North Dakota has had the nation’s lowest unemployment ever since the economy tanked. What’s its secret?

In an article in The New York Times on August 19th titled “The North Dakota Miracle,” Catherine Rampell writes:

Forget the Texas Miracle. Let’s instead take a look at North Dakota, which has the lowest unemployment rate and the fastest job growth rate in the country.

According to new data released by the Bureau of Labor Statistics today, North Dakota had an unemployment rate of just 3.3 percent in July—that’s just over a third of the national rate (9.1 percent), and about a quarter of the rate of the state with the highest joblessness (Nevada, at 12.9 percent).

North Dakota has had the lowest unemployment in the country (or was tied for the lowest unemployment rate in the country) every single month since July 2008.

Its healthy job market is also reflected in its payroll growth numbers. . . . [Y]ear over year, its payrolls grew by 5.2 percent. Texas came in second, with an increase of 2.6 percent.

Why is North Dakota doing so well? For one of the same reasons that Texas has been doing well: oil.

Oil is certainly a factor, but it is not what has put North Dakota over the top. Alaska has roughly the same population as North Dakota and produces nearly twice as much oil, yet unemployment in Alaska is running at 7.7 percent. Montana, South Dakota, and Wyoming have all benefited from a boom in energy prices, with Montana and Wyoming extracting much more gas than North Dakota has. The Bakken oil field stretches across Montana as well as North Dakota, with the greatest Bakken oil production coming from Elm Coulee Oil Field in Montana. Yet Montana’s unemployment rate, like Alaska’s, is 7.7% percent.

A number of other mineral-rich states were initially not affected by the economic downturn, but they lost revenues with the later decline in oil prices. North Dakota is the only state to be in continuous budget surplus since the banking crisis of 2008. Its balance sheet is so strong that it recently reduced individual income taxes and property taxes by a combined $400 million, and is debating further cuts. It also has the lowest foreclosure rate and lowest credit card default rate in the country, and it has had NO bank failures in at least the last decade.

If its secret isn’t oil, what is so unique about the state? North Dakota has one thing that no other state has: its own state-owned bank.

Access to credit is the enabling factor that has fostered both a boom in oil and record profits from agriculture in North Dakota. The Bank of North Dakota (BND) does not compete with local banks but partners with them, helping with capital and liquidity requirements. It participates in loans, provides guarantees, and acts as a sort of mini-Fed for the state. In 2010, according to the BND’s annual report:

The Bank provided Secured and Unsecured Federal Fund Lines to 95 financial institutions with combined lines of over $318 million for 2010. Federal Fund sales averaged over $13 million per day, peaking at $36 million in June.

 The BND also has a loan program called Flex PACE, which allows a local community to provide assistance to borrowers in areas of jobs retention, technology creation, retail, small business, and essential community services. In 2010, according to the BND annual report:

The need for Flex PACE funding was substantial, growing by 62 percent to help finance essential community services as energy development spiked in western North Dakota. Commercial bank participation loans grew to 64 percent of the entire $1.022 billion portfolio.

 The BND’s revenues have also been a major boost to the state budget. It has contributed over $300 million in revenues over the last decade to state coffers, a substantial sum for a state with a population less than one-tenth the size of Los Angeles County. According to a study by the Center for State Innovation, from 2007 to 2009 the BND added nearly as much money to the state’s general fund as oil and gas tax revenues did (oil and gas revenues added $71 million while the Bank of North Dakota returned $60 million). Over a 15-year period, according to other data, the BND has contributed more to the state budget than oil taxes have.

North Dakota’s money and banking reserves are being kept within the state and invested there. The BND’s loan portfolio shows a steady uninterrupted increase in North Dakota lending programs since 2006.

According to the annual BND report:

Financially, 2010 was our strongest year ever. Profits increased by nearly $4 million to $61.9 million during our seventh consecutive year of record profits. Earnings were fueled by a strong and growing deposit base, brought about by a surging energy and agricultural economy. We ended the year with the highest capital level in our history at just over $325 million. The Bank returned a healthy 19 percent ROE, which represents the state’s return on its investment.

 A 19 percent return on equity! How many states are getting that sort of return on their Wall Street investments?

 Timothy Canova is Professor of International Economic Law at Chapman University School of Law in Orange, California. In a June 2011 paper called “The Public Option: The Case for Parallel Public Banking Institutions,” he compares North Dakota’s financial situation to California’s. He writes of North Dakota and its state-owned bank:

The state deposits its tax revenues in the Bank, which in turn ensures that a high portion of state funds are invested in the state economy. In addition, the Bank is able to remit a portion of its earnings back to the state treasury . . . . Thanks in part to these institutional arrangements, North Dakota is the only state that has been in continuous budget surplus since before the financial crisis and it has the lowest unemployment rate in the country.

