"The primary deposit base of the BND is the State of North Dakota. All state funds and funds of state institutions are deposited with the bank as required by law. . . . Use of the banks' earnings are at the discretion of the state legislature. As an agent of the state it can make subsidized loans to spur development . . . . [It] underwrites municipal bonds for all of the political units in the state, and has been one of the leading banks in the nation in the number of student loans issued. The bank also serves as the state's ˜Mini Fed' . . . . As a result of the banks' services, it enjoys widespread support among the public and the independent banking community.
Bringing the Model Current
The private banking system is in systemic failure, and the public is waking up to the fact. We have been fleeced by Wall Street, the banks are not providing loans, and our savings are no longer secure. The publicly-owned Bank of North Dakota has provided an alternative model that has worked remarkably well for nearly a century.
The BND has been around for so long, however, that skeptics can write off the state's remarkable success to other factors. A modern-day public bank that quickly turned its flagging local economy around could set a precedent that was irrefutable. If Florida were to establish a successful public banking model, it could blaze a trail out of the economic wilderness for local governments everywhere.
First posted on Yes! Magazine, October 14, 2009.
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