State Sen. Darrell Steinberg, our railroad baronet

 One could have a terrible sense that the whole California high speed rail scam was designed finally to end in this: Sen. Darrell Steinberg, High Speed Rail Baronet-Sacramento, and President Pro Tem of the state Senate, proposing to "securitize" cap-and-trade auction funds, generated through the authority of Prop. 32, the Greenhouse Gas Initiative, to fund a project neither courts, private investors, the major railroad companies, or the public wants. A project that has been a scam from gross overcalculations of ridership, of roadbed rights-of-way and widths, to endless games on routes to awarding the contract for the first leg to be built -- from nowhere to nowhere in the middle of the San Joaquin Valley -- to a company owned by US Sen. Dianne Feinstein's husband, Richard Blum, a UC Regent and past chair of the Regents popular in the Valley for his strong promotion of that other outstanding local boondoggle, UC Merced.
Steinberg is just creating a pork barrel for the collection of huge fees by investment banks to big to fail, which fees are generated by enterprises that pay to continue to pollute in one more of the "free market" solutions to environmental disaster formulated by politicians who live below the lint level in the pockets of plutocrats.
We have to ask how -- if the courts agree that the high speed rail authority so altered the intent of the proposition that established and partially funded it that the project must be halted, how will the courts feel about using the greenhouse-gas proposition as a pork barrel the same banks that nearly bankrupted the state in the aftermath of the Great Mortgage Fraud. 
How different the whole project, or better, projects that actually would benefit the public, would look if California had a public bank that did not syphon off private bankers' profits. -- blj

