Public banks can be helpful in emergencies, and what with hurricanes, tornadoes, and all, we sure seem to have a lot of emergencies.
Grand Forks, North Dakota, figured this out after one of their floods. Most banks have to make sure their loans meet the tough safety and soundness requirements of regulators, so they may not come through fast enough for people trying to rebuild after a disaster. Grand Forks isn’t relying on them.
Kelly McCartney at Shareable (by way of the Christian Science Monitor) says that the Public Banking Institute blog at WordPress “cites a powerful example of how a public bank can help a city bounce back from a devastating natural disaster. As Hurricane Sandy recovery efforts unfold, there’s a lesson from history about the role of strong local financial institutions in increasing urban resilience.
“In April of 1997, Grand Forks, North Dakota, was hit by record flooding and major fires that put the city’s future in jeopardy. One of the first economic responders was the Bank of North Dakota (BND), currently the only public bank in the United States.
“What’s a public bank, you ask? Public banks are owned by citizens through their government. They have a public interest mission, are dedicated to funding local development, and plow profits back into the state treasury to fund social programs and cover deficits. Rather than competing with private banks, BND partners with them to meet the needs of North Dakotans. …
“As a public bank, BND was able to respond to the ’97 flood in ways that a privately owned bank could not …
“Right after the flood, the Bank of North Dakota got to work, established a disaster relief loan fund, set aside $5 million to assist flood victims, and set up additional credit lines of around $70 million.” More.
Photograph: Reuters/File
Residents of Grand Forks, N.D., carry their pet dog to safety in the shovel of a frontloader April 20, 1997. The more than 50,000 residents of the city were forced to evacuate as the Red River reached 25 feet above flood level. A public bank, owned by citizens, was a key player in the city’s recovery.
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