Banks; joint subcommittee to study whether to establish those to be operated by State. (HJ62)

Introduced By

Del. Bob Marshall (R-Manassas)


Passed Committee
Passed House
Passed Senate


Study; whether to establish a bank operated by the Commonwealth; report.  Establishes a joint subcommittee to study whether to establish a bank operated by the Commonwealth. The study shall consider recommendations for legislation to establish a state owned, controlled, and operated bank. Read the Bill »


Bill Has Failed


01/11/2010Prefiled and ordered printed; offered 01/13/10 10103753D
01/11/2010Referred to Committee on Rules
01/18/2010Assigned Rules sub: #3 Studies
01/28/2010Subcommittee recommends laying on the table
02/16/2010Left in Rules


Angus mac Lir writes:

Thanks for offering this wise bill. You took a brave step. Thanks! and better luck next time.

Potomac Oracle writes:

The systemic method for the elimination of interest debt is to control the quantity and supply of credit. Homeowners, businessmen, farmers, students, etc. will need access to low cost credit to refinance debt, maintain inventories, etc. In Virginia, and in this nation we allow the private banking system to control the cost of funding public programs, and private progress. That has not been working for us lately.

The systemic solution is to do what N. Dakota has been doing for nearly 100 years...managing its own state owned bank.

Some experts insist that we must tighten our belts and start saving again, in order to rebuild the “capital” necessary for functioning markets; but our markets actually functioned quite well so long as the credit system was working. We have the same real assets (raw materials, oil, technical knowledge, productive capacity, labor force, etc.) that we had before the crisis began. Our workers and factories are sitting idle because the private credit system has failed. A system of public credit could put them back to work again. The notion that “money” is something that has to be “saved” before it can be “borrowed” misconstrues the nature of money and credit. Credit is merely a legal agreement, a “monetization” of future proceeds, a promise to pay later from the fruits of the advance.

Banks have created credit on their books for hundreds of years, and this system would have worked quite well had it not been for the enormous tribute siphoned off to private coffers in the form of interest. A public banking system could overcome that problem by returning the interest to the public purse. This is the sort of banking system that was pioneered in the colony of Pennsylvania, where it worked brilliantly well.


The Non Partisan League (NPL), born in 1915, united progressives, reformers, and radicals to return control of North Dakota's government and economy to the people. Taking leadership of the state in 1919, the NPL formed the Bank of North Dakota (BND). Today it is the only state-owned bank in the U.S.

The bank is used as a tool for economic development. A beginning farmer revolving loan fund was originally established through a transfer of funds from the Bank of North Dakota's profits. With its' agricultural loans the bank has developed a reputation for being more lenient than other banks in pressing foreclosures.

Under the “fractional reserve” lending system, banks are allowed to extend credit (create money as loans) in a sum equal to many times their deposit base.

With a uniform 10 percent reserve requirement, a $1 increase in reserves would support $10 of additional transaction accounts [loans created as deposits in borrowers’ accounts.

The 10 percent reserve requirement is now largely obsolete, in part because banks have figured out how to get around it with such devices as “overnight sweeps.” With an 8 percent capital requirement, a state with its own bank could fan its revenues into 12.5 times their face value in loans (100 ÷ 8 = 12.5). And since the state would actually own the bank, it would not have to worry about shareholders or profits being siphoned off. It could lend to creditworthy borrowers at very low interest, perhaps limited only to a service charge covering its costs; and it could lend to itself or to its municipal governments at as low as zero percent interest. If these loans were rolled over indefinitely, the effect would be the same as creating new, debt-free money.

Dangerously inflationary? Not if the money were used to create new goods and services. Price inflation results only when “demand” (money) exceeds “supply” (goods and services). When they increase together, prices remain stable.