California High Speed Rail Blog
Darrell Steinberg Supports Using Cap-and-Trade Funds for HSR…Robert Cruickshank
State Senate President Pro Tem Darrell Steinberg today announced a new proposal to guide the use of California’s cap-and-trade revenues. It includes earmarking 20% of those revenues for the high speed rail project:
In addition to permanent funding sources for affordable housing and mass transit, the strategy (available here) also provides a permanent source of funding for highway and road rehabilitation to improve traffic flows and repair, to retrofit streets for cycle-lanes, and for the Governor’s High Speed Rail project, which is projected to reduce heavy emissions generated by air and road travel. Senator Steinberg’s proposed strategy identifies funding for green infrastructure projects and clean-vehicle programs, seed funds to assist clean projects, and rebates for consumers.
From the Cap-and-Trade Investment Strategy:
III. A permanent source of funding for High-Speed Rail. (20%)
a. Purpose: Ongoing source for construction of HSR.
b. Allocation method: Continuous appropriation. Could be securitized.
What that means is HSR would would be explicitly authorized as a recipient of 20% of the cap-and-trade revenues. And the California High Speed Rail Authority could borrow against those revenues, which is what the “securitized” reference means.
Securitization of cap-and-trade revenues for HSR would be a game-changer for funding. That means the state could borrow against expected future revenues and have a lot more money available now – maybe, just maybe, enough to build the Initial Operating Segment to Los Angeles.
What might those numbers look like? Cap-and-trade auctions brought in $1.4 billion in revenue in 2013. 20% of that is $280 million a year. If those revenues don’t grow, then that comes out to $4.76 billion by 2030. That’s a big help to the project’s finances but not enough to get the tracks through the mountains and into LA. If those revenues do grow, then so does the HSR share. If cap-and-trade brought in $3 billion a year, HSR’s share is $600 million annually and $6 billion over ten years (say, 2020 to 2030).
30 years is a standard length for a revenue-backed bond. So what if the state were willing to “securitize” 30 years of HSR revenue? That could mean $8.4 billion in revenue at current cap-and-trade revenues and $18 billion at the speculative $3 billion a year in cap-and-trade revenues, though perhaps less depending on how interest costs are paid. That latter amount just might get the tracks into the LA basin.
UPDATE: In fact, Sen. Steinberg’s plan actually includes a projection of $5 billion a year in cap-and-trade revenues. They peg HSR’s share at $878 million each year. Over ten years that’s $8.78 billion. Over 30 years, that’s $26.34 billion – enough to get the IOS built.
There’s a lot of ifs to those numbers and so I don’t want to overstate this. The cap-and-trade money alone, even securitized, may not be enough to build the IOS if revenues don’t grow to projections. But it’s a huge shot in the arm for the project and goes a long way toward resolving the financial and legal problems triggered by Congressional Republican hostility to HSR funding.
Sen. Steinberg’s plan appears to have broad support:
Attending the press conference in support of the strategy:
Robbie Hunter, President, State Building and Construction Trades Council of California
Jim Earp, Executive Director, California Alliance for Jobs
Ann Notthoff, California Director, Natural Resources Defense Council
Tom Adams, environmental activist and retired environmental lawyer
Shamus Roller, Executive Director, Housing California
Marina Wiant, Policy Director, California Housing Consortium
Joshua Shaw, Executive Director of the California Transit Association
Steve Heminger, Executive Director of the Metropolitan Transportation Commission
Bill Higgins, Executive Director, California Association of Councils of Governments
Chris McKenzie, Executive Director, League of California Cities
Mike McKeever, Executive Director of Sacramento Area Council of Governments (SACOG)
Joel Keller, Board President, Bay Area Rapid Transit (BART)
Jeanie Ward-Waller, California Policy Advocate, Safe Routes to School National Partnership
I’m especially pleased to see the NRDC listed here, filling in for the utter lack of leadership we’ve seen from Sierra Club California on this issue.
What’s not immediately clear is how much support this has in the State Senate. But my guess is that Sen. Steinberg would not have proposed this unless he had strong confidence that it had a majority. And since this plan merely allocates existing revenues, rather than creating new ones, it requires a simple majority for passage rather than a 2/3 vote. That gives me confidence that this can become law, especially since one would imagine Governor Jerry Brown would be pleased with this plan.
I gotta say, today was a good day.
Cal Watchdog 
NEW: This is an ‘expedited’ review? Nerve-wracking times on bullet-train front…Chris Reed
Nine weeks ago, the news seemed promising on the bullet-train follies front. Now the picture looks a bit murkier.
On Jan. 24, Gov. Jerry Brown and Attorney General Kamala Harris asked the California Supreme Court to conduct an expedited appeals process that considered the state’s newly filed challenges to a tentative ruling in August and a finalized opinion in November from Sacramento Superior Court Judge Michael Kenny.
The respected veteran judge concluded that the state High-Speed Rail Authority did not have a legal business plan because it had not identified reliable funding for the 300-mile “initial operating segment,” a cost the authority earlier pegged as $31 billion. Kenny also said the state had not completed adequate environmental reviews for the initial segment.
In a strategy that on its surface seems beyond peculiar, the office of Attorney General Kamala Harris did not challenge the core premise of Kenny’s tentative ruling — that the project didn’t have a legal business plan. Instead, the AG merely said the project could continue for now with the state using federal grants that were already in hand.
But after Kenny reacted by putting out a final judgment that found, yunno, the project still didn’t have a legal business plan, the sniping started from the governor’s office and state Democrats. After a month, it led Harris and Brown to seek an expedited review. In February, the state Supreme Court agreed to review their request — but assigned the chore to the 3rd District Court of Appeal. On Feb. 15, the appellate court said sufficient issues had been raised about Kenny’s ruling and the importance of timeliness to the project and that it would conduct an expedited review.
I thought and still think the most likely explanation for this shoddy legal work is that the governor — playing 3-D chess to the rest of the world’s checkers — wanted the dubious, controversial project killed off ASAP. Lawyers I talked to with no stake in the case expressed disbelief that Kenny would hold what’s known as a “remedies” hearing only to have the state provide no remedies to the legal deficiencies he cited in his tentative ruling.
An unexpectedly slow ‘expedited review’
