How To Sign North Dakota Banking RFP

How to industry sign banking north dakota rfp

[Music] in 1919 the state of North Dakota established the Bank of North Dakota the country's first state-run Bank 100 years later Washington State has the opportunity to be the second state bank if legislators approve a bill proposed by Senator Bob Hasegawa California is also considering similar measure North Dakota's experience has been very positive the bank reported its 12th consecutive year of record profits for the state which is particularly wonderful given that this period covers the Great Recession and also reflects fluctuations in the oil and gas industry the Bank of North Dakota's success may lie with this consistent collaboration with private community banks using state bank funds as collateral for local loans senator Hasegawa has been a proponent of state banks for over a decade and has introduced nine state bank bills prior to his election to the Washington State Senate in 2013 he served for seven years in the State House of Representatives am I getting those numbers right 8 excuse me he has a varied professional career as well as a master's in public administration from the Evans School of Public Affairs at the University of Washington let's when welcome senator Hasegawa today to tell us how Washingtonians I have to say this line because I like I love a good pun but I want you to tell us how we could get more bang for the buck thanks Christine you got to aim high that's what you do it's it's such a warm atmosphere in here I mean not temperature-wise but the feeling that I get just being amongst you all I really appreciate the warm welcome and the comfortable feeling that you all have share obviously I'm gonna tell you a little bit about my background because I know some of you here and Annie Mackey you are young she's a comrade from way back in the day from the 70s when we were first organizing reform movement inside our Teamsters Union but for me personally we continue with that organizing and we ended up back in 1989 winning a settlement to a lawsuit that the federal government had brought against the entire teamster leadership and from that point it was a racketeering lawsuit not a surprise and but I got elected they had the Teamsters largest Teamsters trucking local union in the Pacific Northwest here that was based out of Seattle but we had just statewide jurisdiction at any rate one thing led to another I ended up the most unlikely person in the legislature because I had no expectations of ever doing anything like that but it provided some great opportunities and one of the things that I saw happen when the bank's caused the crash in 2008 where people were just scared Loney lending had dried up I had actually immigrant farmers from Eastern Washington coming to my office saying what can you do to help us because the banks want to foreclose on my farm and there was no options really no options for them so this concept of public banking had always been in the back of my mind because of the Bank of North Dakota and one thing led to another we had a task force that was convened the Speaker of the House Frank chop liked the idea so much that he convened a task force to put together a bill and that was the first really legitimate bill that we had put together on this subject but it was not polished by any means but it gave us something to work with and campaign around so here I am 10 years later now still talking about the bank and taking the message all around the state and when you talk to people about public banking it's like a light bulb goes off and they oh yeah why aren't we doing this already so in case you were wondering what public banking is let me give it to you in a nutshell right now the state and city of Bellingham every political subdivision in the state that has a tax base collects tax revenue well what do we do with that tax revenue the state puts it out for bid once every however often and funny how there's only ever one bank that bids to take our money right now the state's banker is US bank so we have just written a fifty three and a half billion dollar budget two weeks ago so the US bank gets to process fifty three and a half billion dollars of our tax dollars and but what do they do with our tax dollars they get to leverage it out and invest it however they want make as much money as they want with our tax dollars and in the meantime if we want to build something like improved traffic conditions in downtown Seattle or build a high-speed rail that connects Billingham to Portland what would we have to do we'd have to sell bonds to finance that right well bonding has become our public financing strategy so think of it as a mortgage if we sell a billion dollars in bonds that really costs us two billion dollars at least over the next 25 years by the time we've paid it off and if there's an emergency well okay let's sell a billion dollars of bonds and pay it back but it's our public financing strategy so every year every two biennial budget we appropriate billions of dollars in bonds selling and so you can see how when the money we get to use two billion dollars today is gonna cost us four billion dollars down the road next year another 2 billion means a total of 4 billion we've had to use gonna cost us 8 billion dollars down the road how we reach our debt capacity the state is currently at our debt capacity by that set in the Constitution so that means we cannot borrow more money until we've paid off 25 year old debt so the American Society of Civil Engineers has aren't done an analysis on all the states and they said Washington is at best AC as far as the grade they give to or the state