It's a 'socialist' bank — and North Dakota Republicans love it

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BISMARCK, N.D. — In 1918, an offshoot of the progressive farmer-labor movement known as the Nonpartisan League swept into power in North Dakota, riding a populist groundswell of anger directed at big banks and industry barons in Minneapolis and Chicago. The group was organized by former Socialist Party member Arthur C. Townley, a failed flax farmer who barnstormed the state in a borrowed Ford Model T calling for public ownership of key industries, including banks, mills and factories. By 1919, the state legislature authorized a state-owned and -operated bank. Over a century later, the Bank of North Dakota still stands, and the state is reaping the benefits. The Bank of North Dakota is the nation's only surviving state-owned and -operated bank. It has persisted as Great Plains politics has shifted from prairie progressivism to deep-red conservatism, and it now manages about $11 billion in assets while enjoying broad support from the state's current political leaders. "I think it's weird, right? We're one of the most conservative states in the union, and we have this state-run bank that was started by first-generation Norwegian immigrants," North Dakota Gov. Kelly Armstrong, a Republican, told CNBC. "I don't think we could set one up now, but I'm sure glad we have it." In addition to Armstrong, the bank's present-day boosters include the state's U.S. senators, Kevin Cramer and John Hoeven — who is a former president of the bank, and former North Dakota governor and current Interior Secretary Doug Burgum. All are Republicans in a party where "socialist" is a pejorative on the 2026 campaign trail. At its core, the Bank of North Dakota is a bank. It has a governance structure, holds the state's deposits and provides loans. But it is also a unique institution that melds the political and financial arenas to advance the state's industrial and economic goals. Those efforts can range from saving a coal plant on the verge of going belly-up to buying down interest rates on loans for agriculture, energy or housing. "I've always said it's a very interesting concept; obviously it's a successful one up here," Don Morgan, the Bank of North Dakota president and CEO, told CNBC. "It's one that if you use it wrong, it could be a little bit dangerous. But if you use it right, it can be a really powerful financial tool." The bank also stands as a vestige of the country's last populist socialist uprising, as the U.S. is now gripped by another ahead of the 2026 midterm elections. The bank, which is in a state President Donald Trump won by more than 36 percentage points in 2024, has been used as an example by Democratic, progressive and democratic socialist candidates and lawmakers from across the country who are trying to expand public banking. CNBC traveled to North Dakota to talk with leaders of the bank, which rarely grants such access to national media, and with state political officials and business leaders to learn how the country's only state-owned bank operates and about the interplay with the state it serves — and whether its century-old idea could support a new groundswell of state-run banks. "For a long time people have scoffed at it — 'Oh, that's their experiment with socialism over there' — but I think it's important to note that we live in an era of populism," Cramer said. "Others have looked at it a little bit skeptically, but more recently they've looked at it and gone, 'You know, we could use a tool like that.'" A foundation of populism Roughly a dozen states have had state-run banks in the past, but the Bank of North Dakota is the only one operating today. Most failed by 1900, following the enactment of laws allowing private banks to issue notes backed by Treasury bonds or due to turbulent economic stretches. Still, some politicians hope to use the Bank of North Dakota as an example and bring public banking back to the national conversation. And a wave of progressive populism could create an environment where policymakers return to public banks as a solution for a litany of economic ills. Most public banking supporters are Democrats, including progressive democratic socialists who have surged in popularity after New York City Mayor Zohran Mamdani was elected in 2025. Mamdani, who was a New York State Assembly member from 2021-2025, cosponsored a bill in the assembly that would have allowed municipalities and local governments to stand up public banks. Wisconsin gubernatorial candidate Francesca Hong, who narrowly lost to Democratic nominee David Crowley in August, included a call for a state bank modeled on the Bank of North Dakota in her official platform. Rep. Alexandria Ocasio-Cortez, D-N.Y., a potential 2028 presidential contender, led a bill in Congress with Rep. Rashida Tlaib, D-Mich., to make it easier for states to create public banks. "We're populists, whereas in other parts of the country Republicans aren't as populist as they are conservative," Cramer said of one of the nation's most conservative states being emulated by democratic socialists. "It's somewhat natural that a more liberal political bent is attracted to this sort of experiment that's been going for 108 years in North Dakota that looks more appealing on the surface to the left than it might to the right." Several Democratic-led states, meanwhile, have already taken steps to give public banking a try. One of those states is Washington, where a work group of officials is set to deliver an implementation plan to the legislature by mid-2027. "I think the people deserve to be in control of their own tax dollars that they're putting forward," said Washington state Sen. Bob Hasegawa, a member of the work group who has spent years pushing for a state bank. Hasegawa said he began advocating for the idea after the 2008 financial crisis. "We're allowing big Wall Street banks to use our tax dollars, leverage it, and make tons of money for their shareholders and themselves," he said. "And in the meantime, if we want to do anything like build a bridge or water system or whatever, we have to go back and sell bonds. So we're essentially borrowing what otherwise would be our own dollars back just so we can build infrastructure or finance other programs." Massachusetts, New Mexico and California are also pursuing their own proposals to