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Montana Legislature Debates the Risks and Rewards of a State Bank

second bank of the U.S.
Photo courtesy of Kevin Burkett/Flickr

If passed, HB 474, would put Montana in a unique position as one of only two states, the other being North Dakota, that have a state-owned bank.

According to the bills text, the purpose of the State Bank is to:

Promote agriculture, education, community development, economic development, commerce, and industry in this state by:

(1) acting in partnership or taking a leadership role with other financial institutions, economic development groups, guaranty agencies, and state agencies to serve as a resource for matching funds committed by persons doing business within this state; and

(2) actively engaging in stimulus activities during economic downturns through investments or coordination of other activities within the board of investment’s scope as provided in Title 17.

Backers of a state-owned bank say the system would redirect money from the out-of-state big banks and put the investments and dividends under the control of Montana for the benefit of Montana.

Those against the plan argue that putting investments under the purview of political could be a risky change of course.

Attorney Jim Brown testified against the bill during its hearing today, Tuesday Feb. 19. According to Brown “the biggest hurdle to the bill is a constitutional hurdle set up by our 1972 constitution in that the State of Montana cannot be a guarantor of investments. In other words,  Montana cannot constitutionally extend the full faith and credit of the tax payers dollars to back-up investments.”

Jim Brown:

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