A Virginia lawmaker is urging his colleagues in Richmond to consider creating a state-owned bank that would use deposits from residents and state agencies to lend to local businesses and stimulate economic growth.
The Washington Business Journal reported Wednesday that Del. Bob Marshall, a Republican, introduced legislation this week to study the viability of opening a bank that would be modeled after Bank of North Dakota, the only state-owned bank in the country. Marshall introduced a similar bill in 2010, but that bill failed to make it out of committee.
The idea of creating a state-owned bank has been gaining traction in a number of state legislatures of late. Lawmakers in California, Massachusetts, Oregon, Hawaii and several other states all introduced bills last year that sought to establish a state-owned bank or study the idea of creating one and it is expected that similar bills will be reintroduced early this year when state legislatures convene. (Virginia's legislative session begins Jan. 11.)
In introducing bills last year, most lawmakers said that state-owned banks could pick up the slack from traditional banks that have scaled back their lending in the wake of the financial crisis. A state-owned bank could also help states close budget shortfalls because, if it is modeled after the Bank of North Dakota, all profits would be returned to state coffers.