Remember, in its first appeal — when it was supposed to make its full case — the state didn’t dispute that it was breaking the law. This alone prompted some observers to predict the appellate court would rule within weeks in favor of bullet-train opponents.
Nine weeks later, however, the appellate court still is taking testimony and reviewing evidence. A quick decision affirming Kenny didn’t happen. It sounds to me like this case will drag along — with nothing “expedited” about it.
In the big picture, nothing has changed. The bullet train has no funding options after it blows through its initial $13 billion or so in secured state and federal funding. No investors will come forward without the possibility of taxpayer subsidies to protect them if the project goes south, and such subsidies are against state law. In the sequester era of sharp limits of domestic discretionary spending, Congress certainly isn’t going to fund a hugely costly public works project just for one state.
But in the medium picture, if the appeals judges overturn Kenny or in other ways muck with his opinion, we could soon see the state spends billions of dollars on an initial segment of track for a project that will never be completed.
Stranger things have happened. Every day the “expedited review” drags on makes me worry more that the hoped-for summer 2014 denouement to the bullet-train insanity might not happen. Instead, we’ll have it to kick around for at least another year.
On the bright side, if the Brown administration really does start the initial segment in the middle of nowhere without future funding anywhere in sight, maybe then we’ll finally see the establishment ninnies stop proclaiming Jerry to be a good governor just because budgets pass on time.
A $13 billion abject debacle is pretty tough to ignore.
NEW: Sen. DeSaulnier grills high-speed rail CEO on funding…Kathy Hamilton
Editor’s Note: This is Part 2 of a series looking in depth at the latest hearing in the state Senate on California’s high-speed rail blueprint. Part 1 is here.
Skepticism took center stage as the Senate Transportation and Housing Committee held hearings on Gov. Jerry Brown’s proposal to use cap-and-trade revenues to fund the project. The committee reviewed the California High-Speed Rail Authority’s 2014 Draft Business Plan and evaluated the project’s potential for success.
Committee Chairman Mark DeSaulnier, D-Walnut Creek, grilled CHSRA CEO Jeff Morales about getting votes in the Legislature for the cap-and-trade proposal. DeSaulnier was the only senator at the hearings, a video of which is here.
Cap-and-trade revenues come from quarterly auctions of greenhouse gas emission credits by the California Air Resources Board. The program operates under the authority of AB32, the Global Warming Solutions Act of 2006.
Morales said high-speed rail meets the requirements of the cap-and-trade program, but referred the senator to the California Air Resources Board. He added that high-speed rail was part of CARB’s scoping plan before the 2008 vote on Proposition 1A, by which voters authorized the high-speed rail project.
DeSaulnier asked what would happen if the Legislature didn’t approve the cap-and-trade dollars for the train. Morales replied he wanted first to talk about what approval would look like.
He said cap-and-trade dollars would keep the program moving. But that if they don’t get the funding, they would have to look elsewhere for more money. “We would not have the same kind of certainty that we would have with the governor’s proposal” on using the cap-and-trade funds, he said.
DeSaulnier told Morales there will be cap-and-trade fund discussions as the budget debate heats up. But DeSaulnier said the Brown administration faces a huge challenge to get cap-and-trade fund votes. DeSaulnier even said he most likely would be voting No.
DeSaulnier warned Morales that they need to have an honest discussion about the risk about authorizing $250 million of cap-and-trade money that DeSaulnier believes would be better spent in a more targeted way, as proposed by the Legislative Analyst.
Morales confirmed there aren’t any additional grants on the immediate horizon, as the government moved away from grants toward bond financing.
As to private investment, he said there’s strong interest, but nothing certain. “They’re not there yet,” he said of private investors.
Essentially that means no private investor has jumped in and said, “Let us buy the rights to run this train system for you.” No private investment is predicted to be in the picture until the train is built and carries proven ridership.
Business plan
Morales testified that the 2014 Draft Business Plan builds on the 2012 Business Plan.
He said the CHSRA is doing better with the engagement of stakeholders, meaning anyone or any entity affected by the project, such as cities, counties, railroads and residents.
He admitted the CHSRA hasn’t solved all the problems. But he believes most stakeholders would acknowledge the CHSRA is working with them fairly and openly.
In particular, he testified that the CHSRA’s governance has shown a vast improvement. In 2012, they had two-dozen people. Now they have 120 people on board and will fill all remaining slots by June. “We have government people making government decisions,” Morales said.
He said he appreciated many of the comments that were in the Background Paper prepared by the Senate Transportation and Housing Committee. But he took issue with one statement that judged the project a failure. Speaking for the folks working at the CHSRA, he said he didn’t think it was fair to judge the project because they hadn’t laid any track yet and these projects take time.
Other projects
DeSaulnier revealed that he spoke to the staff of famed mega-project expert Bent Flyvbjerg during the Bay Bridge hearings. Flyvbjerg’s staff reported two types of projects were particularly vulnerable to very high cost overruns: tunnels and rail projects, which run as much as 4-1/2 times estimates.
But, DeSaulnier quickly added, Caldecott Tunnel was done on time and on budget, so those statistics didn’t always hold true.
DeSaulnier said the 2014 Draft Business plan is more robust than previous business plans, but still leaves a lot of assumptions. He pointed out the plan wouldn’t be adequate even to get a small-business loan.
DeSaulnier also brought up the ongoing lawsuits against the high-speed rail project, and asked if Morales had confidence that the project will move forward past the lawsuits. The case now is before the Third Circuit Court of Appeal.
“We’re moving forward in good faith in the law and in compliance with it,” Morales said.
With California’s unemployment rate stuck at 8 percent – and even higher in the area where the first rail construction could begin – DeSaulnier asked about jobs creation.
Morales said almost 6,700 people now are working on the project. “The greatest percentage of jobs will come during heavy construction,” he added.
Tutor Perini Corp., the main construction firm, has contracts with 27 small businesses, most in the Central Valley, with others throughout California. Morales said the jobs are providing economic benefits in those troubled areas and will bring “unprecedented investment in the Central Valley,” as well as help diversify the area’s economy.

