News roundup, 26 June 2025

- Banks in the US have been reversing decisions made during the Biden administration and reinvesting in fossil fuels. Notably, this is disproportionately an American trend; most of the banks offering financing in this sector are US-based, suggesting that these moves may be motivated by other considerations than the objective quality of those investments. Perhaps the fact that states like West Virginia and Texas are actively punishing institutions for divesting from the sector has something to do with it.

- The Trump regime's "One Big Beautiful Bill" includes a provision that charges a tax on investment income paid to residents of countries that the US considers to have "unfair or discriminatory" taxes, such as Canada's digital services tax. Of course, this has the potential to cause investors from such countries to invest elsewhere, potentially driving millions in investments out of the US.

- The proposal to put a build a migrant detention centre in the Everglades, dubbed "Alligator Alcatraz", is going ahead; construction on the facility has begun at an old airport despite concerns from environmentalists as well as human rights activists.

- Hedge funds are buying subrogation claims from insurers, often at steep discounts, in the hope of profiting in the event that the fires are deemed to have been caused by Southern California Edison's equipment. California has a fund in place to pay out such claims and protect utilities from bankruptcy; essentially the state is getting all the downsides of public ownership with none of the upsides.

- Geoffrey Hinton, a Canadian AI researcher who won the Nobel Prize in physics for work on neural networks, is warning that Canada needs to regulate the technology more stringently. He will be meeting with AI and digital innovation minister Evan Solomon to discuss the matter but there is a lot of resistance to the idea, and Solomon himself has said that he has no plans to reintroduce legislation that died on the order paper when the last election was called.

Manitoba's credit unions oblivious to downturn

While commercial banks around the world are in dire straits, their cooperative cousins, at least in Manitoba, are doing just fine, thank you very much:

Somebody forgot to tell Manitoba's credit union system about the economic downturn.

The province's 44 credit unions posted double-digit and near-double-digit returns across their major indicators in 2009 -- deposits were up 10.5 per cent to about $15.9 billion, loans increased 11 per cent to about $13.5 billion and assets jumped 9.8 per cent to about $15.9 billion.

From the Winnipeg Free Press.

State-owned bank succeeds -- in an unlikely place

Apparently 46 out of 50 US states are more or less insolvent. One of the ones that isn't is a bit of a surprise:

California [has] avoided bankruptcy for the time being, but 46 of 50 states are insolvent and could be filing Chapter 9 bankruptcy proceedings in the next two years.

One of the four states that is not insolvent is an unlikely candidate for the distinction - North Dakota. . .

What does the State of North Dakota have that other states don't? The answer seems to be: its own bank. In fact, North Dakota has the only state-owned bank in the nation. The state legislature established the Bank of North Dakota in 1919. Fleetham writes that the bank was set up to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men. By law, the state must deposit all its funds in the bank, and the state guarantees its deposits. Three elected officials oversee the bank: the governor, the attorney general, and the commissioner of agriculture. The bank's stated mission is to deliver sound financial services that promote agriculture, commerce and industry in North Dakota. The bank operates as a bankers' bank, partnering with private banks to loan money to farmers, real estate developers, schools and small businesses. It loans money to students (over 184,000 outstanding loans), and it purchases municipal bonds from public institutions.

Still, you may ask, how does that solve the solvency problem? Isn't the state still limited to spending only the money it has? The answer is no. Certified, card-carrying bankers are allowed to do something nobody else can do: they can create "credit" with accounting entries on their books.

From here. A publicly owned bank is something us lefties have been calling for since long before I was born, but I had no idea that this was in practice in the US, much less in that state. Maybe I should stop making fun of North Dakota. Meanwhile, California is reduced to paying their state employees with IOUs...