State Bank Channels Public Money, Backs Coal Plant

Washington state Sen. Bob Hasegawa says people deserve control over their tax dollars. Yet governments still borrow to finance public projects while private banks use public deposits to earn money for shareholders. “So we're essentially borrowing what otherwise would be our own dollars back just so we can build infrastructure or finance other programs,” he said. A state work group is expected to deliver an implementation plan to the legislature by mid-2027. For now, the public-bank debate is moving through the same political institutions that control public money.

Who Controls the Money

North Dakota’s state-owned and -operated bank holds state deposits, makes loans and uses its financial role to support economic and industrial goals. The Nonpartisan League won power in 1918, and the legislature authorized the bank in 1919. It remains the only surviving state-owned and -operated bank in the country.

The Nonpartisan League grew from the progressive farmer-labor movement. Arthur C. Townley, a former Socialist Party member and failed flax farmer, traveled the state in a borrowed Ford Model T, advocating public ownership of banks, mills and factories. Today, the institution that followed manages about $11 billion in assets.

The bank's money has helped reduce interest rates on agriculture, energy and housing loans, support small community banks, and provide farmers with loan assistance. In 2026, it provided $500 million in loan support amid challenges from Trump's tariffs, low commodity prices and high input costs. It also offers low-interest direct student loans to North Dakotans attending college.

The state general fund supplies most of the bank’s deposits, combining tax and fee revenue. The legislature can return profits to the general fund for the state budget or use them for investments benefiting state industries. The bank discourages individual deposits because it wants to avoid competing with community banks.

Public Tools, Political Limits

Washington, Massachusetts, New Mexico and California are pursuing public-bank proposals. A Washington work group is developing an implementation plan, while proposals elsewhere have moved through legislative and municipal channels. New York City Mayor Zohran Mamdani cosponsored an assembly bill that would have allowed municipalities and local governments to establish public banks. Rep. Alexandria Ocasio-Cortez and Rep. Rashida Tlaib led a congressional bill to make it easier for states to create them.

Those proposals haven't delivered public control. They still depend on legislatures and elected officials to authorize institutions. North Dakota’s bank, meanwhile, answers to the North Dakota Industrial Commission and legislature. The commission—made up of the governor, attorney general and agriculture commissioner—oversees the bank and acts as its board. President and CEO Don Morgan said he serves at their pleasure, as long as their direction doesn't jeopardize its founding documents or safety and soundness.

Morgan says a public bank should avoid competing with local financial institutions. “The minute we start competing with them, then our model falls apart,” he said. Instead, the bank works through 91 financial institutions in the state, with an average deposit balance of about $6.6 billion. Rick Clayburgh, president and CEO of the North Dakota Bankers Association, said community banks see it as a way to “punch above their weight class.” His association would probably oppose creating a state bank today, he said, but called the existing one “a wonderful tool for institutions.”

The American Bankers Association opposed California laws allowing municipalities to establish public banks and individuals to set up state checking accounts. It also opposed a Los Angeles ballot measure to create a public bank. ABA spokesman Josh Britton said public banks present risks to taxpayers and called them “a solution in search of a problem.” The financial industry opposes public banking while claiming existing banks already reliably serve communities and governments.

Public Money, Private Projects

North Dakota’s bank has also helped direct public financing toward large industrial projects. It helped arrange financing for Coal Creek Station, a lignite coal plant that generates 1,151 megawatts of electricity per hour for roughly 1.7 million customers in Minnesota. The plant directly employs about 200 people; a neighboring coal mine employs hundreds more.

In 2020, the plant’s then-owner, Great River Energy, said it was losing money and planned to retire it by the end of 2022. Then-Gov. Burgum, Cramer and Hoeven pressed the company to find a buyer. Bank of North Dakota president Don Morgan said the bank “quarterbacked” the complex sale. The North Dakota Transmission Authority sold bonds for the first time, raising $150 million for a loan to Nexus Line to buy the transmission line. The bank bought those bonds through a $150 million Match Program loan.

Rainbow Energy Center now owns the plant, and Nexus Line bought the transmission line. Rainbow CEO Stacy Tschider said the purchase wouldn't have happened without the bank. The company has redirected electricity to mine bitcoin when grid demand is low, and it's working with several AI hyperscalers on a data center beside the plant. Anti-data-center yard signs appeared on roads near Coal Creek.

The bank also extended a $70 million line of credit to the Theodore Roosevelt Presidential Library to begin construction while it awaited private financing. Its reach extends from student loans and farm support to coal infrastructure and a presidential library. Public banking proposals ask who gets to direct that reach; the decisions described here remain in the hands of state officials, bank managers and the institutions they finance.