Bank of North Dakota (BND), the only 100 percent state-run bank in the U.S., plows about half of its profits into the state budget and takes cues from the governor, who acts as chairman. The bank spins tax revenues into loans for in-state farmers, students and small-business owners. During the recession, BND has propped up more than 100 privately held community banks and has kept credit flowing to small, local businesses. Washington State has recently proposed its own version, and Hawaii has commissioned a report on doing the same. (Newsweek, 5/3/10)
North Dakota has the lowest unemployment rate in the country and one of the largest budget surpluses. In this economic and political environment, could this state-run bank model spread? Will this unique creation be seen as too “socialist” for the mainstream? What would be the impact on national, regional and community banks?
Eric Zavolinsky
