Chapter 9Building and Rebuilding Communities

We might not think of North Dakota as a wellspring of financial innovation, but perhaps we should.

The Bank of North Dakota is America's only state-owned deposit bank. It has operated since 1919, enduring several of the financial sector's most harrowing banking crises. Other state-owned banks have been chartered to support infrastructure projects (so-called “infrastructure banks” that have been proposed at the federal level as well), but North Dakota's bank acts just like a private bank, yet far more willing to open up capital for commercial projects. Many of the projects jump-started by the bank would almost certainly be turned away by the larger, out-of-state banks. “The Bank of North Dakota was formed nearly 100 years ago because of the belief that North Dakota's farmers were being exploited with high interest rates,” said Eric Hardmeyer, the bank's president, in an op-ed for The New York Times. “Since nine of ten North Dakotans were farmers, this issue galvanized voters and lawmakers.” It still does.

Located in a part of the country one wouldn't expect to be fertile territory for socialized banks, the Bank of North Dakota has built political ramparts around itself. If it had taken on too much risk, the bank would have collapsed from its own weight, and few in North Dakota would have mourned its loss. Attempts at privatizing the bank have been few and futile. The relatively free flow of credit in the state has been credited in ...

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