of our infrastructure most people will say there is infrastructure is struggling mightily to keep up with the growth so if we don't like the current state of our infrastructure we are not gonna like it 10 years from now if we can't do something about it but we're constrained we can't borrow any more money which means the state is always looking for other ways creative ideas on how to finance public financing but when we're talking about selling bonds we get to use that billion dollars but that profit the other billion or two billion is profit to Wall Street what could we do if we created our own Bank borrowed from ourselves and paid ourselves back even at a reduced interest rate we'd be making tons of money so Katherine you talked about the bank North Dakota they actually just their latest annual report just showed their forties here of consecutive record profits that means throughout the banking crisis they were making record profits even when the price of oil crash which North Dakota is famous for their oil fields they were still making record profits because they weren't investing in all the speculative stuff derivatives and whatnot they were investing in the people at North Dakota that's what we could be doing so imagine 20 years from now what might our infrastructure look like we can't even imagine what it looks like right now we may have flying cars we may have transporter beams who knows but imagine what our grandkids are gonna their infrastructure is gonna look like you know our water systems you know Seattle is growing so fast our entire water system is totally inadequate our sewer systems are how are we gonna finance all of that so we can't do it by selling more bonds but there is light at the end of the tunnel that's the beauty of what the public bank does public banking is not an anomalous strategy that only North Dakota uses the rest of the entire civilized world actually uses public banking as their public financing strategy we on the other hand in the united states rely on commercial banks as our public banking strategy and that's where were constrained because we have to pay so much in profit just for the benefit of using banks depositors money to build our infrastructure that's the true benefit of what the bank will do so you know I have some slides but I don't want to distract you with slides and all that because it's not a complex concept we own a bank we lend to ourselves we pay ourselves back we grow our pot for our kids and grandkids it's not more complicated than that now they'll try and tell you there's of course there's details to it we work out the details but I will tell you one thing I I got the opportunity to visit China Taiwan last year the year before Denmark and Sweden and what's amazing to see throughout the rest of the world and by the way all these places do have their own public banks that was all the things that I was going around looking at but they have an attitude they don't have the attitude oh you can't do it for this reason or you can't do it for that reason or come up with whatever reasons to fit your comfort zone so you don't have to do something the way they look at problems is how do we fix it how do we get it done it's not looking for reasons on why not to do it and that's the mentality that is really the biggest obstacle I think that we are facing in the state of Washington getting it done because people are not really familiar with banking is kind of this amorphous amorphous concept that's out there and when you talk to people about banking eyes glaze over immediately I don't blame them because I was the same way but it truly is a solution to our public infrastructure financing problems so the proposal that we have at the state of Washington right now is not necessarily the Bank of North Dakota model which I would actually prefer but we've been in order to make progress in the legislature we've had to find areas of unity and what are some of those areas of unity that other senators or legislators would be willing to support so a public Bank of North Dakota model consistently comes back to me as too much for a lot of them to accept which I think a lot of that is because they don't understand the power of what the bank can do for our communities but the point of unity is that it should focus on public infrastructure the other point of unity is that it should allow all political subdivisions to participate in this bank as equity owners and customers for lending programs so that is the bill Senate bill 5995 if you go to ledge dog of click on the bill info link type in five nine nine five and you'll find that sort of prototype model bill sitting there and you could just take a look at it for yourselves if you'd like but currently we have I think I would go out on a limb but I think we have enough votes to pass a bill in the Senate right now our big problem is getting it out of the financial institutions committee because we don't have enough votes in the financial institutions committee to get it to the floor for a vote but we'll be working on that in this interim an in the process last year two years ago we got a budget proviso in the budget that asked the Executive Office to put out an RFP and find a contractor to write a business plan that the legislature could consider so OFM did write an RFP request for a proposal which was accepted and that proposal the bid came back from the University of Washington Evans School of Public Policy and governance so they are currently in the process of writing a business plan unfortunately OFS RFP didn't exactly state what the Legislature's intention was what we wanted out of the business plan was a depository bank the