A repost/expansion on the fall of Madison's Republic

[99th_Monkey]

50. State-owned Banks is more to the point

North Dakota is the only state so far that has established a publicly owned bank. Founded in 1919, the Bank of North Dakota has a mission to “promote agriculture, commerce, and industry” and “be helpful to and assist in the development of… financial institutions… within the State.”

BND functions primarily as a “banker’s bank.” Aside from student loans, BND does little in the way of direct lending. Much of its $2.8 billion loan portfolio consists of participation loans in which BND finances part of a loan made by a local community bank. By sharing in these loans, most of which fund businesses and farms, BND expands the lending capacity of North Dakota’s community banks and absorbs some of the risk associated with each loan. BND also provides a secondary market for residential mortgages, buying loans originated by community banks and thus freeing them to make more loans.

Thanks in large part to BND, community banks are much more robust in North Dakota than in other states. North Dakota has 35 percent more banks per capita than South Dakota, and four times as many as the national average (see our graph). While locally owned small and mid-sized banks (under $10 billion in assets) account for only 30 percent of deposits nationally, in North Dakota they have 72 percent of the market.
http://ilsr.org/rule/bank-of-north-dakota-2/

New State Bank Bills Address Credit and Housing Crises
02/27/2012 * HuffPost * Ellen Brown
Seventeen states have now introduced bills for state-owned banks, and others are in the works. Hawaii's innovative state bank bill addresses the foreclosure mess. County-owned banks are being proposed that would tackle the housing crisis by exercising the right of eminent domain on abandoned and foreclosed properties. Arizona has a bill that would do this for homeowners who are current in their payments but underwater, allowing them to refinance at fair market value.

The long-awaited settlement between 49 state attorneys general and the big five robo-signing banks is proving to be a major disappointment before it has even been signed, sealed and court approved. Critics maintain that the bankers responsible for the housing crisis and the jobs crisis will again be buying their way out of jail, and the curtain will again drop on the scene of the crime.

We may not be able to beat the banks, but we don't have to play their game. We can take our marbles and go home. The Move Your Money campaign has already prompted more than 600,000 consumers to move their funds out of Wall Street banks into local banks, and there are much larger pools that could be pulled out in the form of state revenues. States generally deposit their revenues and invest their capital with large Wall Street banks, which use those hefty sums to speculate, invest abroad, and buy up the local banks that service our communities and local economies. The states receive a modest interest, and Wall Street lends the money back at much higher interest.
http://www.huffingtonpost.com/ellen-brown/banks-credit-housing_b_1301509.html

ON EDIT: here are 5 good reasons to go this route:
Top 5 Reasons to Choose a Community Bank or Credit Union
http://ilsr.org/top-5-reasons-choose-community-bank-or-credit-union/