Populism

The People’s Bank 
Abby Rapoport  April 1, 2013 
How did deep-red North Dakota end up with the nation’s most populist financial institution?
http://prospect.org/article/people%E2%80%99s-bank-0

When the financial crisis struck in 2008, nearly every state legislature was left contending with massive revenue shortfalls. Every state legislature, that is, except North Dakota’s. In 2009, while other states were slashing budgets, North Dakota enjoyed its largest surplus. All through the Great Recession, as credit dried up and middle-class Americans lost their homes, the conservative, rural state chugged along with a low foreclosure rate and abundant credit for entrepreneurs looking for loans.

Normally one of the overlooked states in flyover country, North Dakota now had the country’s attention. So did an unlikely institution partly responsible for its fiscal health: the Bank of North Dakota. Founded in 1919 by populist farmers who’d gotten tired of big banks and grain companies shortchanging them, the only state-owned bank in America has long supported community banks and helped keep credit flowing.

The bank’s $5 billion deposit base comes mostly from state taxes and funds. The money is leveraged so the bank can offer loans for local small businesses and infrastructure projects; the interest, rather than going to Wall Street banks, stays in the state. The Bank of North Dakota rarely makes direct loans; instead, when a community bank wants to give a sizable loan but lacks the capital, the state bank will partner on the loan and provide a backstop. Such partnerships help ensure that small-business owners, farmers, and ranchers can access lines of credit—and they strengthen community banks, which is why North Dakota has more local banks per capita than any other state...

... policy experts like Sam Munger, the managing director at the University of Wisconsin-Madison Center for State Innovation, say that by offering partnerships and avoiding the risky practices of commercial banks, like subprime lending, the state bank was instrumental in keeping community banks healthy. “It’s partly because you have civil servants in charge,” he says, “rather than folks whose paychecks depend on how much money the bank makes in a quarter.”...

Good read, or as the angel said to St. Augustine, "Tolle, lege !"

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