive debt, interest and fees , as well as the felonious actions of international banks and racist redlining practices of mortgage and small business lenders, the entire state, and Baltimore in particular, has struggled. "Wells Fargo charged higher fees to black borrowers through their subprime lending program designed for less creditworthy consumers who are more likely to default on loans." And the crimes of banks involved in the LIBOR sabotage created a financial crisis in Baltimore forcing city budget cuts from which the people have not recovered. The banks appear to be no better behaved after having been repeatedly exposed, and a report that came out toward the end of 2015 confirms that banks in Maryland lend to whites more than blacks, in numbers way too out of proportion to be attributable to chance.
With an energetic election coming up in the Maryland, the cause of public banking is particularly appropriate both at the state and municipal level. We'll keep you posted on 794.