Washington’s Blog 
Sept 23, 2011
By Carl Herman, National Board Certified Teacher in economics, government, and history, who blogs as the Nonpartisan Examiner  at Examiner.com. Carl was one of the leaders who launched themicrocredit movement , and is a tireless activist for peace and justice.
Credit can, and should, be created to maximize public benefits.
California’s legislative chambers passed AB 750  to fund a formal study of benefits of a state-owned bank. The bill is before Governor Brown for his approval or veto.
A state-owned bank for California has several and immediate benefits. Ellen Brown  expertly explains and documents:
North Dakota, the one state that currently has its own bank, is the only state to be incontinuous budget surplus  since the banking crisis began. North Dakota’s balance sheet is so strong that it recently reduced  individual income taxes and property taxes by a combined $400 million and is debating further cuts. It also has the lowest unemployment rate , lowest foreclosure rate  and lowest credit card default rate  in the country, and it hasn’t had a bank failure in at least the last decade .
Revenues from the Bank of North Dakota (BND) have been a major boost to the state budget. The bank has contributed over $300 million in revenues over the last decade to state coffers, a substantial sum for a state with a population less than one-tenth the size of Los Angeles County. North Dakota is an oil state, but according to a study by the Center for State Innovation , from 2007 to 2009 the BND added nearly as much money to the state’s general fund as oil and gas tax revenues did. Over a 15-year period, according to other data, the BND has contributed more to the state budget than oil taxes have.
North Dakota is a conservative red state, not the sort you would expect to be engaging in government enterprise. But the conservative justification for a state-owned bank is that it preserves state sovereignty, allowing the state to be independent of Wall Street and the Feds. The BND is not a business competitor of the local banks but partners with them, helping with capital and liquidity requirements. It participates in loans, provides guarantees, and acts as a sort of mini-Fed for the state.
According to the annual BND report for 2010:
Financially, 2010 was our strongest year ever. Profits increased by nearly $4 million to $61.9 million during our seventh consecutive year of record profits. . . . We ended the year with the highest capital level in our history at just over $325 million. The Bank returned a healthy 19 percent ROE, which represents the state’s return on its investment.
A 19 percent return on equity beats the 170 billion dollars LOST  by CalPERS and CalSTRS, California’s two public pension funds, by the time the stock market hit bottom in March 2009. The BND was making record profits all through that period.
- A d v e r t i s e m e n t
Governor Brown, so far, has upheld the current criminal political and economic “leadership,” and requires a “Scrooge conversion” before he becomes a partner of the people. We know this is true because he does not declare his support for the people with other “emperor has no clothes” obvious crimes of “leadership”:
- Congressional reports disclose that all “reasons” for war with Afghanistan and Iraq were known to be lies as they were told .
- Orwellian unlawful wars , including using depleted uranium weapons  to damn victims with continuous misery and death.
- Obfuscation and silence of the obvious answer  of ending an Orwellian “debt supply” and replacing it with money. This is the national solution for our so-called “monetary” system.
- Silence while the US allows a million children a month to die of preventable poverty, even though historically ending poverty  reduces population growth rate, the investment is less than 1% of the developed nations’ gross national incomes (GNI), and the US has promised this amount and reneged multiple times.
- Torture , extrajudicial assassinations  (including against American citizens ) and indefinite detentions .
- Destruction of the US Constitution as the US devolves into a form of government closest to fascism and nowhere near a constitutional republic.
- Literally throwing Americans onto the streets rather than take any of a dozen acts  to allow them to stay in their homes.
- Intentional unemployment, crime, infrastructure decay, fear, anger, depression (both economic and psychological) rather than create money for full employment .
- US corporate media complicity  to lie by omission and commission to keep the above facts unrecognized by the American public.
- You should also know this area of Truth: the King family’s civil trial found the US government guilty of Dr. King’s assassination . US Corporate media refused to cover the trial or interview Dr. King’s wife. His family’s opinion is that the US government murdered Dr. King to end his protests against unlawful US wars and his call to end poverty.
Perhaps the most egregious documentation of current California government fraud is in the data of collective government Comprehensive Annual Financial Reports (CAFRs) that reveal trillions of our dollars “invested” on Wall Street while lying in omission that they have no money for budgets. The data isexplained and documented here . For an example to understand what this means, the University of California system (UC) had a budget deficit that resulted in thousands of students denied enrollment, thousands of staff laid-off, a 32% tuition raise, and a 10% employee pay-cut with furloughs to reduce education days. The deficit could have been fully-funded with less than one-fifth of one percent  of California’s documented investments. And no, the amount required for retiree benefits is only one-half of one percent of the total; that’s the specious and usual “official” lie to keep those investments on Wall Street. These trillions is an “over-tax” of Californians’ money and expresses current “leadership” commitment to loot the people for the benefit of Wall Street.
A public bank for California would also eliminate the specious reason of needing to over-tax anyone because short-term credit would always be available at-cost.
Another way to understand what a public bank does for cost reduction is that it’s similar to removing “health care” companies from standing between the public and medical professionals. Cost-benefit analyses range between $100 to $300 billion annual cost increase  to the US by paying for health care companies as profit-taking “middle men” rather than having at-cost health care. That is, Americans would collectively save $100 to $300 billion every year with universal health care, no insurance companies, and no administrative red tape.
The lack of health care kills about 45,000 Americans every year according to the recent study championed by Harvard’s Medical School . US “leadership” choice to transfer $100 to $300 billion every year from Americans to oligarchs while killing over 100 Americans every day is what Governor Brown has stood for so far. California could enact just as easily as having a public bank. So far, the Governor has chosen silence on public banking and empty rhetoric with no leadership for single-payer health care.
The long-term savings for single-payer health care in California could be funded in the short-term with credit from California’s own bank. Another example of lack of true leadership is that you have to hear about this idea from me rather than either political party or corporate media.
That said, if Governor Brown strongly stood with the people and rebuked his fascist “masters,” perhaps a hundred others in similar positions would act. This would end the crimes instantly that inside and outside of the US kill millions, cause suffering for billions, and loot trillions of dollars.
You can contact Governor Brown’s office to urge him to sign AB 750 by writing or calling:
Governor Jerry Brown
c/o State Capitol, Suite 1173
Sacramento, CA 95814
Phone: (916) 445-2841
Fax: (916) 445-2841
Fax: (916) 558-3160
Email: http://gov.ca.gov/m_contact.php