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News Now

CU System
Michigan candidate proposes state-owned bank
LANSING, Mich. (3/11/10)--The Michigan Credit Union League will monitor a proposal made by a state gubernatorial candidate who announced a plan Tuesday to create a state-owned bank to serve as a lending "backstop" and help ease the credit crunch. The plan, according to Lansing Mayor Virg Bernero, a Democrat running for governor, would mimic the state-owned Bank of North Dakota, which works with banks in that state to help finance business growth, provide student loans and offer other banking services (The Grand Rapids Press and mlive.com March 10). "On the surface, we're opposed to the concept of a state bank that would compete against credit unions," David Adams, president/CEO of the Michigan Credit Union League, told News Now. "However, we remain open to studying the proposal further to see if this is something we might support," he added. The Bank of North Dakota is backed by the state, not by the Federal Deposit Insurance Corp. A proposed Michigan bank would be capitalized with assets of the state and a bond sale, said Bernero. North Dakota's bank has existed since 1919, when residents organized it, along with a state-owned grain elevator and mill, in defiance of big out-of-state banks and mill operators hindering the state's farmers early in the 20th century. In February, the Association of Vermont Credit Unions (AVCU) addressed that state's House Ways & Means Committee because state lawmakers were interested in exploring how a state-owned bank similar to the Bank of North Dakota would work in Vermont (News Now March 1). AVCU said its president/CEO, Joe Bergeron, and others addressing the panel had more questions than answers about the merits and practicality of a Bank of North Dakota clone. The association said that other legislatures--primarily in Florida, Oregon and Washington--were also looking into a state-owned bank.


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