Merced Sun-Star
High-speed rail loses appeals court bid…Tim Sheehan…Fresno Bee
A state appeals court rejected a petition by the California High-Speed Rail Authority, potentially clearing the tracks for a trial over whether the agency’s controversial and ambitious bullet-train plan can comply with state law.
Three justices with the 3rd District Court of Appeal in Sacramento issued an order late Tuesday summarily denying the rail agency’s March 21 request related to a lawsuit by high-speed rail foes in Kings County. The rail authority had asked the appeals court to overturn a Sacramento Superior Court decision ordering a trial on one part of a lawsuit while another portion of the case is pending an appeal.
“It’s nice when you win one,” said Stuart Flashman, an Oakland attorney representing Kings County farmer John Tos, Hanford homeowner Aaron Fukuda and the Kings County Board of Supervisors. “I thought this (petition) was stupid, and by issuing a summary judgment it looks like the justices thought so, too.”
The appellate decision is the latest development in a complex web of litigation that threatens to stall or kill the proposed $68 billion statewide high-speed rail program, even as the rail agency says it is on the cusp of starting construction on the first 29-mile stretch in Madera and Fresno counties.
The Kings County opponents are suing the rail authority in a two-pronged case filed in late 2011 over compliance with Proposition 1A, the $9.9 billion high-speed rail bond approved by California voters in 2008. The portion of the lawsuit affected by Tuesday’s order involves assertions by Tos, Fukuda and the county that plans for bullet trains to share upgraded, electrified tracks with commuter trains along the San Francisco Peninsula (and to a lesser degree in the Los Angeles area) violates Proposition 1A in several key aspects:
• That the blended system is substantially different from a line of dedicated tracks for high-speed trains that some hard-core advocates and project opponents both say was what voters were promised in Proposition 1A.
• That sharing tracks with the Caltrain commuter line between San Francisco and San Jose will keep high-speed trains from achieving Proposition 1A’s mandate for a 2-hour 40-minute nonstop ride from downtown San Francisco to Los Angeles’ Union Station.
• That the system would not be able to operate without a public subsidy.
Collectively they add up to an illegal expenditure of public funds for the high-speed rail program, according the lawsuit. In early March, Sacramento Superior Court Judge Michael Kenny denied a motion by the rail agency to dismiss this portion of the Tos/Fukuda/Kings County case.
Kenny had ruled last fall on the first phase of the Kings County lawsuit, determining that the rail agency violated Proposition 1A by producing a financing plan in late 2011 that failed to meet the requirements of the ballot measure.
Flashman said he expects that the rail authority will ask the California Supreme Court to review Tuesday’s ruling. “I’m also guessing that review will be quickly denied,” he said. “That means that the trial on the issue of the authority’s violations of Prop. 1A’s requirements ... will move forward, probably sometime this summer.”
In a statement tinged with a hint of defiance Wednesday, rail authority chairman Dan Richard defended the agency’s efforts.
“We are confident that we are complying with the law and are moving forward to create jobs and clean transportation by building California’s high-speed rail system,” Richard said. “Transformative projects historically have faced obstacles and we will continue to oppose all efforts to delay the high-speed rail program.”
Richard’s statement did not indicate whether the agency plans to take its appeal to the state Supreme Court.
The rail authority’s plan for sharing improved Caltrain tracks in the Bay Area was spurred by opposition in communities and among some elected representatives along the peninsula to a new set of dedicated tracks between San Jose and San Francisco and a desire to reduce the costs for the statewide system. In November 2011, a draft business plan issued by the agency estimated the cost for fully dedicated tracks for Phase 1 of the system from San Francisco to Los Angeles through the San Joaquin Valley at more than $98 billion. Later phases would extend the system to Sacramento and San Diego.
By March 2012, the authority had modified its plans, calculating a savings of about $30 billion from sharing the Caltrain right of way and tracks for about 50 miles of the proposed 520-mile Phase 1.
The 3rd District Court of Appeal is also mulling appeals from the rail authority of two other rulings by Kenny over the high-speed rail project: the first piece of the Kings County lawsuit on the 2011 financing plan, and Kenny’s refusal to validate the sale of Proposition 1A bonds needed to pay for the first phases of construction in the San Joaquin Valley

