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Appleton man continues fight to establish state bank

By Gabriel Blodgett | Sep 11, 2019
Photo by: Gabriel Blodgett Randall Parr is a committed advocate of a state bank for Maine.

Appleton — For the last decade, Appleton resident Randall Parr has devoted much of his time to the creation of a Maine state bank. He has helped draft bills sponsored by State Sen. Dave Miramant, D-Camden, at the last two legislative sessions in support of a state bank, testified several times before legislative committees, and written a book titled “Occupying a New Maine Economy.”

Behind all this work is the fervent belief that such a bank would greatly benefit the state’s economy. Whereas the state treasury currently invests much of its reserves in institutions and companies outside the state, Parr believes keeping that money in a state bank would allow for greater investment in small business, agriculture and renewable energy, as well as helping to shield the Maine economy from national and global recession.

Parr, who was born in Camden in 1944, moved to Appleton in 2010 after years of working as a consultant, teacher and more recently as a data systems architect. He also served as district coordinator for the Maine Department of Commerce and Industry in Rockland in the 1970s.

Parr cites the Bank of North Dakota as a prime domestic example of the possible benefits of such an endeavor, while also noting the success public banks have had in Switzerland, Germany and China. More recently, American Samoa established a state bank that was given official status in 2018.

The current Maine treasury portfolio includes commercial paper investments -- short-term, low-interest investments -- in companies and banks including Toyota and J.P. Morgan that Parr notes have little to no presence in Maine and have been forced to pay millions of dollars in settlements to the U.S. Justice Department.

In 2013, Toyota was fined $1.2 billion by the Justice Department for concealing safety defects and in the same year, JP Morgan was fined $13 billion by the Justice Department for overstating the quality of mortgages leading up to the 2008 financial crisis.

Parr notes that Maine also has more than $250 million invested in United States entities such as Fannie Mae and Freddie Mac, which had to be bailed out following the 2008 collapse.

As opposed to these investments, Parr believes a state bank would facilitate more lending within the state, increase Mainers’ access to cash, and help boost an economy that, according to “An Overview of the Maine Economy,” written in 2016 by James Breece of the University of Maine School of Economics, ranked 46th in the nation in economic output. The ranking was down from 42nd in 2004 while per-capita personal income grew only 3 percent in 2014, putting Maine at 33rd in the nation on this measure.

According to Parr, a state bank could also insulate the state from global recession. In the 2008 recession, the North Dakota economy performed well compared to other states.

While there is some debate as to how much of that performance was due to the state bank, as opposed to the economy’s reliance on agriculture and energy industries, since that time, several states have looked into the idea and commissioned studies similar to the one called for in LD 1472. However, there have been few steps taken beyond preliminary research.

Part of the problem for states such as Massachusetts, which established a commission to study the feasibility of a state bank in 2011, has been that they are very different economically from North Dakota. A study by the New England Public Policy Research Center in 2011 at the behest of the Massachusetts commission notes that these differences make comparisons difficult. But Parr argued that with a rural, aging population, and an economic focus on small business and agriculture, many of the benefits felt by North Dakota would be similar in Maine.

The proposal for a Maine state bank was first put forward by former representative Portland Democrat Diane Russell of District 39 in 2013. Each subsequent session has brought another attempt, but the bills have all failed to make it out of committee.

The latest attempt, LD 1472, drafted in part by Parr and sponsored by Miramant, proposed the creation of a commission to look into the feasibility of establishing a state bank. The proposed commission would be made up of state legislators and representatives from a number of different sectors, including small business, banking and agriculture that, by 2030, would make a recommendation to the Legislature.

In his testimony before the Health Coverage, Insurance, and Financial Services Committee, Miramant said, “This is a bill that keeps returning to the Legislature because it has great potential to keep our hard-earned dollars here in the state. While there is only one state bank in the country, in North Dakota, it is celebrating its 100th anniversary this year and has been successful in serving the needs of the citizens of that state.”

Miramant went on to say “In past legislative sessions, bills have laid out plans for establishing a state bank for Maine, but I don’t believe that the details can be properly assessed without more information for the Legislature. Maine is a state much like North Dakota, in that it has large rural areas where economic development is essential. A state bank could help facilitate those efforts.”

The list of people testifying against the most recent bill included representatives of the Finance Authority of Maine, Maine Bureau of Financial Institutions, Maine Credit Union League and Maine State Housing Authority. Parr believes these institutions are worried the proposed legislation would limit their influence.

Many of the arguments against the bill centered on the high cost of establishing the bank and the existence of institutions that make the creation of a state bank unnecessary. FAME Chief Executive Officer Bruce Wagner called the proposal a “solution in search of a problem.”

Parr said the problem is clearly that Maine has a stagnant economy and that Mainers suffer from a lack of liquidity and access to cash, problems that existing institutions have repeatedly failed to address.

Parr says a critical distinction between these institutions and a state bank is that finance authorities like FAME do not create money. They merely receive money through tax revenues and lend it out, whereas when banks grant a loan, promissory notes receivable are debited to create money.

Parr says this distinction is why North Dakota’s economic statistics such as foreclosure rate, loan repayment rate and personal income are more favorable than Maine’s.

Other critiques of the proposal include that it would have a detrimental effect on small banks in the state. Parr believes the impact of a state bank would actually be positive. Not only would the state bank not pursue its own customers, but it would be able to underwrite loans from small banks, enabling them to increase their lending power. He noted that the Small Bankers Association of North Dakota strongly supports the state bank for similar reasons.

Despite the repeated failure of state bank bills to make it out of committee, Parr remains committed to the issue and plans to continue his efforts to generate exposure and enthusiasm for the project, which he believes would have a positive impact on Maine’s economy.

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Comments (2)
Posted by: Ananur Forma | Sep 11, 2019 16:10

fortunate for us that Randall is here and so dedicated. Thank you Randall.

Posted by: Mary A McKeever | Sep 11, 2019 13:41

Sounds good to me. Keep it in State!

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