The Mysterious CAFRs

[Rajiv]

Re: The Mysterious CAFRs

Looking at the North Dakota budget, the BND only contributed $60M in 2008-2009. In contrast, sales taxes were $1B+, motor vehicle taxes were $128M+, individual income taxes were $640M+, corporate taxes were $250M+, and POTTF (Permanent Oil Tax Trust Fund) $115M.

So it was nice, but hardly a major contributor directly to the North Dakota budget.

About the BND -- I think there are some misconceptions floating around. What does the BND do, and why is it beneficial to the state economy? As you rightly point out, its contribution to the state income was nothing much. So why is it so beneficial for North Dakota?

From the New Rules Project

BND was formed to "encourage and promote agriculture, commerce and industry in North Dakota."

The bank is governed by the ND Industrial Commission, consisting of the governor, attorney general and the commissioner of agriculture, all elected officials. The commission, in effect, serves as the bank's board of directors; it was formed with three members so voters could more easily monitor and influence bank policy.

In contrast to most commercial banks, Bank of North Dakota is not a member of the Federal Depository Insurance Corporation (FDIC). North Dakota Century Code 6-09.10 provides that all deposits in the Bank of North Dakota are guaranteed by the state.

The primary deposit base of the BND is the State of North Dakota. All state funds and funds of state institutions are deposited with the bank as required by law. Other deposits are accepted from any source- savings and checking accounts from private sources account for between 10 percent and 20 percent of the bank's deposit base. Use of the banks' earnings are at the discretion of the state legislature. As an agent of the state it can make subsidized loans to spur development; however, its profits and losses affect state tax burdens.

The bank is used as a tool for economic development. A beginning farmer revolving loan fund was originally established through a transfer of funds from the Bank of North Dakota's profits. With its' agricultural loans the bank has developed a reputation for being more lenient than other banks in pressing forclosures.

On behalf of the State of North Dakota, the BND also administers state lending programs that promote agricultural and economic development. For example, under the PACE program for commercial and agricultural lending, a local bank originates a loan, the Bank of North Dakota participates at a rate determined by the community's economic strength (between 50 percent and 80 percent). The local economic development group and the BND "buy down" the interest rate to 3 points below prime. Since its inception in June 1991, the BND has participated in about $44 million in PACE loans to businesses.

The bank serves many other functions in the state. It underwrites municipal bonds for all of the political units in the state, and has been one of the leading banks in the nation in the number of student loans issued. The bank also serves as the state's "Mini Fed", clearing checks for more than 100 banks scattered around the state. Because of its' rural nature, many ND banks tend to be too small to meet the needs of borrowers. Banks, savings and loan associations and credit unions throughout the state come to the Bank of North Dakota for participation in loans.

As a result of the banks' services, it enjoys widespread support among the public and the independent banking community. No bill has been introduced in the legislature to do away with the bank since the 1920s.

The full code governing the organization of BND is found in the North Dakota Century Code

Also from the BND FAQs

Programs that would definitely help when small businesses are dying in CA because banks will not loan money.

Small Business

BND has a variety of small business programs available. Listed below is a short summary of each.

o Business Development Loan Program

The Business Development Loan Program assists new and existing businesses in obtaining loans that would have a higher degree of risk than would normally be acceptable to a lending institution.

o Beginning Entrepreneur Loan Guarantee Program

This program assists in business start-up financing by providing a financial institution with an 85% guaranty of a loan not to exceed $100,000.

.
.
.
New Venture Capital Program

Administered by the North Dakota Development Fund, the New Venture Capital Program through the BND is an innovative financial program that provides flexible financing through debt and equity investments for new or expanding businesses in the state of North Dakota. BND can fund rapidly growing companies which require equity funding.

All in all, establishing a state bank

1) would not be a raid on CAFR funds
2) will not relieve any IMMEDIATE budgetary pressures
3) Will not take away the imperative for prudence in state budgeting
4) It would likely help small businesses start and survive.
5) It would enable municipalities to access funds by helping underwrite bonds

Of course the banking model would not be identical to that of the BND, though there may be similarities.

[ThePythonicCow]

Re: The Mysterious CAFRs

Walter Burien is either a con man or an extremely mentally deluded individual. He is also a convicted felon. The same goes for Ellen Hodgson Brown (minus the felon part). She used to write about Kevin Trudeau style 'Medical Cures They Don't Want You To Know About!!' She has written books on homeopathy and another convicted felon, Jimmy Keller, who scammed cancer patients out of millions of dollars and probably cost some of them their lives. Both of these two sick individuals make their living scamming people.

You're picking up a few select facts, blending them with negative adjectives, and including on an unrelated subject (cancer treatments and medical cures) which we are in no position here to evaluate adequately. I do not find such trash talking useful. I probably disagree with your implications regarding medical treatments, but will not enter into that discussion here.

I post this response primarily to raise a red flag for others to exercise due diligence in reading your post.

[nathanhulick]

Re: The Mysterious CAFRs

You're picking up a few select facts, blending them with negative adjectives, and including on an unrelated subject (cancer treatments and medical cures) which we are in no position here to evaluate adequately. I do not find such trash talking useful. I probably disagree with your implications regarding medical treatments, but will not enter into that discussion here.