He then compares the dire situation in California:

In contrast, California is the largest state economy in the nation, yet without a state-owned bank, is unable to steer hundreds of billions of dollars in state revenues into productive investment within the state. Instead, California deposits its many billions in tax revenues in large private banks which often lend the funds out-of-state, invest them in speculative trading strategies (including derivative bets against the state’s own bonds), and do not remit any of their earnings back to the state treasury. Meanwhile, California suffers from constrained private credit conditions, high unemployment levels well above the national average, and the stagnation of state and local tax receipts. The state’s only response has been to stumble from one budget crisis to another for the past three years, with each round of spending cuts further weakening its economy, tax base, and credit rating.


Not all states have oil, of course (and it’s hardly a sustainable economic basis), but all could learn from the state-owned bank that allows North Dakota to capitalize on its resources to full advantage. States that deposit their revenues and invest their capital in large Wall Street banks are giving this economic opportunity away.


 This article was written for YES! Magazine. Ellen Brown is an attorney, president of the Public Banking Institute, and the author of eleven books, including Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free. Her websites are and

11 Responses

  1. I really think that the oil boom in North Dakota is the main reason for the economic miracle there, as I work in the industry, and currently there are so many jobs being created by the industry they are pulling people in from everywhere to keep up the pace. There is no larger drilling play in the nation and it has been ongoing steady the past 2-3 years…especially this year and last.

  2. very smart

  3. Everyday when I awaken and just before I retire,I pray that the next breaking news is that “Bank of America” was placed in receivership by the FDIC , and the FDIC will sell off all assets but KEEP ALL LOANS. They will then renamed the bank…..”THE FEDERAL BANK OF THE UNITED STATES OF AMERICA” with all of the branches remaining open for business.BUT not for deposits or checking accounts since those assets would have been sold off to the other banks.
    “THE FEDERAL BANK OF THE USA” will then buy all loans
    from banks as needed in order that they qualify
    for the new reserve requirment of 50% within the next 90 days.
    FED BANK USA will have a main branch in each state and one in D.C.
    Total 51.EACH MAIN BRANCH wil have a $1 trillion reserve deposit made by the US Treasury.This is allowed by Congress by requesting the US Mint to produce 51 coins in Platinum with a $1 trillion face value.
    Oh,before I wake up,This also occurred..the solution for Freddie and Fannie.They were turned over thru a stock sale to the public .Their shares went thru the roof because they were turned into a service corporation in order to have an outside company service the potential $51 trillion in loans that FED BANK USA will write (read make outright not the old dumb way…guarantee).
    I am still dreaming.$51 trillion outstandig in loans to taxpayers (people and “people” corporations) paying interest of @ 5% to taxpayers would generate $2.5 trillion in profit.Start making new loans get that figure, using fractional banking, up to $100 trillion and get rid of personal income taxes.Or better yet,since I can dream,make the income tax simple;first $75,000 exempt,then 10% tax up to income of $1,000,000;then 20% over $1,000,000.
    I think this would be called,Taxpayers using taxpayers money to pay taxpayers to insure the general welfare.I dreampt that was somewhere in the US Constitution.
    May God continue to bless America.

  4. Word of the lawsuits by the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, came as a surprise to the market and weighed on bank shares. The lawsuits could add billions of dollars to the banks’ potential legal costs at perhaps the worst possible time for the industry.
    The FHFA plans to accuse major banks, including Bank of America Corp and JPMorgan Chase & Co, of selling bonds backed by mortgages that should have never been packaged into securities, said the sources, who are familiar with the matter. Neither source was authorized to speak on the record. A spokeswoman for the FHFA declined to comment.

    FHFA and various investors have alleged that banks, while packaging residential home loans into securities sold to investors, failed to conduct adequate due diligence, and hid or misstated the quality of the underlying loans and underwriting as well as borrowers’ ability to make payments.
    As more borrowers fell behind or went into foreclosure, the value of securities backed by their loans fell, causing losses for investors.
    Losses stemming from the precipitous deterioration in subprime and other mortgages pushed the government to take over Fannie Mae and Freddie Mac on September 7, 2008. Since then, taxpayers have spent more than $140 billion to keep the firms afloat.
    Major banks already face potential payouts of tens of billions of dollars to settle regulatory charges of abusive mortgage lending and foreclosure practices, and other investor lawsuits over mortgage debt losses.

    THE “INVISIBLE HAND” can work a deal:All banks are to sell their mortgage assets to Bank of America so they can be “rescued as too big to fail” and Bank of America would be thrown into receivership by the FDIC.FDIC will sell all assets ( minus loans) and pay $7.00
    per share for all BAC shares thereby OWNING THE BANK and all its branches.The renamed bank will be called “THE FEDERAL BANK OF THE UNITED STATES OF AMERICA”. It will be funded by the US TREASURY with $51 Trillion dollars as allowed already by law.
    Instructing the US Mint to deposit 51 newly minted Platinum $1 trillion coins which by law they would have to turn over the profits to the US TREASURY.And just like the State Bank of North Dakota,we the people may just have solved “the housing crises.long term lower cost mortgages made by our own bank ,(36 yr @ 4%).Create 2 million jobs with commercial loans to business at terms of first year payments interest only then at 6% for 36 years.Create another million jobs with new home loans.Terms 5% down,then 4% for 36 years. TAXPAYERS paying interest for TAXPAYERS.The $51 trillion will not be spent!! It will be on the balance sheet as $51 trillion mortgage assets.This asset will double every 18 years….1 X 18 = 102 trillion,2 X 18 =204 trillion..good-bye taxes.
    And as for Freddie and Fannie as a reward for finally stepping up and doing the right thing,their shares will be sold as a new issue for $15 a share.They will become THE SERVICER FOR THE LOANS and being paid 1% that comes to $510 billion over 18 years.
    May God continue to bless America


