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Tuesday, August 8, 2023

Governor Kotek Vetoes Bill to Study Creation of State Bank

 Governor Kotek Vetoes Bill to Study Creation of State Bank


Wall Street and Other Financiers are Big Donors to the Democratic Governors' Association, which gave $4.9 million to Kotek's 2022 campaign


August 7, 2023

Governor Tina Kotek on August 4 vetoed a bill passed by the Oregon Legislature (HB 2763) to set up a task force to study the creation of an Oregon state bank. Such a bank, like the Bank of North Dakota that has been operating since 1919, could save Oregon taxpayers billions of dollars in unnecessary fees to Wall Street vulture capitalists and save Oregon businesses and students additional billions of dollars in the form of lower interest rates.

First, the State of Oregon has over $134 billion of investment funds but has placed much of it with world-wide vulture capitalists, corporate raiders, leveraged buyout artists, and hedge funds. These Wall Street operators charge Oregon huge fees (not fully disclosed), likely over $1 billion per year. They invest almost 100% of the money in enterprises outside of Oregon.

That includes $223 million in “an Israeli company whose smartphone spyware has been used against dissidents, human rights defenders and journalists by repressive regimes” and “two prison companies that run immigrant detention facilities.” -- Associated Press (November 19, 2019) 

Second, both the State of Oregon and its counties, cities, and districts also pay huge fees to Wall Street firms in order to float bonds to pay for public works. The typical fee on $100 million of bonds is $3 - 5 million. Local governments in Oregon typically issue over $3 billion in bonds. That’s at least $150 million in fees to Wall Street every year, not to mention the higher interest rates that Oregon government have to pay on their bonds, compared with the rates charged by the Bank of North Dakota.

So Oregon taxpayers pay Wall Street to "manage" our money and then pay Wall Street again to borrow money that we had in the first place.

We can cut out the middle men. Oregon should use its investment funds for public works (transportation, bridges, water systems), housing, and small business opportunities in Oregon. Oregon local governments should borrow funds from the State of Oregon and avoid the huge cost of floating bonds on Wall Street. See www.orpublicbank.org.

It is not surprising that Governor Kotek would veto even a study of a state bank. Such a study would show the huge benefits a State Bank could bring to Oregon taxpayers and businesses--and students (the Bank of North Dakota makes low-interest student loans). The Kotek campaign in 2022 received $4.9 million from the Democratic Governors' Association, a nonprofit corporation that avoids full disclosure of its donors. "We know, however, that its biggest donors include many Wall Street financiers--who most certainly do not want to lose the billions of dollars they are charging Oregon taxpayers for using their own money," said David Delk, chair of the Oregon Progressive Party.

The State of Oregon could provide low-interest loans through local credit unions and community banks for renovation and weatherization of existing homes. It could provide start-up loans for Oregon's small businesses, instead of funding Wall Street sharks and spyware makers.

Small businesses are the organs of Oregon's economy, and community banks and credit unions are its lifeblood. A State Bank of Oregon could provide capital at lower cost, enabling them to lower the interest on loans, to increase lending capacity, and to help entrepreneurs and farmers access the funds they need to grow our economy.

This veto illustrates the need for campaign contribution limits in Oregon. Oregon politicians receive campaign contributions literally in the millions of dollars. The contributors know what they are buying. Wall Street financiers and hedge fund operators are buying the ability to take literally billions of dollars from Oregon taxpayers for their services that are unnecessary. They charge us taxpayers to invest State money (in businesses almost entirely outside Oregon) and then charge us again to borrow back the money (issue bonds).

To get involved in campaign finance reform in Oregon, visit honest-elections.com.

Wall Street's most rewarding investment is its investment in politicians.