Bank of North Dakota | Hacker News Reader

Bank of North Dakota

en.wikipedia.org

63 pointspopcalc35 comments

How is BND's success influenced by the very small size of its assets held relative to other banks? The BNY would have assets comparable to those of a major commercial bank.

Not sure how you are comparing them but BNY was a major commercial bank until it sold its retail to chase. Now it’s a too big to fail private financial services company.

BND is interesting because it’s literally North Dakota, the states, banker. BNY governmental association is long gone in comparison.

I thought they were saying that a hypothetical state run "Bank of New York", set up similar to BND, would have a lot more assets. They weren't referring to any real organizations called BNY.

Yep, that's what I meant. Sorry!

Hard to know honestly. My personal (non-expert) opinion is that the assets are the less important attribute. The more important attribute is the small size and high uniformity of the state population and the industry mix of the state.

That makes the policy decisions for bnd less contentious and non-competitive which allows it to do things other bigger states might not be able to do with a state bank.

The asset size seems incidental to the population size. But perhaps not.

That makes sense. I'm sort of operating under the assumption that it's straightforward to get X returns at Y AUM but much harder to do that as Y grows.

Nice to see this posted. Understated in this is that BND also helped North Dakota avoid the worst of the mortgage crisis, and that the student loan program (combined with decent state universities) make education more affordable. As far as banks go, BND is a gem.

When I was in college, I took a number of Econ courses, and I still remember the Macro Econ professor talk about banks failing. This was in the mid 90's. He flat out said that a bank failing is something that just doesn't happen anymore. He pretty much said, you'll never see it happen. This is before they repealed the Glass-Steagall act.

I still remember the mortgage crisis unfold in disbelief that they didn't see it coming. I worked in finance at the time, and I truly realize how fragile businesses (banks, etc.) are, and our trust in a number of things is completely unfounded. We have certain protections now, but I understood at that moment why people my parent's age (born during WWII) and older didn't trust banks, etc.

I had the same feeling. I remember the first time I looked at the accounts of North Rock (covering for a colleague at a small fund manager), the first British bank to fail (and the only one to go under rather than getting a bailout) and being horrified at its reliance on interbank markets.

A lot of British banks needed bailing out, but but building societies (mutuals owned by customers, traditionally mortgage lenders but mostly full service retail banks) were fine, but big banks and at least two former building societies that had demutualised were not.

From that point of view it sounds as though Bank of North Dakota sounds like another example of different ownership structures enabling greater stability than shareholder owned big banks do.

It was the banks holding MBSs that failed. Banks always hold mortgages. With Glass Steagal the investment banks couldn't have jumped in to do the rescues.

Can anyone who has a real world hands on experiential understanding of the banking system explain to me what exactly bank “capital” is? I’m well aware reserve requirements aren’t a thing anymore and that bank capital is different.

I would find it rather amusing if other banks’ liabilities can somehow be defined as a bank’s capital, because it would mean bank capitalization in aggregate is really just banks expanding their balance sheets. This in turn would suggest that it’s mainly, from an outcomes perspective, about allowing the major banks to dictate to the smaller ones by the former conditionally refusing to expand their own balance sheets to coerce the latter.

Bank capital is trivially defined as the difference between assets and liabilities on the balance sheet.

What you are probably more curious about is regulatory capital. That unfortunately is very complex. Each regulator will have different formulas for how to calculate that (some of which are informed by state or national law or even international treaty).

Regulators generally are pretty hyper focused on contagion risk when it comes to nested balance sheets. Though obviously there are cases where new financial instruments or changed regulatory regimes leave the regulators flat footed (see 2008) it’s reasonably rare in first world western style economies.

> I’m well aware reserve requirements aren’t a thing anymore

Uhh, where did you hear this?

Probably in relation to https://www.federalreserve.gov/monetarypolicy/reservereq.htm

Ahh, I guess that makes sense. I do want to point out that the reserve requirement ratio is currently at zero does not mean that it’s “not a thing anymore”.

I wish there was some books, lectures, etc. about what makes BND unique and what it does. Can’t find anything.

Right in the External Links section of TFA.

- Bank of North Dakota Documentary, produced by Prairie Public Television https://www.youtube.com/watch?v=L75oinBuY1g

- The BND Story: 100 Years, 1919–2019 https://thebndstory.nd.gov/

Ellen Brown has written about public banks in general, and BND specifically. https://ellenbrown.com/

There's https://thebndstory.nd.gov/the-early-years/the-birth-of-the-... which clicks through to a decent amount of historical info.

But if you're taking about like a modern comparison, yea, probably gotta find an expert in banking regulatory law and ask them. (And if they're not in the Midwest, you might need to ask them to read up and learn first, and then tell you lol)

Not directly about the bank, but [Insurgent Democracy](https://press.uchicago.edu/ucp/books/book/chicago/I/bo210283...) is a great read. The Non-Partisan League successfully organized rural farmers against corporate power in the 1910s & 20s. Though they only were in power for a decade or so, their legacy is still quite strong. BND, state hail insurance, and a state-run grain mill to name a few!

Great book.

Why should I care when credit unions have always treated me better? Banks don’t need to exist in a world where credit unions work.

Credit unions need to be more directly tied to “left wing thought” in general. Most Bernie types hardly even talk about the role that banks (even public banks like this one) play in screwing the little person over beyond meme stuff like housing which isn’t even in their control.

How is BND screwing the little person?

It’s not, but credit unions don’t either and they’re more “left wing” ideologically.

>> How is BND screwing the little person?

> It’s not, but credit unions don’t either and they’re more “left wing” ideologically.

Are you just being idiosyncratic? "State-owned business" (like the BND) sounds pretty "'left wing' ideologically" to me.

And why do I care whether my financial institution is more "left wing" ideologically?

More: If they are, why would I regard that as a good thing?

Ideology is the last thing I want from a financial institution.

I absolutely do want my financial institution to have an ideology which is centered around customer service rather than profit extraction. I switched to credit unions a long time ago and I will never go back.

Outside of Wells Fargo - which is just god awful in so many ways - I'm no longer getting a different experience from banks vs credit unions. Sometime before covid I feel like the line between bank and credit union blurred and eventually went away, in relation to customer experience. I have money scattered across many institutions; I get the same treatment at both bank and credit unions now.

From a technology perspective, bank & CU core systems all have approximately the same schema. The front and back offices are virtually identical business patterns. Most of the difference resides in the regulatory framework, forms, etc. Field of membership and ownership models are probably the biggest impact here.

My sole complaint of my credit union is their obliviousness about MFA. Being a smaller org, I imagine they lack domain experts. A shortcoming I'd expect the trans-galactic guild of credit union (or whatever) to address for its members.

BND's purpose isn't to be a consumer bank.

Part of what BND does is BND provide services to other local consumer banks who provide more consumer oriented services.

> BND's purpose isn't to be a consumer bank.

I think it's trying to also offer consumer services? The article intro says > It is the only government-owned general-service bank in the United States.

In the 'Services section it says > direct lending to private borrowers

And their website has details on a range of basic products for the public: https://bnd.nd.gov/bank-services/public/checking-savings/ https://bnd.nd.gov/bank-services/public/online-and-mobile-ba...

BND has consumer services, but they're not competitive with day to day banking services provided by local banks.

I knew people with accounts there, it was more of a matter of pride that they did their banking there than any other reason.

Because some companies need 500 million in credit or more.

It's almost like this government thing has legs...

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