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The state-owned Bank of North Dakota

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The state-owned Bank of North Dakota

Fiscal conservatives often are blind when it comes to alternatives to the "so called" commercial banking system. Many conventional Republicans are ignorant or simply carrying the water for the crony capitalist banking establishment. The fractional reserve banking monopoly that operates under the auspices of the privately owned Federal Reserve System, despises any trace of competition. The bondage from debt created money has doomed Main Street to the fate of contrite beggars in search of securing loans. Useful purposes for business financing are not sufficient reason for the qualifying for commercial credit.

Is there an alternative to the Federal Deposit Insurance Corp. and centralized banking dominated by Wall Street investment banksters? Can state chartered commercial banks compete separate from the favoritism shown to the "Not Too Big To Fail" money centered banks? Well, Ellen Hodjson Brown JD, has popularized the subject of the state-owned bank and believes there is a better model for community banking.

"The secret of its success seems to be the state-owned Bank of North Dakota, which was established by the state legislature in 1919 specifically to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men. By law, the state must deposit all its funds in the bank, and the state guarantees its deposits. The bank’s stated mission is to deliver sound financial services that promote agriculture, commerce and industry in North Dakota. The bank operates as a bankers’ bank, partnering with private banks to loan money to farmers, real estate developers, schools and small businesses. It loans money to students (over 184,000 outstanding loans), and it purchases municipal bonds from public institutions."

The informative video, Bank of North Dakota provides a comprehensive overview, well worth viewing.

Such a departure from the normal coordinated federal regulation and Federal Reserve prescribes, gives pause to the plutocrats that despise any departure from the top down banking model that is based upon special treatment for the schemes of investment banking.

Bloomberg News points out the banking industry opposition to the state-own charter in the article,
North Dakota’s State-Run Bank Adds Millions to Treasury, Spurs Imitators.

"The U.S. banking industry opposes the idea and is lobbying against it, saying a state-run bank would compete with commercial banks for business and politicize a state’s lending decisions.

"A state-owned bank? Why don’t we just re-label the state capitols the Kremlin?" Camden Fine, president of the Independent Community Bankers of America, a Washington-based trade group that represents more than 5,000 community banks, said in a telephone interview.

"It’s a socialistic idea," Fine said. "If you get a state-owned bank that is allocating credit, it can slide very quickly into a situation where those in favor get credit and those not in favor don’t get credit."

How ironic the false claim that a sparsely populated state like, North Dakota could be such a citadel of collectivist enterprise when the titans of cartel-controlled crony capitalism were the financiers of the Russian communist revolution. The new generation of algorithmic traders has no more interest in writing business commercial loans then the banker funded Lenin investment of mercy shown to the Czar.

Even more sardonic is the viewpoint that the only banking monopoly acceptable is the one designated by the barons of usury. The slogan – no small business loans, is their operative policy.

Mother Jones examines what Republicans might call an idiosyncratic bastion of socialism in their interview with Bank of North Dakota’s president; Eric Hardmeyer,
How the Nation’s Only State-Owned Bank Became the Envy of Wall Street. Mr. Hardmeyer explains the operation of their system thusly.

"Our funding model, our deposit model is really what is unique as the engine that drives that bank. And that is we are the depository for all state tax collections and fees. And so we have a captive deposit base, we pay a competitive rate to the state treasurer. And I would bet that that would be one of the most difficult things to wrestle away from the private sector—those opportunities to bid on public funds. But that’s only one portion of it. We take those funds and then, really what separates us is that we plow those deposits back into the state of North Dakota in the form of loans. We invest back into the state in economic development type of activities. We grow our state through that mechanism."

The significance of the North Dakota experiment is that the dominance and control of the State/Capital cabal can be broken. Sensible banking is based upon making loans for productive enterprises, not derivative speculation. The customer of any bank is a person. Financing business growth and development is the core purpose and function of a bank.

The populist underpinnings of the independent method of funding the Bank of North Dakota provide an alternative model for depository transactions. Prosperity for local economies is an integral objective for any community interest bank. Those who profess free market enterprise principles need to adopt practical partner relationships with proponents of state charted banks.

ABC News reports the inconceivable, State-Owned Banks: The Future of Banking?

"Bank of North Dakota officials said that at least 10 states have turned to them for guidance, including some states, like Michigan, hardest hit by the financial crisis. They include California, Florida and Illinois, where a bill to create a state bank already is under consideration by the state legislature."

Success is the best substitute to the stagnation of Wall Street greed and corporatism. Credit unions and associations provide another option for the depositor to conduct business. Loans are a way of life to most wage earners. Applying with an institution committed to their customer is rare in the era of national banking conglomerates. Trust is the basis of banking and the record of the Bank of North Dakota, compared to Bank America, demonstrates a stark difference. Register your discontent with your money stop doing business with national money-centered banks.

James Hall – January 23, 2013

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