Earlier this month, AP reported in “Over a Dozen Towns Support Public Bank Idea” that “The majority of communities asked to support the creation of a public bank in Vermont have approved the measure at town meetings.

“Supporters argue that instead of keeping its money in large global banking institutions, the state could save money, create jobs and eventually generate revenue by creating a state bank.

“The proposal would turn the Vermont Economic Development Authority, a nonprofit agency that makes loans, into a bank. A bill pending in the Legislature would put 10 percent of the state’s funds into it.”

John Nichols of The Nation reports in “Vermont Votes for Public Banking” that “the votes were overwhelming. Vermont is not the only state where public banking proposals are in play. But the town meeting endorsements are likely to provide a boost for a legislative proposal to provide the VEDA with the powers of a bank.”

Robb Mandelbaum, in the New York Times writes that “public banking advocates point most hopefully to efforts in Vermont” to emulate the model of the Bank of North Dakota, which “funnel[s] deposits from state agencies back into the state’s economy through a variety of loan and other development programs.”

GWENDOLYN HALLSMITH, gwendolyn.hallsmith@gmail.com
Co-founder of Vermonters for a New Economy, and the new executive director of the Public Banking Institute, Hallsmith said today: “It is clear that the bank lobby has a lot more traction in the State House than the cities, towns, and the citizens. It has been our contention that the state-chartered banks stand to gain by the legislation, and that their interests and the interests of the large out-of-state banks diverge on this issue.”

According to Vermonters for a New Economy, the bill is encountering fierce opposition, not from ordinary Vermonters, but mostly from lobbyists for big private banks. The group says that when Senate Finance Committee hearings began on March 18, the Finance Committee only invited representatives of big banks to testify concerning the proposal. This led a local paper, the Barre Montpelier Times Argus, to call the bill “politically unpopular” even though a large majority of towns supported it in the town meeting campaign.

A study by Vermonters for a New Economy, the Gund Institute at the University of Vermont, and the Political and Economic Research Institute at the University of Massachusetts states that a public bank would create “over 2,500 jobs” and add hundreds of millions in additional gross state product in the state.

According to the Public Banking Institute, public banks are countercyclical, meaning they are “capable of reducing the negative impact of recessions, because they can make money available for local governments and businesses precisely when private banks decrease lending.”

ANTHONY POLLINA. apollina@sover.net,
State Senator in Vermont, Pollina introduced S. 204, the bill that would grant the Vermont Economic Development Authority a banking license and direct 10 percent of the Treasurer’s bank deposits to VEDA for investment in Vermont.