There are ways we could be doing more to protect and build our assets.
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I would like to take this opportunity to thank Bank of America, Chase, Wells Fargo and all the other big offshore Wall Street banks who have taught me and many others so much over the last few years about private financial institutions and credit in the US. Without the record high foreclosures here in Hawaii, I may never have learned about the destructive nature of credit default swaps, the profit that can be made off of foreclosing on military families, or how difficult it is to simply fax documents to mainland loan modification centers.
But now, like so many in Hawaii and around the country, I have learned a lot. For example, banks can only get away with what we and our laws and regulations allow them to get away with. We have also learned that there are other models of banking around the country and around the world that serve families and communities first instead of shareholders and lead successful economic development and asset building for The People and not just for The Corporate Interests. This is good news.
Last year, two bills were introduced relating to the creation of a State Bank for Hawaii. This year, five bills have been introduced between the House and the Senate and several of those bills are passing quickly through the legislature. Last year, the question was “is a state bank right for Hawaii?” Now the question seems to be “what kind of state bank is right for Hawaii?”
There is a lot of money at stake. For example, did you know that the State of Hawaii deposits more than $4,000,000,000,000 (that is billion, not million) a year of public tax and bond revenue in private banks including over a billion dollars in Wall Street banks and $3 billion in a some of the local banks?
According to some of the banking industry lobbyists who are opposing anything to do with a state bank, including even the creation of a task force to study the concept, a State Bank for Hawaii would ‘create unfair competition’ for local banks. I do not believe this is true, as none of the current proposals for a State Bank for Hawaii would accept deposits or accounts from individuals, would not initiate mortgages and would not offer other individual products like retirement IRAs or CDs.
Opposition to a State Bank for Hawaii have also testified that “The soundness of Hawaii’s financial institutions could be compromised and jeopardized by transferring state monies to a state-owned bank.” Surely our local banks have not grown dependent on public funds to keep their private banks afloat?
Here is a quick rundown of some of the State Bank bills so far this session:
SB2394: This bill passed the House Committee on Consumer Protection and Commerce Wednesday, March 21. This bill creates a state bank that would take responsibility for helping military families facing foreclosure to negotiate with their mortgage company and offer to buy the mortgages for cents on the dollar, “cleanse” the title (repair damage done by robo-signing and other failures in the chain of title), and sell the house back to the family at an affordable price.
HB 1033: This bill calls for the creation of a Clean Economy Bank for Hawaii and passed the House Finance Committee in February and the Senate Committee on Energy and the Environment Tuesday, March 20. I had the opportunity to attend this hearing and the room was packed with supporters from all over Hawaii, the mainland and even Van Jones came to speak on behalf of the bill. Next, this bill will be heard by Senate Ways and Means.
HB 1840: This bill has passed the House Committees on Economic Revitalization and Business, Consumer Protection and Commerce, and Finance in February and was passed out of the Senate Committee on Commerce and Consumer Protection last week. HB 1840 creates a Task Force to study the feasibility and cost of a creating a State Bank for Hawaii. Next, this bill will also go to Senate Ways and Means.
The current discussions around the creation of a state bank for Hawaii are not new to this legislative session or the previous session. In fact, Native Hawaiian activists on Maui and Oahu have been discussing the concept and benefits of a state bank since the 1980’s, and I can understand why: it is painful to watch our state struggle to make ends meet when there are ways we could be doing more to protect and build our assets.
Rev. Tasha Kama who testified at Tuesday’s hearing on HB 1033 and who has been helping lead discussions of a state bank for Hawaii for many years, put it best when she said: “There is an opportunity cost for Hawaii in the way we are currently allowing only for-profit, private banks make so many of the decisions about our public funds. Don’t our values call us to consider other models that could better serve the people of Hawaii?”
No matter what happens on these bills this year, people who care about the future of Hawaii are asking key questions about where our public funds get deposited, are we getting a fair return on our public investments and who should profit off of holding public funds. Thanks to everyone who is helping to ask and answer these important questions.
About the author:Rev. Sam Domingo is the pastor of Keolumana United Methodist Church, and has been President of FACE Oahu for almost two years.
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