|| Print ||
|Articles - March 2011|
|Wednesday, March 02, 2011|
Page 2 of 4
There is only one state bank in the nation, the Bank of North Dakota. It was established in 1919 to give farmers more control and greater access to capital. Ninety-two years later it has evolved into a 170-employee institution with $4.2 billion in assets and an impressive record of performance. “We’ve had record profits for seven years in a row,” says bank president Eric Hardmeyer.
Hardmeyer has run the bank for the past 10 years. As an indication of the importance of his role, his predecessor John Hoeven left to become first governor and later U.S. Senator.
Hardmeyer explains that the Bank of North Dakota is funded through captive deposits. All taxes and fees collected by state government funnel through the treasury into the state bank, rather than going out to bid with private banks. The state bank uses that money to fund state services and manage a $2.8 billion loan portfolio, partnering with community banks in the private sector to boost agriculture and small business.
If that sounds like socialism, well, it kind of is. And it has worked. North Dakota has the lowest unemployment rate in the nation. Property values did not fall there during the housing crash. The bank transferred $340 million back to the state in dividends over the past dozen years, but has not contributed any money for the current biennium because, amazingly, it is not needed. While Oregon and other states are struggling with billions of dollars in shortfalls, North Dakota enjoys a budget surplus.
Hardmeyer is quick to clarify that he doesn’t recommend that other states try to replicate his bank’s model. Asked what advice he has to offer to states considering it, he says: “You’d better staff it with bankers, not economic development folks. Or else you will have a very expensive, short-lived experiment… The other issue is to make sure you aren’t competing with the private sector.”
Linda Navarro, CEO of the Oregon Bankers Association, says the Bank of North Dakota resulted from a “quirk of history” that has little to do with modern realities. “For most community banks, the crux of their business is commercial lending,” she says. “They are looking for good business loans to make… They just need to make sure the loans can be repaid.”
Bill Humphreys, CEO of Corvallis-based Citizens Bank, says he has studied the North Dakota model and concluded that a state bank would be against the interests of the state and taxpayers. “I don’t see how a state-owned bank could enter the marketplace and all of a sudden start making loans that aren’t being made now,” he says. “Unless they decide they’re going to take on greater levels of risk.”
Humphreys and other bankers point out that one driving reason behind the financial meltdown was loose, easy credit without proper collateral. A state-run bank committed to lending to businesses would “share the consequences of higher risk with the taxpayers,” Humphreys says. “This is not a good time to do this. If you look at the state as a business, they are in such a deficit position that they have no business investing in anything.”
Friday, September 12, 2014
BY TOM COX | OB BLOGGER
I often talk about what leaders can do. What about followers? If you’re a team member and you’d like to add positivity to your team, what might you do?
Wednesday, August 27, 2014
Kim Ierian, President of Concorde Career Colleges, and Deborah Edward, Executive Director of Business for Culture & the Arts, share their recent reads.
Sunday, October 12, 2014
BY LINDA BAKER
Cylvia Hayes, tabloid vs. watchdog journalism and the looming threat of a Cascadia earthquake.
Wednesday, October 08, 2014
BY LINDA BAKER | OB EDITOR
A Design Week panel discussion raises questions about how innovative we really are.
Monday, October 06, 2014
BY LINDA BAKER | OB EDITOR
Intel's manufacturing way station; Merkley's attack dog; Diamond Foods gets into the innovation business.
Wednesday, August 27, 2014
Tom Cox interviews Pete Friedes, author of "The 2R Manager," about becoming a Best Boss.
Thursday, August 28, 2014
OB Research Editor Kim Moore shares some pointers about the 100 Best Companies to Work For survey.
|The 100 Best Nonprofits to Work for in Oregon 2014|
|A Recipe for Success|
|Uber considers flu shot delivery service|
|P&G plans to exit Duracell|
|Target to offer free holiday shipping|
|Caterpillar gains after raising forecast|
|Dow Chemical profit up 44%|
|Boeing profit jumps 18%|
|Verizon posts higher Q3 revenue|
Is your business ready to join us in the call for action? This opening panel includes Oregon businesses who will discuss why they signed the Oregon Climate Declaration, the investments they are making to reduce carbon emissions, and how their actions are affecting their companies.
Get ready for two days of special events produced with the EPA, Portland Timbers and ISOS before and after the GoGreen Conference on October 16.
Finding a health insurance plan that makes both financial sense for the bottom line and provides choice for plan participants is a huge challenge for employers.
The right financing at the right time is critical for small businesses to succeed.
Among Oregon universities, Oregon Tech is special in the way it incorporates applied research into the curricula of every department.
More than 400 "Change Makers" will gather to invest in a socially sustainable community.