California Assembly Bill 750 Introduced to Study the Feasibility of a CA State-owned Bank

California Assembly Bill 750 Introduced to Study the Feasibility of a CA State-owned Bank • February 17, 2011

Sponsor: Assemblyman Ben Hueso
Bill: AB 750
Entitled: Bergeson-Peace Infrastructure and Economic Development Bank Act.
Text: AB750 Text

Excerpt: This bill would establish the investment trust blue ribbon task force to consider the viability of establishing the California Investment Trust, which would be a state bank receiving deposits of all state funds. The trust would support economic development, provide financing for housing development, public works and educational infrastructure, provide stability to the financial sector, provide state government banking services, lend capital to specified financial institutions, and provide for excess earnings of the trust to be used for state General Fund purposes. The bill would establish the membership of the task force, which would include designated Members of the Legislature and designees of the Governor, Controller, and Treasurer, and would require the expenses of the task force to be paid by the Senate and Assembly. The bill would require the task force to report to the Legislature by December 1, 2012, on its finding and recommendations relating to the viability of establishing the California Investment Trust, as specified.

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6 Responses

  1. Perhaps someone in California would consider forwarding the PBI newsletter to every mayor in the state.

  2. Great idea, Big John!

  3. Forget the time it takes to do a study. Start a State Bank immediatly. North Dakata is living proof it will work. Their state has none of the problems we do.

  4. This state banking concept is a REALLY BAD IDEA. North Dakota has a fiscally responsible government. California doesn’t. Neither does Illinois, Michigan, New York or any other state deeply entrenched in debt. The way out of debt is to pay off the debt, NOT SET UP A BANK TO BORROW MORE MONEY. This idea is absurd. This just opens a spigot for the legislature to spend at will. Presumably it will give the state an unlimited credit limit. I’m sure the legislature in Sacramento will be leaping with joy – WOW, now we don’t have to worry about those pesky voters voting down our bond measures.

    It sets up a task force consisting of “designated Members of the Legislature and designees of the Governor, Controller, and Treasurer”. Not even officials elected by the people. Then this task force develops a VIABILITY REPORT ON ITSELF?

    The citizens of California, or any other state setting up this type of bank, will lose all control over the spending of the state government. Next thing you know, municipalities will want to set up their own banks as well.

    Doesn’t anyone get it? You handle debt by paying down the debt, not borrowing more money. This banking concept is going to explode the credit supply to state governments (municipalities as well???). That will just add to the inflation of the money supply.

    This is a REALLY BAD IDEA.

    • I read the comments by Mr. Goode and wonder if he understands how a bank works and makes its money. Right now many states pay a premium to banks for “indispensable services” like holding the states money, loaning it out, and providing debt cards so those who need to can use public services. Why should the state GIVE money to a corporation in NY when it could make money or at least break even providing those same services?

  5. This whole thing stinks. However, it will kick the can a good way further down the road.

    Our whole economy, since Nixon took us off the gold standard in 1971, is like a drug addict. The drugs are credit and debt. The best way out is to quit cold turkey (things would be much worse for a short time), and then we’ll be through it in a year or two. Instead governments keep borrowing more money on credit and go deeper in debt. The deeper in debt we go, the more difficult it will be to get off of the credit / debt drugs because of the increased interest. But eventually, the credit / debt drugs will kill the addicted economy. This will happen when the interest will be so large, the gov’t can’t borrow enough money to pay the interest. This will happen when the dollar (or any other fiat currency in question) collapses by becoming unacceptable, such as to the Chinese who loan money to the US gov’t, or to retailers in Utah who accept only gold or silver (now legal in Utah & being proposed in other states).

    Of course, there is Alan Greenspan’s idea that gov’t debt is not a problem, because the Fed can just create whatever amount of money the government needs to pay any debt it decides to take on. Shucks, by this means, we could solve the debt crisis in Europe, Japan, and all the rest of the world. All we have to do is have the Federal Reserve create the money. But who would accept it?

    The only way out is to drastically cut spending and pay down the debt. Otherwise the addict will die and will have to be reborn / recreated. That will take a while. Much better to save the economy we have.

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