Public Banking Institute
Public Banking Model for a State
Jim Morrow, Ira Dember, Writing Team, PBI Volunteers
Public Banking's Background
Public banking is banking operated in the public interest via institutions owned by the people through their representative governments. Public banks can exist at all levels, from local to state to national or even international. Any governmental body which can meet local banking requirements may, theoretically, create such a financial institution.

Public banking is distinguished from private banking in that its mandate begins with the public's interest. Privately-owned banks, by contrast, have shareholders who generally seek short-term profits as their highest priority. Public banks are able to reduce taxes within their jurisdictions, because their profits are returned to the general fund of the public entity. The costs of public projects undertaken by governmental bodies are also greatly reduced, because public banks do not need to charge interest to themselves. Eliminating interest has been shown to reduce the cost of such projects, on average, by 50%.

When the public interest demands, the mission of public banks is to respond immediately, to assure the long-term prosperity of the community. In the U.S., the Bank of North Dakota is a prime example of such a public bank.

Red River Valley, Recorded by Woody Guthrie
ASCN Recordings
From this valley they say you are going
We will miss your bright eyes and sweet smile
For they say you are taking the sunshine
That has brightened our pathways awhile

Come and sit by my side, if you love me
Do not hasten to bid me adieu
Just remember the Red River Valley
And the cowboy who loved you so true

I've been thinking a long time, my darling
Of the sweet words you never would say
Now, alas, must my fond hopes all vanish
For they say you are gong away

Do you think of the valley you're leaving
O how lonely and how dreary it will be
And do you think of the kind hearts you're breaking
And the pain you are causing to me

They will bury me where you have wandered
Near the hills where the daffodils grow
When you're gone from the Red River Valley
For I can't live without you I know

Grand Forks flood, 1997

Did You Know...?
Public banking was first introduced in America by the Quakers in the original colony of Pennsylvania. Other colonial governments also established publicly-owned banks. The concept was later embraced by the State of North Dakota, the only state to currently own its own bank.

As of the spring of 2010, North Dakota was also the only state sporting a major budget surplus; it had the lowest unemployment and default rates in the country; and it had the most community banks per capita, suggesting that the presence of a state-owned bank has not only not hurt but has helped the local banks.

The BND was founded in 1919 to insure a dependable supply of affordable credit for its farmers, ranchers and businesses. 

Without affordable credit, average Americans who do not have substantial wealth cannot make the investments in their families and small businesses necessary to insure a prosperous future.

