As of this moment our financial system is in ruins. The problems leading up to the financial crisis of 2007, are the result of Wall Street dominating the financial domain by systematically breaking down governmental banking policies put in place cap profitability margins, limit expansion and maintain a fair and supportive banking environment. Due to corporate mergers and proponents of deregulation the last two decades has seen the number of banks in the U.S. plummet from 14,000 to 7,000, turning the art of “relationship” banking, into the process of “transactional” banking. This has lead to the growth of larger banks and a financial system that is mismatched to the economic needs of American communities, resulting in high unemployment rates, a severe decrease in small business loans and predatory lending – all of which are greatly impacting the small business environment that makes up the heart of our communities. And lacking substantial reforms, the crises in our communities seem likely to deepen.
One solution lies in the creation of publically owned, state partnership banks. A primary example is the Bank of North Dakota (BND), which is fully owned by the state/public and works through its partnerships with local banks around the state. Because of this partnership North Dakota boasts 4 times as many banks per 100,000 people than the national average. This puts the emphasis back on “relational” banking and the funding of local businesses and community needs. Due in part to its banking system, North Dakota has the lowest unemployment rate in the country and typically has a solid budget surplus while other states are floundering. The BND requires no state funds; in fact, the profits it generates belong to the bank’s only shareholder, the people of North Dakota. Contrast this with the profit-driven model of corporate banking. This is the future of banking, and community empowerment — the time has come to localize.
Stacy Mitchell, “Banking for the Rest of Us”, April 2012, Soujourners Magazine
Ellen Brown, “The Shadow Bailout: How Big Banks Bilk US Town and Taxpayers,” March 22 2012, Common Dreams http://www.commondreams.org/view/2012/03/22-4
“A Choice for States: Banks, Not Budget Crises”, Ellen Brown, Yes! Magazine, March 25, 2011. http://www.yesmagazine.org/new-economy/a-choice-for-states-banks-not-budget-crises
“How to Ease the State’s Budget Crises: Own a Bank”, Public Banking Institute, Web Update: April 2011: http://publicbankinginstitute.org/advantages.htm
Student Researcher: Tim Wilkins, San Francisco State University
Faculty Evaluator: Kenn Burrows, San Francisco State University