Michigan considers state-run bank

A state representative in Michigan introduced a package of bills Jan 18 to establish a state-run bank. As of now, only North Dakota has such an operation..Rep. Martin Howrylak of Troy hopes this state-run bank — the Bank of Michigan — would focus its operations on state and local needs, such as schools, cities and townships, offering interest rates well below market standards. Theoretically, the subsequent savings would reduce taxes for Michigan residents.."This legislation allows the state to offer reasonable interest rates for targeted projects that benefit the public interest, while generating additional revenue for the state's general fund," Howrylak said in a statement. "The State Bank of Michigan would be a win-win for taxpayers, schools, local governments and local banks.".The Bank of North Dakota made $136.2 million in 2016 and will celebrate its centennial in 2019. As much as targeting specific state projects, it works with community banks as an additional funds source..Howrylak's model would replicate that. The state-run bank would partner with banks to make loans to Michigan farmers, nonprofits using funds for rural business development, and parks or recreational properties owned by the Department of Natural Resources..A seven-member, governor-appointed advisory board would guide the bank, including representatives from the private banking sector. The Department of Insurance and Financial Services and an Auditor General would be charged with oversight of the bank.."This is a fiscally-responsible solution for taxpayers," Howrylak said. "The [Bank of North Dakota] provides loans significantly below market interest rates to local governments, smaller banks and businesses. Local governments and schools use these savings to pump more money into classrooms, expand access to infrastructure funding and keep tax rates low.".Howrylak's bills were referred to the House Regulatory Reform Committee for consideration.