A variety of different methods and models could be used in Colorado including

  1. Self-regulation by statute and by-laws: The Bank of North Dakota model has worked very well for 101 years.  The BND was established by making the governor, the attorney general and the commissioner of agriculture the board of directors of the bank. The board then appointed an experienced banker to manage the bank,  In 1969 they added an advisory board that reviews policies annually and makes written recommendations for any changes to the executive committee and board. State legislation and the bank’s by-laws established the rules governing the bank.  The BND is managed directly by its own executive committee and board rather than by the banking board that oversees private banks licensed in the state. That model would be the simplest and least costly for a public bank for the state of Colorado and has been very successful for the BND.  A state public bank (i) can and should operate with very low overhead, (ii) would make loans in partnership with local private community banks which would serve as the state bank’s front office, with the state bank providing a second tier review of the soundness of the loan, (iii) would avoid speculative and risky loans, (iv) would not pay commissions or fees for making loans, and (v) would invest in new goods and services rather than existing assets or commodities, and by following these practices would not create bubbles.  We believe the better policy would be to follow the BND model. Thus, the bank would not be regulated by the state banking board, which is geared to regulate private banks, but by its own board and its organizing documents, and, once local public banks are formed, they would be licensed and regulated by a separate division of the banking board devoted solely to licensing and regulating public banks, based upon their very different mission and methods of operation.
  2. A public bank as an LLC:  Colorado banking statutes allow an LLC (limited liability company) to apply for a bank charter. Colorado’s LLC statutes allow a non-human entity to own an LLC, and allow an LLC to have only one owner.  Under the Colorado constitution, a home rule city or home rule county can generally do anything as long as it’s not prohibited by the constitution or statute.  There do not appear to be any constitutional or statutory provisions that would prohibit a home rule city or county from owning and operating a public bank. (see OLLS Legal Opinions referred to above).  Therefore, OLLS concluded that a home rule city or county could probably operate a public bank without the need for state legislation if it limited its operations to its own jurisdiction.  For these reasons we believe a home rule city or county could form an LLC to apply for a bank charter. That could work quite well as long as the bank’s enacting legislation incorporates all the necessary governance measures necessary to ensure that the bank serves the public interest, is professionally managed, and is fully protected from political and corporate interference and from conflicts of interest in its governance and operations.
  3. The banking corporation model doesn’t fit: Colorado banking statutes also authorize a banking corporation to apply for a charter.  This requires five individuals to apply for the charter, each of whom has paid for 1% of the capital stock of the bank.  This model could theoretically be used if the individuals were all pledged to solely serve the public interest, but it is such an awkward fit for a public bank that we strongly recommend against it.  
  4. Public banks for non-home rule communities:  Only two of the 64 counties in Colorado (Weld and Pitkin) have home rule so the above opportunity for home rule counties will not be available in most counties unless they adopt home rule by charter amendment.  Therefore, it would make sense to pass state legislation to authorize cities and counties to have publicly owned banks even if they don’t have home rule and to authorize cities, towns, and counties to pool their resources to create a public bank.  California’s statute AB-857 signed into law October 2019 included these measures.  
  5. Public banks as public benefit corporations and cooperatives:  We also propose legislation authorizing public banks to be formed as public benefit corporations and/or as cooperatives, which California’s enacted statute AB-857 also provides. A public benefit corporation is required to serve public purposes and is thus more suitable for a public bank than an LLC form of organization.