Hilary Niles • www.vtdigger.org • October 7, 2013
Proponents of a state-owned “public bank” want policymakers to consider alternatives to depositing taxpayer funds with out-of-state shareholders. The renewed call coincides with a $53 million civil penalty settlement by TD Bank, the state’s primary depository.
The state of Vermont kept an average end-of-day balance upwards of $236 million with TD Bank in fiscal year 2013. The American subsidiary of Canadian banking giant Toronto-Dominion Bank held about two-thirds of all the state’s unrestricted funds and earned about $787,000 for its services, according to a July memo from State Treasurer Beth Pearce to state Sen. Anthony Pollina, P-Middlesex.
Pollina, who is co-chair of the Senate Government Operations Committee, asked how much TD Bank held because he wants to know what would happen if that money never left Vermont…
“Right now, we pay our taxes, the money’s deposited primarily into TD Bank, they take our money, and they lend it out any way they want, not necessarily prioritizing Vermont,” Pollina said. “They lend from to New Jersey to China. They make a profit off our money and that goes into the pockets of shareholders.”
Pollina argues that state government could save on the interest and fees if, instead of depositing money with and then borrowing from corporate banks, “we had the potential to use our own money and essentially borrow from ourselves.”
To help test the theory, Pollina also asked Pearce about 10 years’ worth of bonding the state had sold (almost $300 million in new general obligations), projected bonding in the coming years (more than $80 million annually through fiscal year 2015), the amount of interest paid on said bonds (close to $225 million in the last 10 years) and the cost of bonding through management fees, commissions and other related costs (about $4 million since 2004).
“Preliminary Review of Issues in Adopting a Bank of North Dakota (BND) Model in VT” can be read here.
Memo from VT State Treasurer Pearce can be read here.
Read the entire article here.
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