Nevada County public bank concept floated by local
The idea of a public bank is not new.
North Dakota has been hailed by some of that state’s farmers, academics and a handful of politicians for its state bank. It was one of the only states to have a financial surplus after the Great Recession struck in 2008, according to The American Prospect.
Grass Valley resident Rick Robins said the idea of a Nevada County public bank has been percolating in his mind for about seven years. However, they’d been outlawed in California. That was the case until October, when Gov. Gavin Newsom signed the Public Banking Act.
“Now that it’s legal we’re trying to get it going again,” said Robins.
Robins, a member of Main Street Forum Nevada County, said he’s gearing up to build a business plan around the concept locally, but he needs to find a banker who knows “all the nuts and bolts” of establishing a bank to help him. In 2013, Robins and other public bank supporters established a survey to determine the county’s credit needs.
Simply put, a public bank is a financial institution owned by a government body, funded with taxpayer money and accountable to elected officials and civil servants. Public banks, said Robins, don’t make direct loans. Rather, they work in tandem with local banks, allocating a large portion of money to them that then gets distributed in a loan to others.
Public banks have no shareholders. They reinvest profits into community projects at a low cost and need not charge interest, according to the Public Banking Institute. Additionally, public banks, like the one in North Dakota, work with other financial institutions, only dealing directly with North Dakotans when requested to by the private sector, according to president and CEO of the Bank of North Dakota Eric Hardmeyer. In that situation, the governor appoints the board of directors for the bank.
For example, in Nevada County a public bank would provide part of any loan given to a local bank or credit union to a community-minded project. Examples include making homes energy efficient, fire abatement, student loans for local classes, the cannabis industry or whatever locals find important, said Robins.
The local bank, said Robins, would need $10 million to be established.
There are notable difficulties embedded in the Public Banking Act, making a local public bank difficult, according to Robins and local officials.
The law ensures that only two public banks statewide are licensed in a given year and that no more than 10 banks would be authorized at a given time. The public bank must also come from a chartered local entity, which Nevada County is not. That means Robins would have to put that proposal on a ballot for a future election.
No such measure currently is slated for the March or November ballots in Nevada County, but Robins said he wants to make the push for a future ballot.
The obstacles currently make District 1 Supervisor Heidi Hall wary of the institution.
“The concept is intriguing,” Hall said in an email, “but starting a public bank in Nevada County is not feasible. The creation of a public bank would be costly and time consuming and there’s no clear source of capital.”
Despite the obstacles, Robins said he’ll continue to push forward — and seek a banker to help him.
To contact Staff Writer Sam Corey, email firstname.lastname@example.org or call 530-477-4219.
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