A State Bank: The Solution for Michigan Economic Stability and Prosperity By Dan Osterman

Bank top left(Comment: by R Al Bain, Our legislators in Lansing continue to advocate and promote capital cronyism through the “Friends and Family” program along with the “Business Buddies” fund that’s not a good return on investment for the taxpayers of Michigan and only benefits the aforementioned and politicians in a pay to play scheme.) 

When it comes to the economy, government does have a necessary and proper role to protect a functioning free market and the rights of individuals to pursue their economic interests, maintenance of public infrastructure, and the undisturbed flow of commerce across borders. 

Essential to these functions is to support a banking system that seeks to serve the community, act as an incubator for businesses, and to protect the system from those who attempt to abuse it.

The actions of the Federal Reserve System, in concert with the Wall Street bankers, has failed in its stated purpose, while repeatedly stealing the wealth of Americans; which has been felt no greater than in Michigan and in particular, Detroit.

If the Michigan legislature is serious about “reinventing” the state and reviving Detroit, their first priority should be a healthy and expanding community banking system, which can only be achieved by the establishment of a publicly-owned state bank. Bank middle right

There is no better model of success than the state of North Dakota; having the only state bank in the country. During the 2009 financial crisis, the Bank of North Dakota (BND) not only provided a dividend to the state but was responsible for North Dakota achieving the lowest unemployment in the nation, while maintaining the most community banks per capita; without a single bank failure.

In order for Main Street businesses to survive and begin to rebuild the lost wealth of Michiganians, a local community banking system will have to play a lead role; and a publicly-owned state bank, is the lynchpin to success. In a 2012 Dallas FED report by Gunther and Klemme it was stated, “Community banks are not only a major source of credit for job-creating businesses but also a stable one.”

A Michigan economic recovery will only be possible when the majority of the money which circulates through its economy, stays in Michigan, and is no longer siphoned away by Wall Street.

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  10 comments for “A State Bank: The Solution for Michigan Economic Stability and Prosperity By Dan Osterman

  1. March 14, 2014 at 10:18 am

    Not entirely sure I buy into the 'publicly owned bank' thing. A restructuring of regulatory that allows money holders to grow banks outside of federal control might be a better way to do it.

    Admittedly, this is not an area of expertise for me however.

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    • dennis milosch
      March 14, 2014 at 2:25 pm

      Dan Osterman has a solution that can't be worst then the federal disaster. You need to give him a full hearing. Many other states are also looking at this as a means of the federal foot off our backs. Original sin make anything that humans do as suspect. At least the money will be closer to home!

      Dennis Milosch

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  2. March 14, 2014 at 1:21 pm

    I've addressed this previously.

    It would be bad.

    Let's leave tax payers on the hook for junk loans?

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    • Corinthian Scales
      March 14, 2014 at 3:06 pm

      Oh, c'mon now, Jr.

      What possibly could go wrong?

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  3. Dan Osterman
    March 14, 2014 at 3:01 pm


    Why would taxpayers be on the hook for "junk" loans. They would only be backing loans made by the state bank. Did you know the Bank of North Dakota has a loan default rate of less than 2%, which is well below the national average? Did you know that the BND has generated 100's of millions in revenue for the state, and had the largest surplus in its history in 2009 during the financial crisis? It continues to operate at a profit and last year had ROE (Return on Equity of 19%)?

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    • Corinthian Scales
      March 14, 2014 at 3:31 pm

      Really, Mr. Osterman. From everything I see it appears you're doing fine exactly the way things are now.

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    • Jason
      March 14, 2014 at 4:14 pm

      First of all, we need to get over the idea that government should be operating at a profit. Government has a limited role, and being the bank is not a part of that role in either a federal or state situation. North Dakota is welcome to enjoy its success and does so for a number of reasons too lengthy to go into here. (Just think credit cards and usury. )

      JR is correct in his concern for bad paper. But in the end, a bank is a business, and a state is not. (a business)

      Its all a great thought exercise, but would be poor policy IMO.

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      • Corinthian Scales
        March 14, 2014 at 5:08 pm

        Oh noes!

        First of all, we need to get over the idea that government should be operating at a profit.

        *Gasp!* But, but, but... whatta 'bout Teh #ComebackState

        J-man, I honestly don't know if it's even possible to get that through all the rubes thick skulls, anymore. Limited role? Forgettaboutit...

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    • March 14, 2014 at 4:44 pm

      Why would the tax payers be on the hook for junk loans?

      Oh, I don't know. Maybe because it's a STATE BANK?

      So let me ask you this: What is to prevent state government from writing legislation that would, BY FORCE, put private banks at a disadvantage?

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