The Bank of North Dakota makes low interest loans to students, existing small businesses and start-ups. It partners with private banks to provide a secondary market for mortgages and supports local governments by buying municipal bonds.

The public banking model used by the State of North Dakota is simple - the State of North Dakota is doing business as the Bank of North Dakota (BND). That means all the state's assets are used to capitalize the BND.  By law, all the state’s revenues are also deposited in the Bank.  Among other advantages, this gives the BND the ability to participate in loans originated and led by private banks, which then have more flexibility to manage and expand their loan portfolios.

As a public bank, the Bank of North Dakota pays its dividend to its only shareholder - the people of the state. In the past decade, despite its small population and modest volume of economic activity, the Bank of North Dakota has returned over $300 million to the state’s general fund, helping to ensure regular annual surpluses and eliminate the need for drastic tax increases or spending cuts for vital public services.

Most states, with the exception of North Dakota, currently deposit their tax revenues (the public's money) in private Wall Street banks, which use these deposits for their own private gain.  This money could be deposited in the state's own bank and used to fund projects and programs that benefit the public over the long term - the very same projects/programs that are currently being cut from state budgets.

The Bank of North Dakota is only one of many public banking models that have developed historically around the world.  For most of the twentieth century in Australia, the publicly-owned Commonwealth Bank of Australia was not only the nation’s central bank but engaged in commercial banking, “keeping the other banks honest.” In Alberta, Canada, the publicly-owned Alberta Treasury Branches connect nearly every town in a shared credit system. Public and private banks operate effectively together in many countries, including Switzerland, Germany, India, China and Brazil.

Clearly, states and municipalities have the potential to leverage their revenues to a much greater degree than is currently practiced.  The Public Banking Institute has been set up to explore and educate regarding this potential.
Public Banking to the Rescue
How BND Help Save Grand Forks, ND in 1997
Folks in Grand Forks, North Dakota will never forget April 1997, when record flooding of the Red River and major fires devastated the city. They also won't forget that it was Bank of North Dakota--the nation's only bank owned by a state--that put people above profits. The BND rushed to the rescue with financial flexibility and generosity of spirit in the public interest that no privately owned bank could match.

From this valley they say you are leaving.
We will miss your bright eyes and sweet smile,
For they say you are taking the sunshine
That has brightened our pathway a while.

Unlike the cowboy's lament, for Grand Forks, sunshine was part of the problem. Most years, the region's winter snows melt gradually over a span of months. But by mid-March, temperatures had hovered below 40 degrees for four months straight. Ten feet of undiminished accumulated snow pack loomed in the Red River watershed. Beginning March 18th, temperatures suddenly warmed above freezing and remained high for 27 days straight. Runoff from snowmelt swelled the Red River and its tributaries into torrents.1

So come sit by my side if you love me.
Do not hasten to bid me adieu.
Just remember the Red River Valley,
And the cowboy that loves you so true.

The National Weather Service predicted the river would crest at 49 feet, equal to the area's highest previous flood level in modern history. Sandbag dikes, built to handle a flood at that level, protected the town--until they didn't. On April 16 the Red River surged to 49 feet and, in subsequent days, kept rising: 50, 52, 54 feet. On April 18, floodwaters breached a dike, then others.2 All hell broke loose.

Mayor Pat Owens ordered 50,000 people to evacuate3-at the time the largest US evacuation since Sherman's burning of Atlanta, 133 years earlier. But Grand Forks' troubles had only begun. In a turn of events that would make Murphy blush, floodwaters shorted electrical equipment in a downtown building. National news media carried dramatic pictures of firefighters struggling to fight blazes in buildings surrounded by water. Fire spread to apartments where 40 stalwarts had defied Mayor Owens' evacuation order. Emergency workers had to rescue them from both fire and flood before firefighting began. The inferno consumed 11 buildings, 60 apartments, and the Grand Forks Herald, with its 120-year archive.4

The Toll

Incredibly, not a single person in Grand Forks died as a result of these twin disasters. But the town and its sister city, East Grand Forks on the Minnesota side of the river, lay in ruins. Floodwaters covered virtually the entire city and took weeks to fully recede.5 Property losses topped $3.5 billion.6

