Bank of North Dakota

Organization

Under state law, the bank is the State of North Dakota doing business as the Bank of North Dakota. The state and its agencies are required to place their funds in the bank, but local governments are not required to do so.

Services

Other entities may also open accounts at the Bank; however, BND offers fewer retail services than other institutions, and it has only one office. These limit its competitiveness in consumer banking. Instead, BND has taken a role more akin to a central bank, and has many functions, such as check clearing, that might be expected from a branch office of the Federal Reserve. The bank does have an account with the Federal Reserve Bank, but deposits are not insured by the Federal Deposit Insurance Corporation, instead being guaranteed by the general fund of the state of North Dakota itself and the taxpayers of the state. BND also guarantees student loans (through its Student Loans of North Dakota division), business development loans, and state and municipal bonds.

History

The Bank of North Dakota was established by legislative action in 1919 to promote agriculture, commerce and industry in North Dakota. Though initially conceived by populists in the Non-Partisan League, or NPL, as a credit union-style institution to free the farmers of the state from predatory lenders, the bank's functions were largely blocked by out-of-state financial actors refusing to buy the bonds the bank issued to finance its lending, lending that would have provided competition to the commercial banks. The business-backed Independent Voters Association then pursued shutting down the bank politically. The recall of NPL Governor Lynn Frazier effectively ended the initial plan, with BND taking a more conservative central banking role in state finance. The current president and CEO is Eric Hardmeyer; however, the bank itself is managed by the North Dakota Industrial Commission, which is composed of the Governor, Attorney General, and the Agriculture Commissioner (formerly the Agriculture and Labor Commissioner) of North Dakota.

The Bank of North Dakota is the only state-owned facility of its type in the United States other than the Puerto Rico Government Development Bank.