oven's school was gave us an interim report that was due back on December 1st and some of that they were talking about other models like things like consolidating some of the revolving loan accounts that we have you know we have this thing called the public works assistance account that has a 35 year history with zero defaults and that's managed by a board the public works board and they do the lending for this to support building out water and sewer systems and other public infrastructure that's one revolving loan account so a revolving loan account is when you funded you've got X amount of dollars in it lend it out it gets repaid with interest Yuri lend it out is the money's just revolving in that account we have other revolving loan accounts too right now so one of the proposals is to consolidate those and create an infrastructure Bank that's fine but that's not really a bank I mean those are all good ideas but the true power of the bank comes from the fact that it accepts our public deposits because banks can do something that no other nobody can do just by the fact that they're given a bank charter they get to use a different accounting system and they only have to keep 10% of their assets as cash on hand at any time which means to put that in lay terms if we capitalized a bank with a billion dollars that's actually 10 billion dollars worth of lending capacity conservatively banks start getting into trouble if they over leveraged beyond ten but ten to one leveraging is considered safe practice for banking because there's you don't expect a run on the bank that would require you to come and we reimburse all 100% of the capital that's in the bank so that is the true power of the bank that's where we had to redefine in our budget that we want a public depository bank not a just a public infrastructure bank a public depository infrastructure Bank which means it accepts our public deposits based on also a cooperative model which will allow city of Billingham where the portability I don't know do you have a separate port of Billingham taxing district here so yeah we have the governor yesterday signed an executive order because the legislature failed to fund what do you call culvert replacement we have a Supreme Court lawsuit that requires us to replace all the culverts state culverts in the state of Washington that's at least a two billion dollar cost the governor the legislature funded it only to I can't even remember what than 50 million or something out of two billion dollars so the governor put in another 200 million or something like that in his executive order yesterday but that still grow grossly inadequate for the need and that's just in culver you know when we passed an initiative 1351 years back I think it was 1351 that cut class sizes by half what does that mean we have to double the size the numbers of classrooms we have if we're cutting class sizes by half but we're not we just do not have the capacity to build that much classroom space what about infrastructure you know we have the bridge got replaced in just south of here in record time total beautiful example of public efficiency when we put our mind to it and get stuff done fast yeah we can't seem to build light rail that reaches into South East King County where all the workers that are being displaced out of Seattle have to move too so we've got serious infrastructure needs and not just in maintenance but looking ahead to the future for our children what kind of needs are they going to have you know that we we need to give them the resources so that they can they have them to build the kind of society we want them they have so the initial capitalization that's a question that comes up quite often there's any number of ways that we could capitalize it and I think that there's enough quarters and dimes between the seat cushions throughout all the different programs we have but so the state of investment of oh I should also mention the Bank of North Dakota in there record profits they made 17 percent last year return on investment 17 percent so that's just kind of yeah their increment they're setting record profit area but every year is like a 14 15 16 17 percent it's just going upward so this is an example of what the state Investment Board has said as they've shown what 8.7 3 percent would with their that that since its inception but over the last 3 5 10 year terms rates were Yatta Yatta you can see that they were right around the 6 7 8 percent averaging range so not only does it provide this immense capacity for us to finance infrastructure it also makes money for us it's a bank it makes money so it generates new revenue for the people of the state without raising taxes what a beautiful thing right I mean who could say no to that so this shows that kind of the rates of returns that our state Investment Board has returned since 2007 some sometimes it's pretty high but look at that one you're the second and the third lines at the bottom - 1.1 percent - 22 and a half percent t at's how our investments in in all of our funds fell by about a quarter just during those that two-year period right now and how much a larger increase do we need to get on an annual return just to make up what we had lost so I think they made up what they've lost right now and probably our head by now but the Bank of North Dakota during that entire time as an investment was just steadily climbing steadily climbing it doesn't follow in fact banks actually should be counter cyclical with regard to the economy because that's when you borrow money you're not actually but you're creating money I'm putting it out into the economy to stimulate the economy economy so that's