3c hapter - Index of

The Last Real Banker? 75
the region. The bank uses its capital to fund agriculture, energy,
and education in the state, including student loan fi nancing—all
in partnership with local banks. It guarantees some small business
loans in the state, similar to the Small Business Association, and
provides venture capital and assists higher risk startups and existing
businesses in obtaining loans of up to $500,000.
After a fl ood in 1997 ravaged the state’s Red River Valley,
encompassing Fargo and Grand Forks, the bank set up a disaster
loan program to assist businesses. It also turns over half of its profits
each year to the state, adding a third of a billion dollars to state
coffers in the past 10 or so years. 20
That, along with a booming oil business in the state, may
explain why there is no credit crisis in North Dakota. In 2009,
when many commercial banks were struggling, the Bank of North
Dakota celebrated its 90th birthday with record profi ts, assets
approaching $4 billion, and an outstanding loan portfolio of
$2.7 billion. And, while many states are slashing services, pensions,
and jobs to reduce their multi- billion- dollar budget gaps, North
Dakota was eyeing a surplus of $1 billion for its budget cycle ending
in June 2011. The state’s unemployment rate, at 4 percent, is
the lowest in the nation. 21
That’s caught the attention of state and local offi cials from
Massachusetts to Oregon. Virg Bernero, the mayor of Lansing,
Michigan, has talked up the idea of a “Main Street Bank” modeled
on the Bank of North Dakota that would help create jobs in the
hard- hit state. 22 He fi gures the bank could be capitalized with the interest
the state earns on tax revenues, about $350 million, and could
partner with banks doing business in the state as well as make some
loans directly. “Wall Street banks are not lending to Michigan’s small
businesses, and reports show that is the No. 1 problem blocking job
creation here,” Bernero told the Detroit Free Press. “If we invest in our
small businesses rather than Wall Street banks, we can fi nally break
the credit- crunch logjam and unleash Michigan’s entrepreneurs to
create hundreds of thousands of new jobs.” The idea has even won
support from some in the banking industry. 23
In the state of Washington, a bill that would establish a state
bank modeled on North Dakota’s was introduced in January 2011.