Skip to comments.Bank of North Dakota: A Compelling Case for Nationalization?
Posted on 03/31/2009 10:20:03 AM PDT by BGHater
Theres been a bit of ballyhoo lately about the Bank of North Dakota, the only state-owned bank in the United States.
It was created about 90 years ago as part of the populist resistance in the Upper Midwest to New York bankers making decisions on who got farm loans.
But the Bank of North Dakota isnt a model for the creation of government-run banks to save us from the horror of Citigroup (C), Bank of America (BAC) or JPMorgan Chases (JPM) takeover of Washington Mutual.
North Dakotas population is about 640,000 and its hard to see how a successful bank largely built on agriculture translates into major states with diverse economies and large populations such as California, Florida, Texas, Illinois, North Carolina and New York.
The Bank of North Dakota serves as the depository for state taxes and fees. Its impossible to imagine the legislatures of major states creating a similar captive base of depositors for government-run banks while the private sector nods in agreement.
North Dakotas agricultural-based economy is shielded from much of the gyrations of the nations broad economy. Better yet, there isnt rampant housing speculation in North Dakota and the bank wasnt forced to take on billions in subprime loans, thanks to the beneficent souls at Fannie Mae (FNM) and Freddie Mac (FRE).
Were a fairly conservative lot up here in the upper Midwest and we didnt do any subprime lending, Eric Hardmeyer, president of the Bank of North Dakota, told Mother Jones magazine. If we dont understand it, were not going to jump into it.
The Bank of North Dakota has about $4 billion under management and is solidly profitable. It has a portfolio of $500 million to $600 million in residential loans. The bank also provides liquidity, check clearing services and bond accounting to about 100 private banks in the state.
For all states to look at North Dakotas model and say this would be the panacea for all those (problems), I dont see that happening, Hardmeyer said. We were designed and set up to partner with (private banks) and not compete with them.
But that wont stop some earnest state legislator somewhere from proposing a state-owned bank at home to take business away from banks in the private sector. Never mind that politics infused Fannie and Freddie and turned banks into instruments of social policy, playing a major part in creating the current mess.
Its hard to imagine that state legislators wouldnt do worse in the future. The heavy hand of government can screw up just about any industry. Keep in mind that government mandates, especially on gas mileage, forced Detroit to build cars buyers didnt want. And dont forget the government-mandated ethanol boondoggle.
But that wont stop the usual flock of true believers from putting theology ahead of sound economic practices.
My advice is everybody take a deep breath, Hardmeyer told Mother Jones. Were going to get through this and were going to exit this as a stronger industry than when we went into it, with controls in place that are absolutely necessary, with banks understanding the risks they are taking.
Golly, a state employee touting the strength of the free market - thats news.
I would say skin color should have nothing to do with repaying loans.
Values of thrift and personal responsibility are found in every ethnic group and skin color.
The liberals want to segment us by those artificial divisions (skin color and ethnicity) and thus give a pass to someones bad behavior.
I say no way. Everyone should be held to the same standard of personal responsibility.
When I first went looking for a mortgage, I got turned down. It was pretty simple really: I wasn't earning enough. I waited a few years, got a better paycheck, and the bank became much happier about giving me a mortgage.
What ACORN does, is offer to sue to bank right off the bat for not giving a mortgage to people who have inadequate income. ACORN doesn't try to help everyone. I don't think they would have sued the bank on my behalf. But ACORN does sue banks on behalf of some people.
In areas where ACORN is active, banks end up giving up mortgages that they ought not to give out. The banks do it out of fear.
Also note: some of the folks who cannot repay their mortgage end up calling ACORN again: ACORN is willing to sue banks (again) for having the temerity to have given a mortgage to people who lacked the ability to repay.
I'm thinking ACORN is not active in North Dakota. I'm thinking that this helps the state bank remain solvent.
I'm all for holding everyone to the same standards of thrift and responsibility. ACORN, however, takes a different stance.
That pretty much says it all. There are no deadbeats in ND. They pay there bills. Welfare, probably not much. One can make a case about skin color if they like but.... I'm with you Clearguy.
You and I are probably on the same page, in that everyone should be treated the same no matter what their skin color.
Everyone is assumed to be acting in good faith until proven otherwise; black, white, purple or green.
Personal responsibility should be the factor that determines who gets approved.
Liberals do not believe this.
Words to live by.
There are areas around Fargo where whole neighborhoods are underwater, and yet the shelters that have been set up by the government, Red Cross, etc. to accommodate people whose homes are uninhabitable are nearly empty.
I can tell you another thing, too. You won’t hear people bitching and moaning saying, “Where was FEMA? Where is my free trailer? I need $5000 to relocate!” They sure as hell wouldn’t have been sitting in their houses waiting to be rescued or refusing to get out when they were warned. Sure you’ll have some holdouts, but for the most part I’m sure common sense dictates people’s actions.
I grew up in ND and people there just suck it up and move forward. Work harder, make more money, take care of their families and neighbors...you get the idea.
It’s an excellent place to live.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.