the power of what banks should be doing but the big banks you know we ended up bailing them out with what was a hundred billion dollars worth so I'm sorry I didn't actually answer the question about I'm working my way to the slide about capitalization so but State Investment Board how can we capitalize it the state treasurer's our state general fund has a core capital level because they need to keep a cushion to make sure that we never go into the red we always have to have enough money to pay our bills so we have a cushion that cushion is about at any given point about a billion to two billion dollars plus you know we have a rainy day fund or whatever that is supposed to not be used for anything so rainy day fund is a possible source this court capital cushion that we keep in our general fund even if we took a hundred million dollars out of that that's a billion dollars worth of lending capacity for a start-up bank I mean and there are so many different accounts like that where if we just took 50 million or ten million here I just put it all together if we have a billion dollars ten billion dollars worth of lending capacity that's more than double what our capital budget is that we just passed this year and it will only grow over time so I would contend that that's all we have to do is or another weak way we can do it we we just passed a transportation budget there's a lot of tolling fees involved with one of the bills that supported the budget that told you know that they're selling bonds and using that toll revenue as the capital base for those bunk to back up those bonds imagine instead if we use that revenue stream to capitalize the bank's he had constant revenue feeding into the bank and growing it and then creating that leverage lending capacity out so bonding against toll revenues is really a bad idea because I think it was something like 30% of that goes to administrative costs to out-of-state contractors and then if you think of the other 50% going to as profit to Wall Street because we're paying a dollar for dollar profit for the bonds capacity we're only using maybe 30 cents out of that dollar of revenue being generated to actually build something so to me that's just really a bad idea at any rate there are all these different revenue streams that we can use to either fund it through revenue stream we could sell a bond to capitalize it it wouldn't be a municipal bond therefore that you couldn't offer that half percent interest rate cut we'd have to pay half cent interest rate more but we would pay it off it's so much quicker time because of that leveraging capacity so there's a lot of different ways like that that we can use to capitalize it yes hello Lynne Rosen here I would like to hear you address the issues regarding opposition to this issue yeah everyone seems amazed that there would be any opposition to this see the way things happen in Olympia it's it's all about power right and there's two kinds of power in Olympia there's money and there's people and unfortunately in our increasingly corporate dominated society kind of generally reflected in the legislature there represent society money seems to have all the power our challenge is to rebalance that and get the power back to the people so that the people are making these decisions in our own best interests so the main opposition comes not surprisingly from the big banks the you would think and if you go to the North Dakota Bankers Association community bankers love their Bank of North Dakota because it it provides all of this backstop and other capacity for community banks it grows the economy locally so the community banks have a lot more customers it provides some administrative services for some of their banks too so if you talk with them they'll say privately they love their bank but don't quote them on that so community banks which our bank would work with in support stand - I think benefit significantly from it but they cannot to me it's an issue of like class solidarity where they don't they stand with their Wall Street Big Brothers in opposition the credit unions have been neutral on it and then they went opposed and now they're back to neutral I think they have nothing but to gain by the increased economic activity that state bank would create what's surprising opposition also that I didn't actually realize until a couple years into this was bond brokers bond brokers would stand so they kind of lurked in the background all the time the main political opposition comes from the State Treasurer if the state treasurer would get on board we'd have a bank right now and this is regardless of a Democrat or a Republican that in that seat they've all opposed it so the current there's an interesting story with the current state treasurer because you know there was a vacancy it was an open seat last election we had five candidates three Democrats and two Republicans two of the three Democrats strongly supposed supported creating a public bank unfortunately three Democrats can each other out so we ended up with two Republicans running against each other in our top two primary that's a problem we have to fix but even that being said one of the Republicans came from Spokane County and the Spokane County Treasurer is a strong supporter of public banking even though he's a Republican so he highly recommend this this person Dwayne Davidson I spoke with him he at least made it sound to me like he supported a public bank so I support him since there was no Democrat in the race he won he is now our state treasurer now has totally flipped on the issue so you know what can I say we have work to do to build people power it's significant amount of