In 2014, the state Bank of North Dakota was more profitable than Goldman Sachs and J.P. Morgan Chase. And, that's why every state should own their own depository institution.
Most people attributed the Bank of North Dakota's success with the oil boom in the region, but their latest report shows that last year was their most profitable year ever, despite the fact that their state's oil boom has become an oil bust.
In fact, for each of the last 12 years, the Bank of North Dakota has outperformed each previous year, and their return on investment last year topped 18 percent.
While the rest of the banking industry was dealing with the turmoil of the last financial crash, the state-owned depository bank was propping up the economy. And, once again, as North Dakota's economy suffered because of the decline in oil prices, their state-owned bank has helped fund 300 new local businesses, which means a ton of local jobs.
If other states had their own banks, they could help stimulate local economies when times get tough, and they can do so without handing over millions in profit to Wall Street.
For example, if the state of California created their own state bank, they could save billions on fees and interest currently going to the big banks. And, they could better protect state pension funds and finance modern infrastructure projects like a bullet train or new green energy.
Rather than simply throwing money away in the form of interest and fees, states could protect depositors, boost local economies, and fund the new infrastructure needed for the modern era.
North Dakota has proven that state-owned banks are a win-win for all of us, and more states should follow their example.
-Thom
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