    • I agree, instead of paying interest to banks for money they get from the government just pay government the interest and use that money to offset taxes. Essentially this is what is happening in North Dakota, to a degree anyway, and if this was implemented on a Federal or even a State level the collapse of the middle class would reverse and become a massive expansion of it.

  5. Great work your doing Ellen, yet here we stand on the brink of social disaster waiting for another white rabbit moment from the wizard, having no faith in his magic or understanding. Wish i could devise a game based on banking called ‘international banker’ for computers, and get it out for christmas perhaps more people would get it.

  6. This Federal Reserve and the US banking system has bothered me for quite some time. I am beginning to draw on the days when I lived in Texas and helped run and was a part owner in a company that was the largest stockholder in a $2 B in deposits state bank. The state bank went busted in the mid 1980s and I have always believed it was run out of business illegally. As I see it there a two major problems in this country. 1. Companies that get money from the federal government legally are allowed to contribute to political candidates. This is pure bribery and must be stopped. 2. The Federal banking system. The expression power corrupts, absolute power corrupts absolutely is what has happened to the private corporation known as the Federal Reserve. The corruption connected with Banksters has gotten so bad it has come to the point that the people must stop the Banksters or literally we will be killed. So I think I like the idea of states owning a state bank and working in conjunction with privately owned state banks. Boy this country missed an opportunity – instead of bailing out the Banksters we should have allowed Banksters’ fail. But there are going to be other opportunities to let the Banksters’ fail. Banksters with $ 200 Trillion is bets will go bust again. My guess is Banksters figure they own Congress and will get bailed out until they own everything. When Banksters own everything we are facing a de facto firing squad. With all the bets Banksters have in EU, the people should be in a position to rise up against the Fed soon.

    • What you say is true and I would not be at all surprised if the bank you mention was torpedoed using unethical means but there is one theme I would question. That is the idea that the individuals who are most responsible are consciously evil. By “consciously” I mean their view of themselves and their actions. I am sure that most of them have found ways to justify their greed and thirst for power and therefore have come to look upon themselves as benevolent, that is the ones that have even gone that far along the path of self-awareness, with many just being controlled by reflexive greed and a complete lack of awareness about themselves or life outside of their gilded life of luxury. In some ways that is scarier than pure psychopaths being “the power behind the throne” but I believe it is closer to the truth. Ideas about overpopulation are likely a favorite for the ones who view themselves as benevolent, it is based on a false premise but if one accepts that premise a logical framework can be built upon it that would enable these power hungry individuals to mitigate their guilt so they can continue performing reprehensible actions without hating themselves. Once someone has dug themselves into that pit it would be hard to dig ones way out and so it probably almost never happens.

      Another thing is society is not a victim of this charade but a willing partner. If a critical mass of people rejected the current system there would be no other option except for it to end because it is very hard to justify firing squads such as the ones you allude to and the odds that the squad would follow those orders in this day and age, if a critical mass of people were aligned with changing the system, is slim to none. The blame does not solely rest on those that take advantage of society it also rests on the society that allows them to do it. As the french revolution shows, it is impossible to impose on a society that refuses to be imposed upon and that is even more true today with the widespread belief in democracy, even if it is just a representative one. Within a democracy violence is not necessary, just a critical mass of aware voters, so the situation today, which may look hopeless right now, is actually a step ahead of where the french were before the revolution, the questions are how bad will it get before a critical mass of people is reached and what solutions will that critical mass come up with. The latter one is the scariest question, in my opinion, and if the wrong solutions are propagated it could very well get even worse before a better solution is arrived at and it gets better.

  7. Ms. Brown, I’d like to add to this discussion that ND is one of the highest resipients of Federal monies, receiving $1.68 for every $1.00 of federal taxes paid. See:

    It’s been a while since I investigated this, but my recollection is, bottom line, the Federal spending in ND brings far more money to the state than their banking system. I have no doubt that their state / private bank relationship is good for the people of ND; but I would like more of a case made for how much benefit it is to their economy vs other factors. You have addressed one of them in this article (oil production). Can you please address the Federal spending issue?


  9. […] of course, Ellen Brown has written extensively close North Dakota’s publicly-owned bank as well as how non only did they non sense the housing bubble crash, but they really heleped the […]

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: