Troy Lawmaker Introduces Bill To Start State Bank

LANSING, MI – Michigan Rep. Martin Howrylak, a Republican from Troy, this week introduced bipartisan legislation aimed at the formation of a new state bank, according to an announcement from his office. The state, if the measure is approved, will operate the bank that will be allowed to make loans to Michigan cities and towns, among others.

The bank will not operate any branch locations but will focus exclusively on wholesale loans, according to the statement. Howrylak says establishing a state bank will help all citizens by making loans available to municipalities at below market interest rates.

The bank will also lend to smaller banks and some businesses, particularly those eligible for state subsidies. Howrylak says this ultimately helps the taxpayer.

"Local governments and schools use these savings to pump more money into classrooms, expand access to infrastructure funding and keep tax rates low," Howrylak said in a statement.

North Dakota remains the only state in the nation with its own bank, The Bank of North Dakota. In 2019, the institution will celebrate its hundredth year in operation, and had income of $136.2 million in 2016.

“This is a fiscally responsible solution for taxpayers,” said Howrylak. “As states are looking for ways to reduce spending, many are exploring the idea of a state-owned bank, similar to the Bank of North Dakota," he added.

The state bank legislative package proposes the following actions:

• Establish the Bank of Michigan and authorize it to receive state tax revenue.
• Create an advisory board for the bank composed of seven members appointed by the governor, including representatives from the private banking industry.
• Provide oversight by allowing an Auditor General to audit the bank and prepare an annual financial report.
• Permit the Community Bank of Michigan to lease and sell state-acquired property or partner with other banks and make loans to Michigan farmers; nonprofits using funds for rural business development; parks or recreational properties owned by the Department of Natural Resources that are in need of construction, reconstruction, renovation or maintenance; and government medical facilities for financing.

In addition to the advisory board and the Auditor General’s input, the Department of Insurance and Financial Services will review the state bank’s operations at least once every two years and will have authority to investigate any suspect findings.

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