An Act To Create a Public State Bank
Maine Legislature, Session 127, LD 0024
Committee: Insurance and Financial Services
Sponsors: RUSSELL, BEAVERS
Amends: 5 MRSA §12004-F, 5 MRSA §12004-I, 9-B MRSA §1253, 9-B MRSA §1254

Legislative Document 
No. 24 
H.P. 23 
House of Representatives, January 13, 2015 
An Act To Create a Public State Bank 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
ROBERT B. HUNT 
Clerk 
Presented by Representative RUSSELL of Portland. 
Cosponsored by Representative: BEAVERS of South Berwick. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  5 MRSA §12004-F, sub-§19 is enacted to read: 
19.   
Sec. 2.  5 MRSA §12004-I, sub-§2-H is enacted to read: 
2-H.   
Sec. 3.  9-B MRSA c. 125 is enacted to read: 
CHAPTER 125 
MAINE STREET BANK 
§1251.  Definitions 
As used in this chapter, unless the context otherwise indicates, the following terms 
have the following meanings. 
1.  Advisory committee.  "Advisory committee" means the Maine Street Bank 
Advisory Committee under section 1254. 
2.  Bank. "Bank" means the Maine Street Bank established in section 1252. 
3.  Board.  "Board" means the Board of Directors of the Maine Street Bank under 
section 1253. 
4.  Participation loan.  "Participation loan" means a loan in which one or more than 
one bank, bank holding company, state-chartered or federally chartered financial 
institution, any other financial institution or any other entity that provides financial 
services participates pursuant to a written agreement with the originator of the loan. 
5.  Public funds.  "Public funds" means funds under the control or in the custody of a 
public official by virtue of office. 
§1252.  Bank established; purposes 
The Maine Street Bank is established and is a public body corporate and politic and 
an instrumentality of the State.  The bank is established for the following purposes: 
Maine Street Bank, Board of 
Directors 
Expenses Only 
9-B MRSA §1253
Banking 
Maine Street Bank 
Advisory Committee 
Expenses Only 
9-B MRSA §1254 
1.  Economic development.  To support job creation in and the economic 
development of the State by increasing access to capital for businesses and farms within 
the State in partnership with local financial institutions; 
2.  Financial stability. To provide stability to the State's financial sector, but not to 
compete with state-chartered financial institutions, credit unions or other financial 
institutions; 
3.  Basic banking services.  To reduce costs paid by the State for basic banking 
services; and 
4.  Return profits.  To return profits, beyond the revenue needed to accomplish the 
purposes and for continued sound operation of the bank, to the Maine Budget 
Stabilization Fund established in Title 5, section 1532. 
§1253.  Board; duties and powers 
1.  Members.  The Board of Directors of the Maine Street Bank, as established in 
Title 5, section 12004-F, subsection 19, consists of 5 voting members appointed by the 
Governor and subject to approval by the joint standing committee of the Legislature 
having jurisdiction over appropriations and financial affairs and confirmation by the 
Senate.  The Treasurer of State and the Commissioner of Administrative and Financial 
Services serve as ex officio nonvoting members of the board.  The board shall oversee the 
operation, management and control of the bank in accordance with this chapter.  The 
board shall designate one of its members as chair and shall determine the location of the 
bank's main office and maintain places of business of the bank. 
2.  Meetings; quorum.  The board shall establish the frequency of regular board 
meetings in bylaws and public notice requirements for meetings through rulemaking 
under subsection 5.  A special meeting may be called at any time upon notice by the 
Governor or by 3 members of the board. Three voting members constitute a quorum and 
may transact business and exercise all rights, duties and powers of the board. 
3.  Appointment of president; employment of officers and agents.  The board shall 
appoint a person with extensive experience in banking as the president of the bank.  The 
board may appoint and employ any subordinate officers, employees and agents that the 
board considers necessary and shall define the duties, designate the titles and fix the 
compensation of all those positions. 
The board may designate the president or another officer or employee as its agent with 
respect to the functions of the bank, subject to the supervision, limitation and control of 
the board.  The board may discharge any person appointed and employed under this 
subsection. 
4.  Compensation.  Board members serve without compensation except that 
members may be reimbursed for travel expenses associated with their duties under this 
chapter. 
5.  Rulemaking.  The board, through rulemaking, shall adopt bylaws and operating 
policies and shall enforce orders necessary to fulfill its functions under this section.  
Rules adopted under this subsection are routine technical rules as defined in Title 5, 
chapter 375, subchapter 2-A. 
§1254.  Advisory committee 
The board shall appoint the Maine Street Bank Advisory Committee, as established in 
Title 5, section 12004-I, subsection 2-H, to actively enlist the help of private enterprise 
and encourage use of the bank. 