people power to elect people who will support it once it gets in steve blackman son family resident so when you your proposal is a state bank and it what how does it how do I use it do I use it like I do I'm a Boeing employees credit union member would it be a bank than I that I would use or is it just for state agencies it would just be for public agencies what I talked about points of unity to get enough legislative support to hopefully move this bill when the business plan comes from the University of Washington that one of the points of the unity was that it not do private accounts however if you talk to the Bank of North Dakota people they don't they don't provide banking services for general citizenry but their philosophy is if they absolutely want to bank with us they can but we don't provide any services so if you want to do do your banking with the Bank of North Dakota you have to drive to their teller cage at Bismarck which they only have one and do your business at that teller cage and then leave there's no ATMs there's no credit cards all of that stuff on the other hand I think that that there are some good things that we're over looking that the bank can do not necessarily taking personal accounts but for instance the biggest book of business for the bank North Dakota was student lending think of how we could support students throughout the state through a state-run student loan program like that so there's other things that were foregoing just be just because our point of unity right now is that we focus solely on infrastructure I really know nothing about banking except that I put my money in there and I can use it but I have two questions one is what you mentioned for instance school bonds with school districts be able to use this Bank that's one question I mean in other cities the counties the various taxing occur like the Pugh DS and all of that correct under the model that we're proposing okay it's hard to say what after it goes through the meat grinder and Olympia what it looks like when it comes out that's all we're proposing yes okay so now I'm coming to more on my feeling question which is that since I know nothing about banking really and how it works this sounds too good to be true it's no I'm serious because I don't know how many of us all know a lot about banking but I bet most of us don't know a whole lot and I feel like I'm being snowed that's my feeling that's my fear because I don't know what the structures are so I guess maybe my question is how can you spread the word about this so people don't say no no no it's too much too good to be true I'm being snowed as an old person here you know who doesn't know anything so I trust the good judgement of the people and if you think about what we're proposing because I totally understand what you're saying you know it does kind of seem too good to be true but that's because we've been under this commercial banking model for so long we don't really know any other way even though the rest of the civilized world basically uses it so just think about the profit that we're paying for Wall Street and think about reinvesting that back into our local communities think about generating revenue without raising taxes I don't know how to put that at ease and except that you just have to think about it a little bit and you know if you have specific questions maybe I can try and answer them but you know a general fear it's hard to overcome that general fear is there some oversight group or who would be managing the funds in this who would be managing what the funds the funds there's a governance structure built into the bank that's modeled after the Bank of North Dakota so at the top level what North Dakota has is this thing called the industrial commission that was set up by the people of North Dakota the legislature of North Dakota back in 1917 and that led to creation of the bank in 1990 you know what if you're really interested in history you should study the history of how the Bank of North Dakota came about I went back to Bismarck actually to visit the bank and just on a little side thing I walked over went over to their State Legislative Capitol because I like to look at legislative capitals if I'm in a different state and right next to it is this archive and they have these records back in the day they had the reason that they were able to get it done politically is because at that time people hated both they felt like they had lost control of their lives that all the the shipping companies were setting the prices and leaving very little for the farmers to get their stuff to market and the banks were controlling all the rest of the economy and they felt like they had lost control they got tired of the democrats and the republicans voted them all out and voted a third party and called a nonpartisan league so this NPL ran on a platform that was based on a lot of stuff that we were doing here in city of seattle so if you go through their old newsletters called the NPL leader they they were showing examples and I have some slides in here that I don't have to dig for I can if you want to see him but they show the I don't know if you know the grain towers down there by the Port of Seattle right on Elliott Bay they they said this is what the public can do if you just let us get it done and so you know the the Port of Seattle was one of their examples that they showed City Light Seattle City Light another example so they used in Seattle as the model actually to create their public infrastructure which is the public bank and the public grain granary are milling system did I I think I straight from the question I forgot what the question was