Economy prompts fresh look at North Dakota's socialist bank

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http://news.yahoo.com/s/ap/20100216/ap_on_bi_ge/us_socialist_bank

Economy prompts fresh look at ND's socialist bank
By DALE WETZEL, Associated Press Writer

BISMARCK, N.D. – It has no automatic tellers or drive-up windows, doesn't issue credit cards, and tends only a few thousand checking and savings accounts. Its only location is a glass, steamboat-shaped headquarters near the Missouri River, where the business moved from its original 1919 home in a former auto assembly plant. The Bank of North Dakota — the nation's only state-owned bank — might seem to be a relic. It was the brainchild of a failed flax farmer and one-time Socialist Party organizer during World War I. But now officials in other states are wondering if it is helping North Dakota sail through the national recession.

Gubernatorial candidates in Florida and Oregon and a Washington state legislator are advocating the creation of state-owned banks in those states. A report prepared for a Vermont House committee last month said the idea had "considerable merit." Liberal filmmaker Michael Moore promotes the bank on his Web site. "There's a lot of hurt out there, a lot of states that are in trouble, and they're tying the Bank of North Dakota together with this economic success that we're having right now," said the bank's president, Eric Hardmeyer. Hardmeyer says he's gotten "tons" of inquiries about the bank's workings, including questions from officials in California, Michigan, New Mexico, Ohio and Washington state.

North Dakota has the nation's lowest unemployment rate at 4.4 percent, soaring oil production and a robust state budget surplus — but Hardmeyer says the bank isn't responsible for the prosperity. "We are a catalyst, perhaps, or maybe a part of it," he said. "To put this at our feet is flattering, but it frankly isn't true."

The Bank of North Dakota serves as an economic development agency and "banker's bank" that lessens the loan risks of private banks and helps them finance larger projects. It offers cheap loans to farmers, students and businesses. The bank had almost $4 billion in assets and a $2.67 billion loan portfolio at the end of last year, according to its most recent quarterly financial report. It made $58.1 million in profits in 2009, setting a record for the sixth straight year. During the last decade, the bank funneled almost $300 million in profits to North Dakota's treasury. The bank has the advantage of being the repository for most state funds, which can be used for loans and occasional relief for private banks that need a jolt of cash during sluggish credit markets. "We think of ourselves as kind of a little mini-Federal Reserve," Hardmeyer said...