A Model for a State-Owned Bank

Florida will be having an election for Governor in November of this year. One of the candidates, Farid Khavari, has as part of his platform a state-owned Bank of Florida. He states that the money this bank would earn would go into the State Treasury, and proposes the following formula:

* 2%, 15-years mortgage
* 2% energy loans
* 2% student loans
* 3% car loans
* 3% business loans
* 6% credit cards
* 6% CDs

I am of the opinion that creating banks owned by the government (the people) is the only hope we have for turning the global meltdown around.

No having an adequate regulatory framework prevents banking meltdowns Australia proved this when none of there banks went under during the credit crunch . Here in New Zealand Kiwi Bank is a SOE created by the last Labour government with the goal of having a home grown bank giving Kiwis a alternative to the largely Australian owned banks . Kiwi Bank has been far more successful then its supporters or detractors ever imagined .

While I have trouble swallowing the notion the government has any business running a bank I can see how Kiwi Bank could be used to further the the start up of new small business . Given the private sector record of trashing state assets in New Zealand a bank that is locally owned is required . Opening up Kiwi Bank to Mum and Dad investors would be a sensible measure because the government cannot keep funding the expansion of the bank . If Kiwi Bank goes to private ownership then there needs to be a sound regulatory framework to ensure it remains in local hands and suits national interests .

Originally posted by xpert11
No having an adequate regulatory framework prevents banking meltdowns

Not having regulations prevents meltdowns?

Originally posted by xpert11
. . . Kiwi Bank is a SOE . . .

What does "SOE" stand for?

Originally posted by xpert11While I have trouble swallowing the notion the government has any business running a bank . . .

This was the argument used in the United States that resulted in private banking interests taking hold of our money supply.

I was inspired by the idea of a state-owned bank with interest being paid in place of taxes! in Ellen Brown's Web of Debt.

reply to post by Mary Rose


I like the rates on this new formula, but why would you want a government owned bank? You used parenthesis' to say (by the people)...
Are you assuming that if the government owns something, it's really owned by the people?
Because of tax money?



Anything the gov't touches, immediately falls apart.
Why on Earth would you want the gov't to own banks?

Bahh....nevermind. Bankers and Gov't are one in the same.
Corrupt.

reply to post by havok


The government is corrupt right now! That is for sure.

But I think a state-owned bank would work if the government were not bought and paid for by powerful, private interests. So I am of the opinion that other things need changing besides the monetary system. There needs to be election reform as well. I think political contributions and advertising need to be banned and elections should be wholly paid for by the tax-payer. I would like to see political parties become obsolete, too. Just have candidates.

In short, we need a new paradigm altogether.

reply to post by Mary Rose


I concur.
I also believe in dis-mantling the lobbyists' too, but that's another topic.


I see the cure-all is reverting back to state's rights and people's power.
Gov't in itself is totalitarianistic in nature.

The only thing gov't should be allowed todo is decide if a law, created by the state, is legal or not. Beyond that...there is no need for it.
The people choose who they want to help decide with laws.
Not, in essence, run the country.
To me, the POTUS has turned into a dictatorship decades ago....

But, I am all for state's rights and individuals rights....not uniform federal rights.

reply to post by Mary Rose


Sheez you misunderstood me what I was saying is that the regulatory frame work across the ditch prevented any of the Australian banks from melting down . SOE is short for State Own Enterprise fairly straight forward stuff .

Cheers xpert11.

Originally posted by xpert11
No having an adequate regulatory framework prevents banking meltdowns

Originally posted by Mary Rose
Not having regulations prevents meltdowns?

Originally posted by xpert11
Sheez you misunderstood me what I was saying is that the regulatory frame work across the ditch prevented any of the Australian banks from melting down

I misunderstood you?

“No having an adequate regulatory framework prevents banking meltdowns Australia proved this when none of there banks went under during the credit crunch .”

Originally posted by xpert11 SOE is short for State Own Enterprise fairly straight forward stuff .

It’s nice to give the meaning of an acronym or abbreviation when on an international forum where not all members are familiar with them.

reply to post by Mary Rose


I understand now that I thought, in error, that you typed "no" when you meant "not." Sorry for the confusion I created.

So, Kiwi Bank is state-owned now, but you're saying that the government cannot keep funding the expansion of the bank?

Could a state-owned bank use the interest paid on loans in place of taxes?



[edit on 8/1/2010 by Mary Rose]

reply to post by Mary Rose


I'm am sorry for any confusion I caused . To answer your first question a part of the answer is a matter of practicality and part politics . Up until privatization in the 80's everything from the New Zealand Railways to the post office was run by the government .The private sector engaged in asset stripping more then anything else . Now the question or point of view I would put forward is the following .

