SEP 01 2010

State Bank of California

Miscellaneous

California should seriously consider passing a law that forms the State of California doing business as the State Bank of California.   Its funding model would be to serve as the depository for all state tax collections and fees.  With this captive deposit base, the bank could pay a competitive rate to the state treasurer.  Then, these deposits could be turned into loans within the state of California.  The bank would not participate in the FDIC; it would be backed by the full faith and credit of the State of California.  It is a novel mechanism for helping our state recover from its economic doldrums.

Impossible, you say?  The State of North Dakota already did this–in 1919.

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