MONTPELIER, Vt. — At least 20 Vermont communities are being asked to support the creation of a public bank by approving resolutions at town meetings.
Supporters argue that instead of keeping its money in large global banking institutions, the state could save money, create jobs and eventually generate revenue by creating a state bank.
Gary Flomenhoft, of the University of Vermont, suggests taking the Vermont Economic Development Authority, an existing nonprofit agency that is already making loans, and turning it into a bank.
There is a bill pending in the state Senate that would start that process by giving the agency a banking license and putting 10 percent of the state’s funds into it.
“We’ve already got very successful financial lending agencies with a good track record,” he told Vermont Public Radio. “Why reinvent the wheel? Just give them the ability to take deposits.”
Opponents, including state Treasurer Beth Pearce, say that if Vermont’s relatively small cash assets were in a state bank, that money would be at greater risk if loans go bad.
And it could jeopardize the state’s bond rating, which would make it harder for the state to borrow money, she said.
A poor bond rating “turns around and affects every Vermonter,” she said. “Whether it’s affordable housing, whether it’s a college education for students, commercial development in the state, commercial energy improvements in the state. Those are the types of things that benefit from our bond rating. I don’t want to put that at risk.”