By Kim Kalunian, WPRO News
A new bill submitted by Rep. Charlene Lima (D-Cranston) would create a Rhode Island state bank.
The bill would establish a Rhode Island state bank to “protect the financial welfare and economic vitality of the citizens” and create jobs.
The state bank would have the same banking powers as a commercial bank, and could accept deposits, pay interest and make loans. The lending and guaranteeing powers of all state departments and agencies, like the Rhode Island Economic Development Corporation, would be transferred to the state bank.
Lima submitted the bill at the request of Keven McKenna, a lawyer and former candidate for Attorney General.
McKenna said the proposal would “make money from our own money.”
McKenna told WPRO that instead of doling the state’s money out to commercial, international banks, the state could be making a profit on its own funds.
“The State of North Dakota did it 1908 has never had a state deficit,” he said.
According to the Sunshine Review, a government transparency organization, North Dakota does have debt, but is considered to be one of the best run states when multiple economic and socioeconomic factors are taken into consideration.
Under the guidelines of the bill, the state bank would be a for-profit entity. All net profits would be transferred to the state treasurer monthly to support the state budget, minus a reserve of 20-percent. Where would that reserve go? Into the wallets of registered voters on an annual basis.
In terms of lending authority, the bank would only be permitted to lend to residents, public departments and business of Rhode Island.
Following the 38 Studios debacle, McKenna said people cannot be afraid of government and the state’s money management skills.
“You cannot deal with paranoia,” he said. “If you are fearful of government then have the government do nothing at all: no roads, no education, no support for the elderly, nothing.”
McKenna said the bank is a smart economic move to make.
“To have change you need vision,” he said. “Here’s a vision.”
Deposits made by residents into the state bank would be guaranteed by the state. The residents would also be the stockholders.
The bank would be governed by a board of directors consisting of the governor, the lieutenant governor, the attorney general, the secretary of state, the treasurer and four residents each elected to a four-year term.
McKenna called the idea of a state bank a “pretty simple concept” and said it would be a “win, win, win situation” for Rhode Island.
The bill has been referred to House Finance. No hearing date has been set.
