By Alexander Soule, Published 7:43 pm, Monday, February 23, 2015

A Connecticut legislator is seeking a study of whether the state should create a publicly held bank as a way to provide a stable source of funding for various projects, among other potential benefits.

State Rep. Susan Johnson, D-Windham, proposed the bill, which is under deliberation by the Connecticut General Assembly‘s Banking Committee, co-chaired by Sen. Carlo Leone, D-Stamford. Johnson said she became interested in the concept of a public bank following the financial collapse of 2008 and 2009, when many consumers and business owners voiced frustration with banks for what they felt were restrictive credit policies.

Johnson said she does not envision a public bank in Connecticut structured similarly to a consumer bank, with branches and deposits, visualizing it as a stable steward of capital and funding for projects in Connecticut.

With a history dating back to 1919, the Bank of North Dakota is the only state-backed public bank in the nation, with assets totaling $6.9 billion in 2013 and generating income of $92 million that year. Legislators in Massachusetts have attempted without success to get a public bank authorized in the Bay State, one of 15 such efforts tracked nationally by the National Conference of State Legislatures.

Ed Heflin, a Greenwich resident who lost last year as a Green Party candidate for the seat of state Sen. L. Scott Frantz, R-Greenwich and Stamford, has been a vocal supporter of a state-backed bank in Connecticut. Heflin, who is chief technology officer of a Clifton, N.J.-based startup called Retail Shopping Systems, testified last week before the Banking Committee and filed a proposal to demonstrate how a bank law could be drafted.

“The Bank of North Dakota turns out a tidy profit year after year because it substantially lowers costs and risks, more so than any private commercial bank,” Heflin said. “It has no exorbitantly paid executives; pays no bonuses, fees or commissions; has no private shareholders; and has very low borrowing costs.”

Walt McRee, Director of Communications

Public Banking Institute

walt@publicbankinginstitute.org

 

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