1.  Members. The advisory committee consists of 7 members and must include: 
A.  Representatives of the State's financial, business, agricultural and labor sectors; 
and 
B.  At least 2 officers of state-chartered financial institutions that do not maintain 
offices outside the State. 
2.  Officers.  The board shall appoint a chair, vice-chair and secretary for the 
advisory committee from the members of the advisory committee. 
3.  Terms.  Advisory committee members serve a term of office of 4 years. 
4.  Vacancies.  If a vacancy occurs on the advisory committee, the board shall 
appoint a successor to fill the unexpired term. 
5.  Quorum.  A majority of the members of the advisory committee constitutes a 
quorum. 
6.  Duties.  The advisory committee shall: 
A.  Meet regularly with the board to review and make recommendations concerning 
the bank's operations, finances and loan practices; 
B.  Make recommendations to the board for improving management performance, 
customer service and internal methods, procedures and operating policies of the bank; 
C.  Make recommendations to the board relating to the establishment of objectives 
for the operation of the bank; 
D.  Make recommendations to the board concerning the appointment of officers of 
the bank; and 
E.  Participate on loan committees. 
7.  Compensation.  Advisory committee members serve without compensation 
except that members may be reimbursed for travel expenses associated with their duties 
under this chapter. 
§1255.  Deposit of funds 
The bank may accept deposits of public funds.  Except as provided in section 1256, 
the bank may not accept deposits of private funds.  All income earned by the bank on 
public funds must be credited to and becomes a part of the revenues and income of the 
bank. 
1.  Paying of interest.  The bank shall pay interest on deposits of public funds at a 
rate comparable to rates paid by private depositories of public funds and may offer other 
financial products to the Treasurer of State on a competitive basis. 
2.  Deposit by the Treasurer of State.  The Treasurer of State shall deposit with the 
bank 50% of the funds in the State Treasury according to Title 5, section 130 no later than 
December 31, 2020, 75% of these funds no later than December 31, 2025 and 100% of 
these funds no later than December 31, 2030. 
3.  Investment by Maine Public Employees Retirement System.  The bank may 
accept funds from the Maine Public Employees Retirement System pursuant to section 
1257. 
§1256.  Powers of the bank 
1.  Loans.  The bank may: 
A.  Make loans to and purchase, guarantee, modify or hold loans originated by state-
chartered financial institutions; 
B.  Make, purchase, guarantee, modify or hold loans: 
(1)  That are insured or guaranteed in whole or in part by the United States or its 
agencies or instrumentalities; and 
(2)  Obtained as security pledged for, or originated in the restructuring of, any 
other loan properly originated or participated in by the bank; 
C.  Make loans to and purchase, guarantee, modify or hold loans of instrumentalities 
of this State; and 
D.  Purchase, guarantee, modify or hold loans originated by financial institutions 
authorized to do business in this State. 
Except as provided in subsection 2, paragraph B, the bank may not make loans to any 
private individual or legal entity. 
2.  Participation interests.  The bank may: 
A.  Purchase participation interests in loans made or held by banks, bank holding 
companies, state-chartered or federally chartered financial institutions, any other 
financial institutions or any other entity that provides financial services and that 
meets underwriting standards that are generally accepted by state or federal financial 
regulatory agencies; and 
B.  Make loans in the form of participation loans to qualified persons residing in or 
doing business in this State if the originator of the loan is a private financial 
institution. 
3.  Investments.  The bank shall invest its funds in conformity with policies of the 
board and the investment standards in Title 5, chapter 7. 
4.  Federal bonds. The bank may buy and sell federal bonds. 
5.  Corporate bonds.  The bank may issue corporate bonds. 
6.  Property.  The bank may lease, assign, sell, exchange, transfer, convey, grant, 
pledge or mortgage all real and personal property title to which has been acquired in any 
manner. 
7.  Services to other banks.  The bank may: 
A.  Act as a custodian bank for financial institutions authorized to do business in this 
State and accept deposits from the financial institutions in connection with this 
function; 
B.  Issue bank stock loans to financial institutions authorized to do business in this 
State; and 
C.  For financial institutions that make the bank a reserve depository, perform the 
functions and render the services of a clearinghouse, including all functions for 
providing domestic and foreign exchange and rediscount notes, on terms prescribed 
by the board. 
8.  Reserves.  The bank may hold reserves in the form of gold or silver bullion. 
9.  Other powers. The bank may perform all acts and do all things necessary, 
convenient, advisable or desirable to carry out the powers expressly granted or 
necessarily implied in this chapter through or by means of its president, officers, agents or 
employees or by contracts with any person, firm or corporation. 