create public banks. A monetary expert says public banking makes good sense in the design of the monetary system. "For me, it came from a design perspective. Why don't we do this obvious thing? Why doesn't the public use the same power of banking that private institutions use?" said Christine Desan, the Leo Gottlieb Professor of Law at Harvard University, who teaches about the political economy of capitalism and the monetary system. "The reason banks are such great lenders is that they operate in a network," Desan said. "In effect, the way a public bank would operate is it would be saying, we're just going to join the network; the public, the state of Massachusetts, will join the network, and then we'll have the same advantages in lending." Skepticism from commercial banks Major players in the banking industry aren't sold on public banking as a concept. The American Bankers Association opposed eventual laws in California that allowed municipalities to set up public banks and set up state checking accounts for individual citizens. The group also opposed a ballot measure in Los Angeles that would have allowed the creation of a public bank. "History has shown that public banks are a solution in search of a problem and present significant risks to taxpayers," ABA spokesman Josh Britton told CNBC. "America's banks are already highly regulated and well-capitalized and reliably serve communities, businesses, and state and local governments across the country, and misguided political interference would only harm consumers and the economy." The state getting involved in banking decisions is also one of the greatest political risks facing public banking. A public bank could theoretically pick winners and losers based on the political bent of elected officials, disadvantaging some industries while advantaging others. Morgan said strict prohibitions on competition with local financial institutions, along with a sound governance structure, could help other states set up public banks with as few pitfalls as possible. "Our founding documents stating that we're never to compete with [North Dakota financial institutions] is a very powerful statement, because I've always said the minute we start competing with them, then our model falls apart," he said. "I believe any state can do it. But how you found it originally is critically important. That original governance framework is critically important." Morgan noted the bank does "serve at the pleasure" of the North Dakota Industrial Commission and legislature and will follow them "as long as it does not jeopardize and move against our founding documents or jeopardize the safety and soundness of the bank." Running the bank as a financial institution more than as a government institution serves as a "backstop that we can fall back on, because at the end of the day, we have to run the bank and protect the bank because we're protecting the state's deposits," Morgan said. Morgan, who travels the country to speak with public banking advocates, said a public bank could serve its state in any way the state wants, so long as it is a bank first. Other states have proposed using the bank to fund new housing, finance infrastructure and reduce inequality. "Your bank can do whatever your state wants it to do, as long as it does not get in the way of being a healthy bank," he said. "And then when you're ready, you can do those things that strategically align with your state, which will be different in every state of the Union." A bankers' bank Today, the bank of North Dakota acts as a "bankers' bank," backing small community banks in financing projects they may be too small to finance themselves. The bank is helmed by the Industrial Commission, a government body created by the bank's founding statutes. The governor, attorney general and agriculture commissioner make up the commission, which acts as a board of directors for the bank. The bank also has an advisory board and an executive committee, the latter of which runs its day-to-day operations. "I really attribute that governance framework to the 107-year history and why we're still around, [while] many other public banks have failed out up to this point," Morgan told CNBC at the bank's Bismarck headquarters. Morgan said the bank's core business consists of participation loans, commercial real estate loans and agricultural loans. The bank also engages in other areas where the state's privately owned banks don't already compete, including offering direct student loans at a low interest rate for North Dakotans hoping to attend college. It will also quickly stand up disaster relief programs. The bank pumped $500 million in loan support to farmers in 2026 amid challenges from Trump's tariffs, low commodity prices and high input costs. In decades past, it has gone further — selling foreclosed farmland back to families under asking price after the Dust Bowl and ensuring teachers got paid in full during the Great Depression. The bank does not have a traditional deposit base of individual customers stashing their cash. In fact, the bank discourages individual deposits so as not to compete with the state's community banks. Instead, the bank is the primary depository of state funds. Morgan said it draws its core deposit base from the general fund, a mix of state revenue from taxes and fees. The state legislature can then appropriate bank profits back into the general fund for the state's budget, or the profits can be used to fund the bank's investments to benefit the state's industries. "We take that average balance of about $6.6 billion — that's our deposit base, our core deposit base," Morgan said. "We use those deposits [for the bank's operations], work through our 91 financial institutions in the state, do our participation loans, do our disaster loans, do our student lending, and then we make a nice healthy profit back to the general fund." The state's other banks don't see the Bank of North Dakota as competition, according to Rick Clayburgh, president and CEO of the North Dakota Bankers Association. Instead, they view it as a tool that allows community banks to "punch above their weight class." "I think if we were trying to create a state bank here in North Dakota today, our association would probably be opposed to it," Clayburgh said. "But the fact that we know what it is now and that it's developed over the 107 years, it is a wonderful tool