The Disaster Relief Secret Weapon


| 11/6/2012 2:56:35 PM


Tags: Bank of North Dakota, Grand Forks, Public Bank, Disaster Relief, Hurricane Sandy, Shareable, Kelly McCartney.,
North-Dakota-Flood

This post originally appeared at Shareable.net.
 

The Public Banking Institute blog 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 U.S.

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 compete with private banks, BND partners with private banks to meet the needs of North Dakotans. BND is one reason North Dakota has low unemployment and runs budget surpluses while most states are deeply in the red.

As a public bank, BND was able to respond to the '97 flood in ways that a privately owned bank could not or, perhaps, would not. While Sandy's wrath cost dozens of lives and an estimated $60 billion, Grand Forks' suffered $3.5 billion in losses -- a lot of damage for a town of 50,000, which saw flood waters inundate a staggering 75% of area homes. Fortunately, no one died.

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: