3c hapter - Index of

74 Locavesting
As depositors, we’d all go put our money in the bank, and the
bank would turn around and loan that to our local business and
entrepreneurs, reinvest it in the community. So it was a circle. And
once you started repackaging and securitizing the loans, that’s
gone away.”
Wall Street on the Missouri
Millions of fed up individuals have moved their money into local
fi nancial institutions. But what if that idea could be implemented
on a larger level? As state governments grapple with the worst
budget shortfalls in years, some are taking a closer look at North
Dakota, a rural red state, as a model for public banking and a way
to lessen their dependence on Wall Street. The Bank of North
Dakota, based in Bismarck, is the country’s only state- owned and
-operated bank. It doesn’t take consumer deposits, but all state
government agencies are required to place their funds in the
bank, for which they receive interest.
“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,”
Bank of North Dakota president Eric Hardmeyer explained
to Mother Jones. 19
The idea has caught the attention of many state and local
agencies, which often deposit their money in out- of- state banks,
some of the very same ones that were bailed out with taxpayer
money and have been hoarding cash since.
The Bank of North Dakota was ushered in on a wave of populism
almost a hundred years ago. Farmers in the agrarian state
were tired of grain prices and loan terms being dictated back East.
The nostalgic- sounding Non Partisan League (if only!) took control
of the legislature and, in 1919, created the Bank of North
Dakota (as well as the North Dakota Mill and Elevator Association
to regain control over grain marketing and fi nancing).
Today, the bank acts as sort of a mini- Federal Reserve clearinghouse
for the state, but it is also an important source of funding for