The flood inundated 16 of 22 local schools, 315 business and a staggering 75% of area homes. In all more than 5,000 businesses were affected by an earlier blizzard plus the flood and fire. Some businesses sustained only minor damage; others were totally destroyed.7

Enter BND - North Dakota's Public Bank

Soon after floodwaters swept through Grand Forks, the state-owned Bank of North Dakota began taking unprecedented action to help families and businesses recover. Led by BND's then-president and CEO John Hoeven--future North Dakota governor and US senator--the bank quickly established nearly $70 million in credit lines:8

·  $15 million for the ND Division of Emergency Management

·  $10 million for the ND National Guard

·  $25 million for the City of  Grand Forks

·  $12 million for the University of North Dakota, located in Grand Forks

·  $7 million allocated to raise the height of a dike at Devil's Lake, about 90 miles west of Grand Forks

BND also launched a Grand Forks disaster relief loan program and allocated $5 million to help other areas affected by the spring floods. With BND leading the way, local financial institutions matched these funds, making available more than $70 million altogether.9

Flooding swept away many jobs, leaving families without a livelihood. BND coordinated with the US Department of Education to ensure forbearance on student loans. The bank also worked closely with the Federal Housing Administration and Veterans Administration to gain forbearance on federally backed home loans and to establish a center where people could apply for federal/state housing assistance. Further, BND worked with the North Dakota Community Foundation to coordinate a disaster relief fund, and the bank served as the fund's deposit base.10

BND didn't stop there. Agriculture has long been a North Dakota economic mainstay. In the Great Depression, BND helped keep families on their farms.11 With the record 1997 spring floods, many farm families again faced financial ruin. BND responded by reducing interest rates on existing Family Farm and Farm Operating programs. Families used these low-interest loans to restructure debt and cover operating losses caused by wet conditions in their fields.12

To help finance the disaster recovery, BND obtained funds at reduced rates from the Federal Home Loan Bank, in turn enabling the publicly-owned bank to pass along cost savings to flood-affected borrowers in the form of lower interest rates.13

Some impacts can be readily measured; others may be deduced. Between the 1997 floods and 2000, Grand Forks lost 3% of its population. Sister city East Grand Forks, right across the river in Minnesota, lost 17% of its population in the same period.14 Coincidence? Or did Grand Forks--one minute away by car--achieve a more rapid, more graceful economic recovery, in part because of what North Dakota's unique, publicly-owned bank accomplished there? Likely, one could also compare the results of BND's efforts to what happened in New Orleans, after hurricane Katrina, and end up with the same answers.

Conclusion: Unparalleled Advantage

In 1997 the people, businesses and institutions of Grand Forks, North Dakota experienced firsthand the unparalleled ability of a publicly-owned bank to place the public interest above all other considerations. Because BND has no shareholders other than the State of North Dakota, it has far-reaching flexibility and, in emergencies like the 1997 flood, can act quickly to catalyze and coordinate resources ranging from federal agencies to local community banks.

No other institution in the wake of 1997's overwhelming disaster combined the credibility, clout, capital, and connections to protect the public interest as BND did for North Dakota families and small businesses.

The same holds true today. People and businesses across America are drowning in unsustainable debt. They face a flood of foreclosures, many with home values that are "underwater." Meanwhile conventional banks keep credit tight, drying up the very resource that businesses need to hire more people and get the economy moving again.

If each state had its own public banking institution, today's drastic situation might be very different.

Just ask anyone in Grand Forks who lived through 1997.


1. "1997 Red River Flood in the United States",

2. Ibid.

3. Ibid.

4. "1997 Red River Flood",

5. Ibid.

6. Ibid.

7. "1997 Red River Flood in the United States",

8.   "North Dakota Response to the 1997 Disasters", North Dakota Department of Emergency Services (2007).

9.   Ibid.

10. Ibid.

11. "BND Resurgence / The Depression Years", Bank of North Dakota.

12. "North Dakota Response to the 1997 Disasters", North Dakota Department of Emergency Services (2007).

13. Ibid.

14. "1997 Red River Flood in the United States",