Colorado

I think the fact they act as mini feds in their states is what makes them work. They are putting up capital to community banks / credit unions and lending with proper underwriting, etc.

I really think that we as citizens would be in great shape with 3 changes to finance in general:

1). Get deposits / credit card borrowing out of the big banks into local institutions.
2). Use the state run banks to provide lending capital to those local institutions.
3). Establish a federal infrastructure bank to assist state and local governments.

If we can pull retail banking to the local level, backed by state banks, I think it accomplishes what we need without putting states in the position of competing with private industry. Small local banks are much more likely to aggressively compete than the large banks. Further, the state banks can easily "regulate" how lending gets done if they are to participate, e.g., underwriting standards, deceptive language, etc.