Why should Kiwi Bank expansion or growth be continued to be funded by the tax payer when it is currently a commercial success ?

To further side track a bit but to help a alluded to things in New Zealand conservatives either think that SOE should operate on a for profit basis or not exist at all . Left wingers are more inclined to think that SOE should have more policy orientated goals rather then just making a profit . For instance when the last Labour government brought back the country rail network with the idea of copying the European model for that mode of transport .

Back to Kiwi Bank .

Kiwibank – the brand that brought local banking back into fashion – is axing more than 20 of its branches, angering customers who bought into its patriotism-based advertising.

Tripe said Kiwibank faced the same challenge as any other bank in making branches work – generating enough revenue to surpass running costs. In the case of the 20 closures, Kiwibank had responded no differently to the major banks.

Source

Above is a more relevant example of what I am talking about . My view is that unprofitable branches should not be funded by the tax payer not that there was any hint of that happening . Let Mum and Dad investors fund Kiwi Bank capital especially since the government wants to try and encourage investors away from the housing market . As for your second question you deserve merit for thinking outside the square . But I think in practice it would be to tricky to balance out the need for the bank to cover its costs plus fund the government if it is a commercial rather then a central bank .

Originally posted by xpert11
As for your second question you deserve merit for thinking outside the square . But I think in practice it would be to tricky to balance out the need for the bank to cover its costs plus fund the government if it is a commercial rather then a central bank .

I think if there were a new paradigm established where private bankers were no longer in control of the monetary system, nothing would be the same. It would mean the people were in control. It would change the military budget. It would probably free suppressed energy technology. Entrepreneurship could flourish because small businesses could have access to credit. The money we now pay in taxes could be spent on productivity in the economy instead.

I think the idea sounds so good we think it can't be possible. But I think it is possible and if we were to actually have a state-owned bank issuing loans and using the interest payments to finance the government - we would have a renaissance.

I love this idea but I think allot of Americans will hate it. This is very much a socialist policy, as a socialist I love it, I think all banks should either be completely nationalised or at the least the government should be the majority shear holder. Saying that however most of America is very much of the capitalist liberal mind set and this will not be popular based on that ideology.

reply to post by kevinunknown


I like capitalism with government oversight. I don't want state-owned factories or state-owned businesses. I love the entrepreneurial spirit. I want people to be inventors and engineers and creative innovators and be rewarded for their efforts.

But the money - the issuance of currency and access to credit - needs to be under the control of the people. This is providing for the public welfare. Only government can do that.

reply to post by Mary Rose


Capitalism and socialism can work as a hybrid I think it’s called state capitalism were by the state plan the economy but the goal is to make a profit that goes back into providing services. It is possible for private enterprise to exist in a socialist state regardless, this ensures that the creativeness that comes with capitalism can still exist. I gave up long ago trying to persuade capitalists that socialism was the next step so i won’t try to change your mind.

Originally posted by kevinunknown
reply to post by Mary Rose

 

Capitalism and socialism can work as a hybrid I think it’s called state capitalism were by the state plan the economy but the goal is to make a profit that goes back into providing services.

I don't think I've ever heard the term "state capitalism" before.

So, you're saying still have private enterprise, but in addition, have state-owned businesses.

Would we still have taxes, or would the profits generated by the state-owned businesses be the only source of revenue?

reply to post by Mary Rose


I don’t know enough about it as an ideology I only really know about the main ones. I have read about it however it is what I said it was the state plans the economy, however it does so to make a profit. Free enterprise can exist in a socialist state, so long as it is fitting with the planned economy of the state. For example the state could say we need to produce 100 tons of cloth per week, so they would contract it out to a private contractor. Or you could still have small privately owned restaurants, bars and even shops and so on however they are controlled by the state thought tough regulation. If we were talking about communism this would not be possible.

Originally posted by kevinunknown
reply to post by Mary Rose

 

I don’t know enough about it as an ideology I only really know about the main ones. I have read about it however it is what I said it was the state plans the economy, however it does so to make a profit. Free enterprise can exist in a socialist state, so long as it is fitting with the planned economy of the state.

It sounds like you're describing a system where only the planning is done by the state and the state does not own the businesses themselves.

That would have to stifle free enterprise somewhat, I would think. If your idea for a new product doesn't fit in with the plan it would not be allowed.

What is the advantage you see in state planning?



[edit on 8/2/2010 by Mary Rose]

[edit on 8/2/2010 by Mary Rose]

[edit on 8/2/2010 by Mary Rose]