Michigan First Financial System

A bill to establish a Michigan-centered financial system that keeps capital circulating inside the State; to expand and strengthen state-chartered credit unions; to authorize exploration and creation of public-purpose banking capacity; to prioritize low-cost lending for homeownership, small business, family farms, and manufacturing; to reduce the extraction of Michigan wealth by distant financial intermediaries; to promote transparency and member ownership; and to build lasting economic sovereignty and prosperity for Michigan families and communities.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Section 1. Short Title.

This act shall be known and may be cited as the “Michigan Credit Union and Public Banking Sovereignty Act” or the “Michigan First Financial System Act.”

Section 2. Legislative Findings.

The Legislature finds and declares all of the following:

(a) A significant share of interest payments, fees, and financial profits generated in Michigan currently flows to institutions and markets outside the State, reducing the capital available for local homeownership, small business, agriculture, and community development.

(b) Member-owned credit unions already operate on a not-for-profit or limited-return model that returns benefits to members and keeps decision-making closer to the communities they serve. Scaling and strengthening that model, together with carefully designed public-purpose banking capacity, can recycle a greater share of Michigan capital inside Michigan.

(c) Lower, transparent cost of credit for housing, small business, and farms reduces foreclosures, supports generational family enterprises, and eases pressure on household budgets and local tax bases.

(d) Michigan has the industrial, agricultural, and human capital to support a more self-reliant financial ecosystem while remaining fully compliant with federal law.

(e) All provisions of this act shall be implemented consistent with the Constitution of the United States, the Constitution of the State of Michigan, the Federal Reserve Act, the Federal Credit Union Act, and other applicable federal banking and securities laws.

Section 3. Definitions.

As used in this act:

(a) “State-chartered credit union” means a credit union organized under the laws of Michigan and supervised by the Department of Insurance and Financial Services.

(b) “Public-purpose bank” or “Michigan Public Bank” means a state-owned or state-sponsored banking institution authorized to accept deposits of public funds and to make loans or investments that advance the public purposes of this act.

(c) “Authority” means the Michigan Financial Sovereignty Authority created in this act.

(d) “Priority lending” means loans for primary-residence homeownership, small-business expansion, family-farm operations, and manufacturing or industrial projects located in Michigan.

Section 4. Strengthening and Expanding State-Chartered Credit Unions.

(1) The Department of Insurance and Financial Services shall streamline chartering, branching, and field-of-membership expansion for state-chartered credit unions that commit to high levels of Michigan reinvestment and priority lending.

(2) State agencies shall, to the maximum extent permitted by law and fiduciary duty, prefer state-chartered credit unions for the deposit of non-pension public funds when safety, liquidity, and return are comparable.

(3) Technical assistance, shared-services platforms, and limited state-supported guarantees or second-loss facilities may be offered to credit unions that expand affordable home-mortgage, small-business, and agricultural lending inside Michigan.

(4) Credit unions participating in enhanced state programs shall publish transparent reports on local loan volume, interest-rate ranges, member returns, and community reinvestment.

Section 5. Michigan Public Banking Capacity.

(1) The Authority is directed to study, design, and, upon legislative approval of a detailed business plan and capitalization method, establish a Michigan Public Bank or functionally equivalent public-purpose lending capacity.

(2) The Public Bank, if established, shall:

(a) Accept deposits of state and local public funds;

(b) Partner with state-chartered credit unions and community banks for retail distribution;

(c) Focus lending and investment on priority sectors—housing, small business, family farms, manufacturing, infrastructure, and energy projects located in Michigan;

(d) Operate under strict fiduciary, transparency, and anti-political-interference standards; and

(e) Return surplus, after prudent reserves, to public purposes or to reduce the cost of credit for Michigan residents.

(3) No public bank created under this act shall engage in speculative trading or compete unfairly with private institutions in retail consumer banking outside its public-purpose mission.

Section 6. Priority Low-Cost Lending Goals.

(1) It is the policy of this State to expand the availability of transparent, reasonably priced credit for:

(a) First-time and young-family homebuyers;

(b) Small businesses and startups;

(c) Family farms and value-added agricultural enterprises; and

(d) Manufacturing and industrial projects that create Michigan jobs.

(2) The Authority and participating institutions shall work toward the lowest sustainable interest rates consistent with safety and soundness and federal law. Aspirational targets, including rates near 3 percent for qualified priority loans when market and risk conditions allow, shall guide program design but shall not compel unsafe lending.

(3) Down-payment assistance, rate-buydown, and guarantee programs financed by state appropriations, Sovereign Wealth Fund earnings, or public-bank surplus may be used to further reduce effective borrowing costs for eligible Michigan households and enterprises.

Section 7. Keeping Capital in Michigan.

(1) State investment and deposit policies shall preferentially direct public funds to institutions that demonstrate high ratios of Michigan loans and investments relative to Michigan deposits.

(2) The Authority shall publish an annual “Michigan Capital Recirculation Report” measuring the share of deposits, loans, and financial profits that remain inside the State.

(3) Barriers that unnecessarily drive Michigan deposits or loan demand to distant intermediaries shall be identified and reduced.

Section 8. Transparency, Governance, and Consumer Protection.

(1) Participating credit unions and any public bank shall maintain clear public disclosure of interest-rate ranges, fees, compensation, and community-reinvestment performance.

(2) Governance of the Authority and any public bank shall include strong conflict-of-interest rules, independent audit, and prohibition on partisan political activity.

(3) Existing consumer-protection, fair-lending, and anti-discrimination laws remain fully applicable.

Section 9. Michigan Financial Sovereignty Authority.

(1) There is created the Michigan Financial Sovereignty Authority to coordinate credit-union expansion, public-banking design, priority-lending programs, capital-recirculation metrics, and related policy.

(2) The Authority shall report annually to the Governor and Legislature on loan volume in priority sectors, effective interest rates achieved, capital retained in Michigan, and progress toward lower household and business borrowing costs.

(3) The Authority shall operate under performance metrics and periodic reauthorization requirements.

Section 10. Relationship to Federal Law.

Nothing in this act shall be construed to impair the supremacy of federal banking, monetary, or credit-union law, to alter the status of the Federal Reserve System, or to authorize any action that would jeopardize deposit insurance or the safety and soundness of participating institutions. The State shall pursue all complementary federal partnerships and waivers that advance the purposes of this act.

Section 11. Severability.

If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act and the application of its provisions to other persons or circumstances shall not be affected.

Section 12. Effective Date.

This act takes effect 90 days after enactment. The Michigan Financial Sovereignty Authority shall be constituted and shall deliver its initial public-banking design report within 180 days.

Enacting Section.

This act is ordered to take immediate effect.

Prosperity First. Michigan First.

Money Recycled at Home.

Credit Unions Strengthened. Public Purpose Banking Explored.

Lower Costs for Homes, Farms, and Small Business. Michigan First.