actually who are responsible for it was a governance question that's right so I modeled the governance structure for the public this Bank after the Bank of North Dakota's ma which has that Industrial Commission at the top and then the professionals actually running the bank who know banking there will be public employees but with finance expertise the commercial banking today where we bank there's a Federal Deposit Insurance Corporation which ensures our deposits up to some reasonable number it will there be something analogous to that in the state bank no the fdic 4 along with the privilege of ensuring our fifty three and a half billion dollars up to the amount of two hundred and fifty thousand would come a lot of strings attached with it so this bank will be backed by The Full Faith and Credit of the people of the state the people are banking on the banks so to speak and the bank is banking on the people hi Susan I've got two questions one of it maybe goes to the fear a little bit deeper on that the bank is lending basically to other of our government units for the infrastructure presumably defaulting on those would be a lower concern the way that if you have you know regular people who get into a jam is that part of the reduced risk and then also where you have to have the 10% in order to leverage it because there won't be a run on the bank but again if we get into troubled times then and our state gets into a jam I don't know how that part works either so that's my first question if you could look at that and then the other part of it is is there you were talking earlier about getting it out of committee and that you're working on that and also about the treasurer who has completely turned is it possible to get this thing out of committee and passed without the treasurer being on board and what are you doing to get it out of committee thank you okay so on your first question about having enough capital to make sure that the bank doesn't go under in a recession the the Bank of North Dakota I guess is the best model for that because the bank if you think about it a public bank really cannot fail because it is backed by The Full Faith and Credit the state and who would be the run create the run on the bank it would be the state so the state legislature would have a couple of different options they would either cut the budget which we already did during the last recession we cut it so hard I mean you're seeing the effects of it today the increased homelessness and people who are living without a social safety net out there it's because we cut it that much and we have never caught up so we made it almost impossible for people to get on TANF or for instance and the need is so much greater now because of the growing income inequality so this is one of the reasons I like to talk about a bank because it lets me talk about so many other different things that I really feel passionate about especially this income inequality and the wrong way I think that our economy is going right now but the bank really cannot fail because it's backed by The Full Faith and Credit so the state can what does the bank need to do it needs to the the legislature in order to keep it make sure that it doesn't fail if loans are crashing which is very unlikely in and of themselves because we're lending to political subdivisions that have taxing authority so that's it the public works assistance account like I said in its entire history has never had a single default and most I don't know a few if any city has Billingham ever defaulted on a loan I don't think so so the risk of default is very minimal but even if it does default its socialized over such a broad area that the impact would be probably negligible the only real problem would be if the state itself would default but I can't imagine that happening and then the state you always have taxing authority push come to shove if worse gets to worse if you can't cut the budget you know for you can't do this that or the other you can raise taxes so in that sense a public bank can really never default nobody ever wants to raise taxes of course that's probably the last thing would do but yeah I hope that answers your question well and then there's second part what am I trying to do t get it out of committee that's just inside political stuff that I think I need to not talk about right now I'm with Lucy I have no clue about banking but I know if I get a mortgage from the credit union I pay the interest to them if we're lending money to ourselves where does this all this interest money come from it comes from however that interest money is coming from now except that it's probably going to be less so in a sense that it's our bank so think of it or there you have an account in there say say we have a revolving loan account the public works assistance account and that the depository for that public or assistance account is going to be at our bank okay so the bank has the funding that the PO coruscant has this big pot of money and that's what it's lending from but the legislature could say hey we want to support that lending assistance so they could say well let's apropriate five times more for the poke works assistance account to lend out because it's just going to get repaid anyway those are repaid by revenues generate sales tax money whatever the purpose of that infrastructure is however was going to be planned to be paid back anyway or if there's a junior taxing district that's the one requesting the loan that district pays the interest yeah we're whoever borrows the money yes paying the interest to the banks yeah but they're not gonna be able to borrow money to begin with if they can't don't