Why is Socialism Doing So Well in Deep Red North Dakota?

Tim Porter, Chief Administrative Officer: $122,533.95

Joe Herslip, Chief Business Officer: $105,000.00

Lori Leingang, Chief Administrative Officer: $105,000.00

Wally Erhardt, Director of Student Loans of North Dakota: $91,725.92

The very existence of a successful BND undermines Wall Street's claim that in order to attract the best talent big banks need to offer enormous pay packages. But somehow North Dakota is able to find the talent to run one of the soundest banks in the country?   The BND is living proof that the Wall Street high pay rational is a self-serving fabrication.   (For more information on financial inequality please see my latest book, How to Earn a Million Dollars an Hour, Wiley, 2013)

Wall Street is gunning for Bank of North Dakota

As you can well imagine, financial elites would love to see this successful (socialist!) bank disappear. Its salary structure and local investments makes a mockery of Wall Street's casino banking system.  But the bigger threat comes from the possible spread of this public banking concept to other states. Already, there are twenty or so state legislatures that are exploring state banks.  Collectively, more public banks would pose an enormous threat to the $1 trillion of state and local bank deposits that now run through Wall Street.   

But elite financiers also stand to lose much more. In the 49 states without a public bank, there's no safe place to turn for loans to rebuild schools and finance other public infrastructure projects. That creates an enormous opportunity for Wall Street firms to hook localities on expensive bond programs like capital appreciation bonds, which can lead to repayments equaling ten times the original loan.   Investment bankers and advisors also can make enormous fees by selling expensive, high risk financial schemes to state and local governments. ( See investigative report here. )   But such schemes are useless in North Dakota where the state bank provides the capital for a fraction of the long-term costs.

Free Trade Agreements: Wall Street's Weapon of Mass Destruction:

Clearly from Wall Street's perspective the North Dakota bank must go, and all other state efforts to replicate it must be thwarted.  Wall Street's stealth weapon may be lodged within the latest Pacific Rim free-trade agreement called the Trans-Pacific Partnership (TPP) which currently is being negotiated in secret. We already know that Wall Street is seeking to remove all tariff restrictions that prevent  the U.S. financial service industry from doing business in countries like Brunei, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.  The biggest banks also want the treaty to eliminate "non-tariff" barriers including regulations that create "unfair" competition with state-owned financial enterprises. Depending on the final language it is possible that the activities of the Bank of North Dakota could be declared illegal because "foreign bankers could claim that the BND stops them from lending to commercial banks throughout the state," according to an analysis by Sam Knight in Truthout.  How perfect for Wall Street: a foreign bank can be used as a shill to knock out the BND.

The Public Bank Movement

A small but highly dedicated group of financial writers, public finance experts and former bankers have formed the Public Bank Institute to spread the word.  Working on a shoe string budget, its president Ellen Brown (author of Web of Debt), and its executive director Marc Armstrong have become the Johnny Appleseeds of public banking, hopping from state to state to encourage legislatures to explore state-owned banks.

The movement is gathering steam as it holds a major conference on June 2-4 at Dominican University in San Rafael, CA featuring such anti-Wall Street hell raisers as Matt Taibbi and Gar Alperowitz along with Brigitte Jonsdottir, a member of the Icelandic parliament and Ellen Brown.  

Is America up for this fight?

Except during the inspiring interlude created by Occupy Wall Street, the financial community has wriggled off the hook.  In fact, fatalism may be replacing activism as we sense that maybe Wall Street simply is too big and too powerful to change. After all the big banks seem to own Washington, as too-big-to-fail banks are permitted to grow even larger and more invulnerable to prosecution and control.

But this new public banking movement could have legs, especially if it teams up with those fighting for a financial transaction tax (See National Nurses United .) Most Americans remain furious about how financial elites profited from the crisis -- before, during and after --   while the rest of us pick up the tab. Americans know deep down that Wall Street is the predator and we are the prey.

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