§1257.  Investment by Maine Public Employees Retirement System authorized 
1.  Investment authorized.  The Maine Public Employees Retirement System, 
referred to in this section as "the retirement system," may invest funds in the bank in the 
exercise of its discretion and consistent with its fiduciary duties to the beneficiaries of the 
retirement system.  This subsection does not mandate or require any investment by the 
retirement system or give the retirement system any responsibilities in the governance 
and oversight of the bank. 
2.  Investment restrictions.  The retirement system may not invest more than 
$20,000,000 in the bank. 
3.  Disclosure of investment.  The retirement system shall make available to the 
public the following information with respect to any investment in the bank pursuant to 
this section: 
A.  The amount of the retirement system's total investment in the bank; 
B.  The date of the investment; and 
C.  The rate of interest paid on the investment by the bank in accordance with section 
1255, subsection 1. 
§1258.  Transfer to Maine Budget Stabilization Fund 
Except as provided in Title 5, section 1533, as soon as possible after the end of each 
calendar year, the board shall determine the amount of income, if any, earned by the bank 
in that prior calendar year that is in excess of amounts necessary to pay for expenses of 
administering the activities of the bank less any reserves required pursuant to rules 
adopted in accordance with section 1259, subsection 1, paragraph E for delinquencies and 
future business and payment of debts from any initial funding.  The amount of the excess 
must be transferred to the Maine Budget Stabilization Fund established in Title 5, section 
1532. 
§1259.  Rulemaking; oversight 
1.  Rule-making authority.  The bank shall adopt rules to: 
A.  Ensure the safety and soundness of the bank that, to the extent possible, reflect 
applicable standards for safety and soundness set forth in 12 Code of Federal 
Regulations, Part 364 (2014); 
B.  Specify the bank's powers and permissible investments and activities consistent 
with section 1256; 
C.  Specify services that the bank may provide; 
D.  Specify limits for loans and other obligations the bank makes or undertakes; 
E.  Specify reserve requirements; and 
F.  Set requirements that the board considers necessary to administer the bank under 
this chapter and to accomplish the purposes listed in section 1252. 
Rules adopted under this subsection are major substantive rules as defined in Title 5, 
chapter 375, subchapter 2-A. 
2.  Examination and report.  The bureau shall examine the bank at least once each 
calendar quarter to verify and ensure that the bank is complying with the rules adopted 
under subsection 1.  The bureau shall report the results of the examination to the board 
and to the Commissioner of Administrative and Financial Services.  The bureau's report 
is a public record subject to disclosure. 
3.  Audit.   The State Auditor shall audit the accounts and financial affairs of the 
bank at least once every 2 years. 
4.  Annual report; performance measures.  Beginning July 1, 2018 and annually 
thereafter, the bank shall report to the Governor and the Legislature on the financial 
condition and performance of the bank and provide an analysis of the bank's effect on the 
State consistent with the bank's purposes set forth in section 1252, particularly the bank's 
effect on job creation and economic development. 
§1260.  Exempt from liability 
Whenever any public funds are deposited in the bank, the public official who 
deposited the funds and the sureties on any bond of the public official are exempt from 
liability for loss of any of the funds while the funds are deposited in the bank. 
§1261.  Use of name; execution of instruments 
All business of the bank must be conducted under the name of the Maine Street Bank.  
Title to property pertaining to the operation of the bank must be obtained and conveyed in 
the name of the Maine Street Bank. 
Instruments must be executed in the name of the State.  Within the scope of authority 
granted by the board, the president of the bank may execute instruments on behalf of the 
bank, including any instrument granting, conveying or otherwise affecting any interest in 
or lien upon real or personal property. 
Officers, employees or agents of and legal counsel to the bank may execute 
instruments on behalf of the bank when authorized by the board. 
Sec. 4.  9-B MRSA c. 127 is enacted to read: 
CHAPTER 127 
COUNTY AND MUNICIPAL BANKS 
§1271.  County and municipal banks authorized 
1.  County or municipality may establish; purposes.  A county or municipality 
may establish a public bank.  A public bank established pursuant to this subsection shall 
serve the following purposes: 
A.  To support job creation in and the economic development of the county or 
municipality by increasing access to capital for businesses and farms within the 
county or municipality in partnership with local financial institutions; 
B.  To provide stability to the county's or municipality's financial sector, but not to 
compete with state-chartered financial institutions, credit unions or other financial 
institutions; 
C.  To reduce costs paid by the county or municipality for basic banking services; and 
D.  To return profits, beyond the revenue needed to accomplish the purposes and for 
continued sound operation of the bank, to the county or municipality. 
2.  Board.  The legislative body of the county or municipality that establishes a 
public bank pursuant to this section shall appoint a board of directors for the bank.  The 
board of directors shall oversee the operation, management and control of the bank.  The 
board of directors shall appoint a president for the bank. 
