Faced with a tight credit market, recession and dwindling state funds, one proposal lawmakers have on the table is setting up a state bank.
Bills in the House and Senate would create the Washington Investment Trust, a move applauded by many small-business owners but opposed by the state treasurer, who says it would be risky and unconstitutional.
Rep. Bob Hasegawa, D-Seattle, the House bill’s sponsor, said the proposal was modeled after a similar institution in North Dakota and based on the idea that the state’s money should not be at the disposal of Bank of America, where Washington has its accounts.
“Why don’t we create our own institution, keep that money in our state and we make money off our money that we can then reinvest back into our community?” asked Hasegawa.
He said the North Dakota experience with a state bank has been successful, leading to a budget surplus and preventing bank failures during the 2008 financial crisis.
House Bill 1320 would set up a task force charged with organizing the bank, in which all state funds would be deposited. The bank could then use that money to make loans to businesses, farms and students, and could lend to other financial institutions.
Assistant State Treasurer Wolfgang Opitz said he and Treasurer James McIntire oppose the idea.
Opitz said that the measure would violate the state constitution, which prohibits state credit from being loaned to any individual, association, company or corporation.