have a way to pay it back if the City of Bellingham say wants to build whatever a new road and they borrow money from the state bank then is the City of Bellingham paying the interest on what they borrow yeah the people of the city probably would have passed a levy to finance that lending to us to buy a bond for instance apropos apropos North Dakota State Bank presumably the historical records show then it cruised right through the depression and through the more recent 2008 recession so as a reassurance you want to talk to that briefly for us okay during the Great Depression well actually the Bank of North Dakota had a hard time getting up and running because the it was the only one in the country so they chose to finance it by selling bonds and so all the bond brokers refused to sell them so they they were unable to sell I refuse to buy their bonds so they were unable to sell any it took him a long time to get up and running and what happened was the Republicans won a subsequent election and took it away back from the NPL and once the Republicans figured out they owned a bank they said oh no so then the bank started catching on no you I didn't answer your question can you restate your question cuz I get sidetracked on all these other little stories about Bank of her oh through the Great Depression so there's an interesting point in the Great Depression so they were the Bank North Dakota was doing a lot of farmer lending and during the Great Depression nobody could afford to pay the loans and they had the Dust great Dust Bowl drought and all of that and so the bank North Dakota act as a heat sink for that crashed economy and held on the loans the governor of North Dakota declared a moratorium on repayment for the town foreclosure and they let the farmers stay on the land until the economy picked back up and then they sold those foreclosed farms back to the original owners for the amount that they had into it so they the bank was able to absorb the downturn effect of the economy for the people it's pretty amazing I'd have a question about profits you saw who you showed and you said that the North Dakota bank has profits that just go like that for technical dance pardon me like all banks okay well that's what I'm not understanding because then and I think it was the Washington pension fund I'm not sure but their curve was not like that their curve was like this there was a 21% deficit a few years ago during the Great Recession and yet North Dakota did fine during the Great Recession what is it that our bank would have to do to maintain that profit curve the way North Dakota has not invest in the stock market but who makes the decision about the investments does North Dakota have a group of people that do that yeah they have they have a board that manages the lending program so they and they get some mandates from the legislature to legislature says we want to focus on student lending then they start focusing on soon way or whatever it is over there in North Dakota they they focus on they had focused on student loans but they've kind of pulled back from that now and I'm not exactly sure what their main book of business is right now we have a question in the back you know when you talk about the fear factor Lucy you're looking at what private banks have done in this country as far as the losses and the collapse 1975 New York City emergency financial Control Board which controlled by the very banks that lent and got the city to borrow that money well press their capacity to pay it off and then they ended up running the kind they owe the city because the state legislature and governor carry a point of the very same back spending scroll Hatton the Salomon Brothers Lehman Brothers all those banks then just lost all that money just just talked him into borrowing it way past the capacity of New York City now we're going to toll the city and get the money back they cut programs left right and center so you can't compare a public bank and get the private our system as to whether farriers meant not in the public system oh sorry the question is whether these people are gonna come to that to control the investment policy likely to wind it or what I'm having a hard time I'm being elected appointed the board that unit of control of elected they will be elect so the way that we have the top-level administration of the bank set up is it consists of five statewide elected the governor the Lieutenant Governor in a pick five that that's gonna get sorted out in the mix as we perfect the bill in the legislature but the I think the core principle is that they have to be held directly accountable back to the people so that they're they're making good decisions it's a question my check yes yes thank you adding on to that question how do you keep politics out of the bank's decision my concern is you just said the governor and several five level people may be on the bank well as the legislation change or they vote our governor is very heavily into environmental what AM is what they told the bank to fund everything environmental and not help students or I can see the fear of average person myself included that Bank sounds like a wonderful idea but not when it's controlled by some of our modern politics yeah the problem is unless we let we have that kind of direct accountability back to the people then we have no accountability so you have the check and balance of the legislature to sort of directing the action and I know that a lot of people don't maybe have much faith on the legislature either I have less faith in corporate governance that has no accountability [Applause] so those are probably two options I don't know if you