3.  Deposit of funds.  A public bank established pursuant to this section may accept 
deposits of public funds, as defined in section 1251, subsection 5.  All income earned by 
the bank on public funds must be credited to and becomes a part of the revenues and 
income of the bank. 
4.  Audit.  The State Auditor shall audit the accounts and financial affairs of a public 
bank established pursuant to this section at least once every 2 years. 
5.  Rules.  The bureau shall adopt rules, which are routine technical rules as 
described in Title 5, chapter 375, subchapter 2-A, governing the operation and 
examination of public banks established pursuant to this section. 
Sec. 5.  Treasurer of State, Commissioner of Administrative and 
Financial Services and Chief Executive Officer of the Finance Authority of 
Maine to make recommendations.  No later than January 15, 2016, the Treasurer of 
State, the Commissioner of Administrative and Financial Services and the Chief 
Executive Officer of the Finance Authority of Maine, in consultation with the Attorney 
General, shall submit a report to the joint standing committee of the Legislature having 
jurisdiction over appropriations and financial affairs with recommendations for 
implementing the Maine Street Bank, as established in the Maine Revised Statutes, Title 
9-B, chapter 125 and referred to in this section as "the bank."  The report must include: 
1.  A draft of any legislation needed to amend the Constitution of Maine to authorize 
the State to establish the bank; 
2.  A recommendation on the amount of money needed to adequately capitalize the 
bank; 
3.  A draft of any legislation needed to transfer funds to the bank; 
4.  A description and draft of statutory changes needed to fully use the resources and 
powers of the bank, to eliminate any duplication of efforts or conflict with the authority 
or responsibilities of the Maine Municipal Bond Bank and any other state agencies and to 
merge the Finance Authority of Maine into the bank.  The statutory changes must provide 
that programs and services offered by the Finance Authority of Maine must continue to 
be offered by the bank and rights and obligations of the Finance Authority of Maine must 
be assigned to the bank; 
5.  Recommendations for guaranteeing funds deposited in the bank; 
6.  Recommendations pertaining to the liability of the State and the bank in civil 
actions; and 
7.  Recommendations regarding the confidentiality of certain records held by the 
bank. 
Sec. 6.  Initial appointments.  Notwithstanding the Maine Revised Statutes, Title 
9-B, section 1254, subsection 3, of the initial appointments to the Maine Street Bank 
Advisory Committee, one member must be appointed for a one-year term, 2 members 
must be appointed for a 2-year term, 2 members must be appointed for a 3-year term and 
members must be appointed for a 4-year term. 
Sec. 7.  Authority to report out a bill.  The joint standing committee of the 
Legislature having jurisdiction over appropriations and financial affairs may report out a 
bill to the Second Regular Session of the 127th Legislature pertaining to the 
establishment, oversight and operation of the Maine Street Bank established in the Maine 
Revised Statutes, Title 9-B, chapter 125. 
Sec. 8.  Effective date.  Those sections of this Act that enact the Maine Revised 
Statutes, Title 5, section 12004-F, subsection 19; Title 5, section 12004-I, subsection 2-H; 
and Title 9-B, chapters 125 and 127 take effect July 1, 2017 except that the Maine Street 
Bank may not make, purchase, guarantee, modify or hold loans until the bank has capital 
of at least $20,000,000. 
SUMMARY 
This bill establishes the Maine Street Bank effective July 1, 2017 except that the bank 
may not make, purchase, guarantee, modify or hold loans until the bank has capital of at 
least $20,000,000.  It specifies the purposes of the bank, establishes a board of directors 
and creates an advisory committee. It allows the bank to accept deposits of public funds, 
to make, purchase, guarantee, modify or hold certain loans and to serve as a custodian 
bank.  It directs the Treasurer of State to deposit money into the bank.  Excess income of 
the bank is deposited in the Maine Budget Stabilization Fund. 
The bill provides for a quarterly examination of the bank by the Department of 
Professional and Financial Regulation, Bureau of Financial Institutions and an audit by 
the State Auditor every 2 years. 
The bill allows counties and municipalities to establish public banks. 
The bill directs the Treasurer of State, the Commissioner of Administrative and 
Financial Services and the Chief Executive Officer of the Finance Authority of Maine to 
consult with the Attorney General and report to the joint standing committee of the 
Legislature having jurisdiction over appropriations and financial affairs by January 15, 
2016 with recommendations to fully implement the bank, including recommendations 
regarding the merger of the Finance Authority of Maine into the bank.  It authorizes the 
joint standing committee to report out a bill to the Second Regular Session of the 127th 
Legislature.