By David Harris | Flint Journal
March 13, 2010, 1:00PM
AP File PhotosSenate Minority Leader Mike Bishop (left) and Sen. John Gleason.
GENESEE COUNTY, Michigan — Two area lawmakers are part of state Senate Democratic push to establish a state-run bank they believe would make it easier for individuals and small businesses to borrow money.
Supporters say the bank would stimulate the economy and create jobs.
“The banks are just too tight (with lending practices),” said state Sen. John Gleason. “The banks aren’t doing what they need to do.”
Democrats estimate that with an investment of $150 million, the bank could lend up to $1 billion.
Start-up money would come from a economic development bond that voters would have to approve.
It would be similar to a traditional bank, but would focus on economic development rather than profits, Democrats said.
It would be modeled after a similar bank in North Dakota.
The Michigan bank would offer small-business loans, low-interest student loans, low-interest credit cards and agricultural loan programs.
So far, no legislation has been introduced on the idea.
Senate Minority Leader Mike Bishop, R-Rochester, could not be reached for comment on the proposal.
Some local business leaders were receptive to the idea Friday when Gleason spoke at a Flint Area Chamber of Commerce meeting, said Nick Singelis, vice president of the chamber.
“A lot of people, especially in the trades, that can’t even bid on work and get a project going because of the restrictions of the banks,” he said.
“If we can get something like this going, I think it’s going to be able to put an opportunity in place for people currently that don’t have it.”
Not everyone is so keen on the idea.
Michigan Bankers Association spokeswoman Gail Madziar said she doesn’t know all the details of the plans, but she doesn’t think having a state-owned bank will make loans that much easier to get.
“If you take a look at what’s holding back the economy and what’s holding back the lending, it’s not that banks don’t want to lend, it’s that collateral values have dropped,” she said. “The amount that can be lent to you based on that collateral is lower. And that’s not going to change” until the economy picks up.
Unpaid loans could hurt the state’s bottom line, she said.
“I would hate to see taxpayers on the hook for any losses that a state bank might incur,” Madziar said.
The MBA represents 169 banks statewide.
Gleason said he doesn’t see a problem with the state being hung up on bad loans. He said the government would be responsible in giving away the loans.
The Associated Press contributed to this report.
Original publishing can be found here.
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If we can’t trust our banks NOW to manage money sensibly, and certainly can’t trust our lawmakers to manage money well, WHY would we want to have the state manage our money? Just another power grab. It may create jobs but just how many would it eliminate in the private sector???