Posts tagged "Public Banking"

North Dakota’s Historic Public Bank

The Bank of North Dakota, or BND, is the nation’s only public bank: a government-owned and -operated entity that prioritizes public access over profit, and offers fair banking services to North Dakotans when private banks can’t or won’t. “It is potentially insulating you from loans, lenders, from out-of-state interests who won’t or don’t listen to the concerns of the local economy,” Flynn said.

At the time of its creation, BND’s purpose was to protect the state’s farmer class by offering low-interest agriculture loans. A century later, the bank is still an active force in the state, although its function has shifted, Flynn said, “from an insulator to more of an incubator.”

With $8 billion in assets, BND now offers business and student loans along with commercial services. Its purpose, however, continues to distinguish it from modern private banks. “When a US bank isn’t interested in going into that type of loan or startup, or thinks it’s too risky, BND would get engaged,” Flynn said. “They could point to this mission and say, ‘We’re helping growth, the growth helps the state.’”


Public Banking

“There are an array of viable stakeholder oriented financial institutions ready to take the deposits of many individuals and businesses. Things get a little bit more tricky when we think about a city, like Seattle, divesting and reinvesting. Cities have financial needs that are not easily accommodated by the existing ecosystem of stakeholder oriented financial institutions. Broadly speaking, there are three possible solutions to the puzzle:
(1) making creative use of the existing system;
(2) creating new private institutions;
or (3) creating a new public bank.

Future writings will outline the detail how to explore options (1) and (2), but this post will discuss the public bank option. The public bank movement has been working for years in Vermont, is picking up steam in Oakland, and seems to be garnering quite a bit of focus from divestment activists.

The Public Bank Option

A public bank is a bank owned by a state or municipality. The idea has considerable potential. Let’s walk it.”

And of course, France has a ubiquitous postal banking system. Not impossible to do.

La Banque Postale is the retail banking arm of La Poste who operate alongside the normal post-office counters, or as part of the same counter service.
The banking services offered by La Banque Postale are enjoyed by many millions of French citizens because they are generally less expensive than the main retail banks, they have an extensive branch network, and they are open on a Saturday morning (although this advantage is fast disappearing as some banks start the practice).
Most importantly, until 2009 they had a monopoly of the popular tax free savings account called “Livret A.”
(This monopoly was removed in January 2009, since when all banks are able to offer the product.)
La Banque Postale also offer mortgage services, with rates that are often below those of the main banks.
Nevertheless, their procedures in relation to non-French citizens still leaves room for improvement, and only those who can offer a secure and clear source of income will be accepted for a mortgage.
The bank also offers unsecured loans and a range of insurance products for health cover, and car and house cover.