“State Bank” a Recipe for Cronyism

Vermont State Senator Anthony Polina is at it again pushing the idea of a “State Bank”.  His latest push is chronicled in Rob Mitchell’s latest Vermont Press Bureau article:

Currently, the vast majority of incoming tax money or federal money the state receives goes to TD Bank, which earns a profit and charges fees, Pollina says. Through a state bank, which would use existing local banks or a state agency like the Vermont Economic Development Authority, the state could earn interest and use the money to re-invest in businesses or student loans, advocates say.

In 2010, a preliminary analysis by the Vermont Legislative Joint Fiscal Office wrote the system has a number of potential long-term benefits, but it would likely have a complicated and controversial transition.

Committee hearings have gathered testimony about the possibility, but banking representatives have opposed the measure.

Banking representatives are not the only ones who should be opposing this idea.  Having the state be in control of an entity that would take money and “re-invest in businesses” is a recipe for cronyism.  We already have an energy policy that is a recipe for cronyism that True North Reports has written about here:

The potential for cronyism here goes far beyond what we saw in the now infamous Solyndra scandal. That scandal involved guaranteed loans, while H.468 produces guaranteed customers. With that in mind it might be a good idea to inquire as to which energy interests are behind this bill. Again as John McClaughry pointed out in a previous commentary entitled “Unicorn Power for Vermont“, the effect of H.468 is to move more quickly in the direction of a VPIRG backed bill that Shumlin championed four years ago. VPIRG has a history of inserting itself into our energy debate as a champion of wind power as noted in a 2006 Barton Chronicle article:

The problem lies on VPIRG’s board of directors. Two members, Matt Rubin and David Rapaport, are the principals in East Haven Windfarm, the company that wants to put four demonstration wind towers on East Mountain and, ultimately, erect 50 windmills on the ridge lines of Essex County.

Mr. Rubin, president of East Haven Windfarm, is former chairman of the VPIRG board. Mr. Rapaport, Windfarm’s vice president, is VPIRG’s former executive director. Both stand to make money if the state approves their projects, and lose money – possibly a good deal of money – if it doesn’t.

So it’s not about the public interest, after all. VPIRG faces a good old-fashioned conflict of interest, just the sort of thing it was organized to protect us from.

As pointed out in that article, in dictating energy purchases, H.468 guarantees customers for favored companies who are “SPEED” approved facilitators.  In contrast, the Solyndra scandal involved guaranteed loans.  With a state bank, politicians can cover that base as well for politically connected supporters.