North Dakota is the only state with a state banking system and it is being used as a model for seventeen other states that currently have introduced bills for state-owned banks or are researching this plan. This is a system that has allowed North Dakota to maintain a thriving economy and have the lowest un-employment rate in the country, while the rest of the nation continues to plummet.
With our current system state and local municipalities are largely invested in Wall Street Banks. These banks have been lending the money out to special interest groups, federal projects and big corporations that build factories in other countries. Our money and jobs go away. With State owned banks state and local municipalities make their deposits into a state bank that in turn make loans to local businesses to expand and employ local people and to fund local projects, such as, schools and infrastructure.
Loans made to the state by a state bank have lower interest rates and fees because it’s loaning money to itself. This is in contrast to the Federal Reserve, which is not owned by our federal government but instead by shareholder whose only interest is in making a profit. There is nothing federal about the Federal Reserve other than its name. State banks are run by bankers not politicians. These banks will not be making high risk or foolish loans to big corporations and special interest groups because their livelihood will depend on their success. Unlike big Wall Street Banks current laws do not allow our government to advance credit to local government. Though Federal mandates do, and did, allow $12.3 trillion for large banks.
Student Researcher: Julie Meikle, Indian River State College
Sources: Ellen Brown, “A Choice for States: Banks, Not Budget Crises,” Yes! Magazine, March 25, 2011. http://www.yesmagazine.org/new-economy/a-choice-for-states-banks-not-budget-crises
Faculty Instructor: Elliot D. Cohen, Ph.D. Indian River State College