There are successful management and policy models for public banks throughout the world. Here is a small sampling:
BANK OF NORTH DAKOTA (BND)
“Promoting Agriculture, Commerce and Industry” in North Dakota since 1919, BND is the only state-owned bank in the nation. It was started by desperately poor farmers who launched the Nonpartisan League who sought a local alternative to being at the mercy of out-of-state economic powers. Funded initially with a two million dollar investment, it has grown to a seven billion dollar economic powerhouse.
BND has been the major factor in the creation of North Dakota’s strong, resilient economy over the past forty plus years (long before the recent oil and gas boom). Because North Dakota’s public funds were deposited in BND and invested locally, the people of North Dakota sailed through the great 2008 recession unscathed.
BND works as funding resource in partnership with over one hundred local financial institutions, economic development groups and guaranty agencies. Local financial institutions are thriving because they have an excellent, secure source of credit from BND. There are more community banks per capita in North Dakota than in any other state.
Its partnership with community banks has increased their capacity to make loans to businesses. Those same businesses have grown good jobs for the people of North Dakota.
The people of North Dakota have very good financial terms when it comes time for them to buy or renovate an existing home. Farmers and ranchers have a good friend in the BND. When they need a loan to build a home or barn or to invest in their farm or ranch, BND sees this as a priority.
BND is able to respond quickly when natural disasters strike so that rebuilding can begin quickly. In 1997 the Red River flood created tremendous damage to homes, businesses and farms in North Dakota and Minnesota. With the help of BND, North Dakotans were able to quickly rebuild and recover from their losses while those on the Minnesota side lacked the support they needed to recover.
BND manages a major student loan program for its college students. The student loans are at lower interest and more favorable terms than through other programs and help to reduce the amount of debt students will have to repay after graduation from college. BND’s student loans are paving the way for a well-educated workforce for its state.
Tribally Owned BANK2
While not officially designated a public bank, Bank2 is a wholly owned subsidiary of the Chickasaw Nation, “committed to helping people build better lives” and has set the stage for other indigenous peoples to establish their own banks with the mission to serve Native peoples. Bank2 was established in 2002 with 7.5 million in assets and by 2014 it had grown to more than $100 million in assets. Bank2’s specific purpose is to serve Native American small businesses and individuals not only across Oklahoma but the entire country. Its special focus is in the Oklahoma City area and the 13-county jurisdictional area of the Chickasaw Nation in south central Oklahoma. It provides banking services to a population that might be unbanked or underbanked.
Many of Bank2’s clients are minorities; about 53 percent of its clients are Native Americans. A total of 15 percent of Bank2 clients have a household income at or below 80 percent of the area median income. Since its inception Bank2 has significantly impacted small business and has made home ownership a reality for many who would not have been able to secure a mortgage elsewhere. The bank has made hundreds of small business loans totaling $10s of millions. In the area of housing, Bank2 has financed over 1,000 housing units and has developed or rehabbed 500 single-family homes. These efforts have benefited the lives of thousands of clients.
THE GERMAN SAVINGS BANKS (Sparkassen Banks)
The German Savings Banks serve as a highly successful example of public banks working independently and cooperatively. There is a Sparkassen (Savings Bank) in nearly every town and village in Germany. Sparkassen Banks were established over 200 years ago to ensure that everyone, including the very poor, had access to banking services. Sparkassen Banks hold and manage its communities’ public funds. Profits from the bank are invested back into that community. They are part of a cooperative model. Each little bank is managed legally and financially independent, but is also part of a supportive network of other Sparkassen Banks that work together to ensure the success of each bank. Savings Banks operate according to commercial principles, but without the aim of profit maximization. This process of investing back into the community and working together has helped create the resilient, stable economy that Germany is well known for.