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CONLEY COMMENTARY (WSAU) I’ve spent some time talking about the bad ideas of New York City mayoral frontrunner Zohran Mandhami. Free daycare, free subway rides, government subsidized grocery stores are all ideas that won’t work.
Here comes another bad idea from a candidate for governor in Wisconsin. Francesca Hong is the most liberal candidate in the race. She has little chance of winning, but even her bad ideas should be pushed back on. She proposes a state-run bank. It would make loans that private banks won’t.
Hmmm. What could possibly go wrong?
First, private banks make their money by lending money. They’re looking for viable loans and want to say “yes”. If the bank turns you down for something like, say, a car loan or a mortgage – what are the reasons. Perhaps you’re a poor credit risk – like you have a bankruptcy or you haven’t repaid past loans. If you’re told ‘no’ for a mortgage, perhaps your downpayment is too small or your monthly payments will be too high based on your income. But Francesca Hong’s state-run bank might say ‘yes’ and she promises they would have lower interest rates than regular banks.
Who would cover the costs when these loans go bad? You and me… the taxpayers.
There’s another important question about the state-run bank. Liberals like Francesca Hong were on the student loan forgiveness bandwagon, which was, thankfully, blocked by the courts. Would all the loans taken out at the state-run bank be intended for repayment? Or, if the cause is one favored by liberals, be eligible for forgiveness? Would we, the taxpayers, be on the hook for those loans too.
Who else might be lining up at the door of the state-funded bank to borrow money? For sure, politically favored cases. Would a solar farm qualify for a 30-year loan? The solar panels are only good for 20-years? Would politically connected donors be looking to borrow at below market rates? The potential for corruption and sweetheart deals are overwhelming.
Commercial banks serve a valuable purpose. They examine who is and isn’t a good risk, and they lend accordingly. Francesca Hong’s state run bank would quickly become a piggy-bank for her political favorites. It’s a bad idea.
Chris Conley
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