can come up with a third option but I personally believe in just that having that direct accountability with checks and balances if I'm Jan if this is such a good idea as it sounds why in a hundred years is North Dakota the only other one actually there is a second one now are other states looking at this right now yeah that's on another one of my slides but so American Samoa of all places just got approval by the Federal Reserve to create its own bank because they couldn't yeah so that was last year so there's now a second one if you consider it's not exactly a state but it's providing banking services were needed there anyway there's probably 21 states right now that are considering it in some way shape or form along with other cities right now San Francisco has taken a major look at him a friend of mine in California has just dropped a bill on that Hawaii is looking at it so there's a lot of places looking at it but they're all facing this kind of the same obstacles you know power asserting itself behind the curtain where we can't see it how can individuals put pressure on the finance community to get it out of that committee how what could we do I think it would really help if you had your local legislators supporting it and they can carry you they can carry your message to the leadership in their particular chambers so yeah I mean that's that's the best way send your messengers down to Olympia with this message we want you to move this forward and do what it takes to get it done you know including getting composing the right people onto those those committees do you have a list of legislators that are supportive of this I think that there's I think that the we have enough votes right now to get it done as I said have you looked into or has there been any work done on working with different tribes who under their treaty rights might be able to establish these banks on their own without going anywhere else I think the tribes absolutely should probably do something like that but they would still need to get a charter from the state frankly I'm surprised more institutions don't create their own banks but it's probably pretty hard to get a charter yeah in fact the former City of Seattle treasurer Lloyd Hara tried to start a state city-owned Bank for the City of Seattle back in the 70s I believe it was he said he was stymie he got all the way through the process up until the Federal Reserve who refused to grant him a routing number for the city yeah got that far with it mr. Hasegawa you mentioned about the started with the capital how to capitalize the bank I think if you would sell the stock to only the government entities and agencies like cities can buy it the other agencies can buy it because every agency every organization has their reserve funds they can even take one or two percent of that and then they have the ability to make that profit from it too so I don't think that funding would be problem it's the getting the routing number is the problem yeah yeah agreed and that's the plan is to let political subdivisions buy in it's good for a soul you mentioned that Germany has a state bank right now anything to learn from their experience yeah so as I mentioned most of the rest of the civilized world unless they've already been co-opted to convert to commercial banking does operate on public banking so if you look at all the BRIC countries you know Brazil Russia China India Japan Taiwan I mean you name it they all have public banks that's how they're able to finance these huge infrastructure projects like running high-speed rail the length of Japan going every direction or whatever so in Germany they have the largest public banking system I believe I I don't know where it stands on an order of magnitude administered against China because I don't know that anything could stand up against China but Germany has what they call spark Asin and it's a system of public banks all the way from the federal level which you don't don't mistake our federal reserve as being owned by us the people the federal reserve here is owned by the big banks all the shares of the Federal Reserve are owned by the big banks so we have a private system even at the top level Germany has a publicly owned system up there and then every state has their own public bank then even municipalities have their own banks so in a in relation to Deutsche Bank we all hear about the rich bank especially the last couple of days well a spark Asin is an order of magnitude larger than toi bank and that's how they're able to finance so much development in their country including they're transitioning to a national solar and energy independence using that system to finance the conversion this goes to the all this too good to be true but I'm retired now but I have a little time on my hands and I was wondering if if I were the director of the new public bank of Washington if I could get a salary that's 250 times the average workers and if I could maybe get fifteen to twenty five million dollar bonuses do you have those kind of perks and I would bet against that in North Dakota they're all public employees including the president and CEO Boeing and other large corporate entities waited on this subject they have not Boeing already has access to the Exim federal Exim Bank which it relies on for most of its financing so I gave a presentation to the House Republican caucus on this years back and they said well yeah that all sounds good Bob but we hate socialism I mean that was the whole reason that was X that was literally the reason for not supporting it okay I'm not sounding note of outrage let's say thank you to Senator thank you [Applause] [Music] [Music]