for institutions." Coal and data center funding An example of the bank's investment activity — and one progressives might do differently — is found in McLean County. There, in the middle of the rolling plains between Underwood and Washburn, Rainbow Energy Center's Coal Creek Station burns lignite coal to generate 1,151 megawatts of electricity per hour for roughly 1.7 million customers in Minnesota via a hulking transmission line. The plant employs about 200 people directly, and the coal mine next door employs hundreds more. In 2020, however, the plant was on a much different trajectory. Its then-owner, Great River Energy, said the plant was losing money and that it planned to retire it by the end of 2022, replacing its generation with wind farms and natural gas. Then-Gov. Burgum, a vocal supporter of coal, along with Cramer and Hoeven immediately demanded that Great River find a buyer for the plant and its accompanying transmission line, a tall order, as the country was moving toward renewable energy and coal's economic advantages were declining. "It would have been a huge detrimental impact to this area," said Ethan Vaagene, the plant's director. "It was probably the worst feeling I've had in my life ... I still remember this day when the prior owner announced to all the employees that they were going to be closing the facility. It was a complete shock to all of us." Burgum led an all-of-government effort to find a buyer. And while one did emerge, the complex financing of the sale would have proven difficult to execute without the Bank of North Dakota. Morgan said the Bank of North Dakota was able to "quarterback" the complex sale of the plant and its transmission line from Great River to its eventual buyer, Rainbow Energy. Rainbow Energy Center bought the coal plant, and Nexus Line purchased the transmission line that moves the power to Minnesota. Both companies are affiliates of Rainbow Energy Marketing Corporation. The deal included a financing package in which the North Dakota Transmission Authority sold bonds for the first time, netting $150 million in proceeds to fund a loan to Nexus Line to purchase the transmission line. The Bank of North Dakota purchased NDTA bonds through a $150 million Match Program loan, the bank's program that supports large-scale economic diversification projects. The CEO of the company that bought the power plant said that without the Bank of North Dakota, the deal would not have materialized. "I start all our meetings with the Bank of North Dakota [by saying] that we wouldn't be here today without you," Rainbow CEO Stacy Tschider told CNBC, standing on the coal plant's roof. "If I was going to go outside the state, it would be more difficult to basically get other banks' understanding because ... with prior administrations, there has been a war on coal." After the bank's investment, Rainbow began expanding the plant's use. CNBC toured the plant with Tschider and Vaagene. Tschider said he envisions the plant as a futuristic "energy park." An example of the plant's evolution already exists. Underneath the soaring spires releasing steam from electricity generation, computers mining cryptocurrency hum away. Coal Creek now redirects the electricity it generates on site to mine bitcoin during periods of low grid demand to offset lost profits. Tschider said the plant is in talks with artificial intelligence hyperscalers to build a data center directly next to the plant, bringing in more revenue. A smattering of anti-data center yard signs dot roads near Coal Creek, indicative of local opposition to the facilities that is plaguing the AI build-out nationwide. "We're in the process right now of working with several hyperscalers," Tschider said, adding that he expects to begin construction over the next six months. A stablecoin for the original populist The Theodore Roosevelt Presidential Library, nestled in the canyons of the badlands in Medora, North Dakota, is built into the geography, jutting out of the land where a young Roosevelt visited seeking solace after his wife and mother died on the same day. On the day CNBC visited the library, the Bank of North Dakota — which extended a $70 million line of credit to the library to begin construction while it awaited private financing, allowing it to open for the nation's 250th anniversary — was celebrating the launch of its first stablecoin there. Dubbed the Roughrider Coin, it will allow North Dakota's network of community banks to execute near real-time bank-to-bank transfers. Roosevelt looms large over the ethos of North Dakota, and the library has big ambitions: It aims to host a presidential debate and serve as a national hub for conservation work in the U.S. Roosevelt also has the unique distinction of being the favorite president of modern political figures on both sides of the aisle for his populist, progressive appeal, trust-busting history and staunch nationalism. The bank, in many ways, was a result of the movement in American politics that Roosevelt ushered in. "The Bank of North Dakota has very deep roots in the state of North Dakota; [it's] very much tied to the prairie populist movement," said Robbie Lauf, the library's interim CEO. "That kind of happened after the Progressive Era, of which Theodore Roosevelt was one of the most important characters of a fundamental piece of American history." Lauf, who previously worked in Burgum's office and in the office of former Federal Reserve Chair Jerome Powell, rejected any idea that the bank clashes with free-market ideals just because it was founded out of a prairie populist, progressive movement. "Anywhere where agriculture and rural communities are formed, there's a deep populist heritage, and there's a misunderstanding of what populism means, as well," Lauf said. "What it really is trying to do is help us achieve self-determination as a region." "It is anything but an embrace of any type of state ownership of means; it's a partnership with private enterprise," he said. "This institution does not work without private enterprises and private banks ... For me, that's deeply free market." Asked about the bank's socialist roots, Morgan said the bank, whatever its roots, was simply a good idea. "There's good ideas on all sides of the political spectrum," he said. "We get so hung up in the debate or the letter by your name or the title assigned to you. There are good ideas."