I post this response primarily to raise a red flag for others to exercise due diligence in reading your post.

A few select facts? The point is that the people who are spreading this nonsense are professional hucksters. They make a living passing off this kind of garbage. I included the links to the reddit article that guy wrote, which has links supporting everything he said. I checked his links and the facts checked out.

Would you say the same thing if the conversation was about Bernie Madoff? I'm sure he is probably a peach of a guy when he isnt robbing people blind, but if someone was posting that he was a criminal, and detailed the facts explaining why, would you say that person was " picking up a few select facts"?

Go do your own research and see if Ellen Hodgson Brown didnt write a book about "cancer cures" that was nothing more than a fluff piece on a guy who was convicted by the US government and went to prison.

Don't believe me, take a look

http://www.romingerlegal.com/fifthci...0.CR0.wpd.html

James Gordon Keller was convicted in September 1991, of one
count of conspiracy to commit wire fraud, in violation of 18 U.S.C.
§ 371, and ten counts of aiding and abetting the commission of wire
fraud, in violation of 18 U.S.C. §§ 1343 and 2. The government
presented evidence that Keller and several associates created a
scheme to obtain money from cancer patients and their families by
promising them, by way of interstate telephone conversations, an
effective treatment and cure for their cancer.

Do a google search for Tumorx, and you can read all about it. The author of this piece helped Jimmy Keller defraud cancer patients. He stole their money and people died of cancer that might have been treated if they went to an actual doctor instead of that quack. You really think that's hard to evaluate?

Your response is typical from the conspiracy crowd. You can't refute any of the facts presented, so you complain that pointing out someone is a crook and documenting it with facts is "trash talking".

I dare you to do your own research into this CAFR nonsense and then come back and talk to me about it. The fact is Ellen Brown wouldnt know a financial statement from a lottery ticket. Go over to reddit and argue with that guy who posted this stuff in the first place. I checked his links, and his facts checked out from what I could tell. Until then, maybe you should think about the type of people you are defending here. Maybe you would feel different if you had a dying family member scammed out of the last few months of their life by these criminals.

[nathanhulick]

Re: The Mysterious CAFRs

About the BND -- I think there are some misconceptions floating around. What does the BND do, and why is it beneficial to the state economy? As you rightly point out, its contribution to the state income was nothing much. So why is it so beneficial for North Dakota?

From the New Rules Project

Also from the BND FAQs

Programs that would definitely help when small businesses are dying in CA because banks will not loan money.

All in all, establishing a state bank

1) would not be a raid on CAFR funds
2) will not relieve any IMMEDIATE budgetary pressures
3) Will not take away the imperative for prudence in state budgeting
4) It would likely help small businesses start and survive.
5) It would enable municipalities to access funds by helping underwrite bonds

Of course the banking model would not be identical to that of the BND, though there may be similarities.

Whether or not starting a state bank is a good idea is something completely different from the assertion that government has all this money just sitting around.

Sure, governments could start a state bank, but they would need money to do it, and selling police cars and hospitals isn't the smart way to fund it.

Also, why stop at banks? We could have government oil companies, grocery stores, etc. If you think government would do a better job running a bank, whats different about a grocery store?

[nathanhulick]

Re: The Mysterious CAFRs

Yup, people like this who are in the mix discredit the entire area of discussion. I only refer people who are interested in the CAFR to Gerald Klatt, who was a US Gov't Auditor and appears to have no alternate agendas or dubious past.

I am sorry, but perhaps it wasnt clear earlier. There is no CAFR money laying around. Klatt (who may or may not even exist, I havent seen any evidence of him other than Burien's website) is just as crazy as Burien. For all I know he is a figment of Burien's imagination.

Do you understand that a CAFR is showing all government assets? Let me cut and paste the part that explains how to read a CAFR

The part we are interested here is the Fund Financial Statements. There are three parts, they are Governmental Funds, Proprietary Funds, and Fiduciary Funds.
Governmental Funds are funds which account for basic services, such as the police department, sanitation department, or the fire department. Proprietary Funds are those funds which operate in a manner similar to private businesses and collect fees for their services. Examples of these types of funds are the state lottery, state or government owned hospitals, or mass transit systems. Fiduciary Funds account for resources which are held by the government as a trustee for the benefit of others. Examples of these funds would be pension plans for government employees or sales tax collected by the state on behalf of local governments.
In order for government to use this money for some new purpose (some purposes suggested by conspiracy theorists are ending income tax or taking the money to start state owned banks to make low interest loans or just giving this money to everyone as some kind of dividend), the money will have to either be taken from some government service, such as the police or the hospitals; or taken pension funds, unemployment funds, or workers compensation funds. Now, the question of whether or not government is spending too much money on police departments, hospitals, or pensions is a policy discussion outside the scope of this essay. However, it is apparent that there are no hidden trillions in these financial statements.

Also

The term "funds" does not mean the same as it does when referring to a "mutual fund". In terms of governmental accounting, a "fund" is actually a ledger balance, or an account balance.
This does not represent a sum of money in an account somewhere just sitting around waiting to be spent. A fund could represent the book value of all the police cars owned by that specific government entity, expressed in dollars. That is not to say that the government has access to that particular amount of money, but it is simply a method of accounting for assets.

[ThePythonicCow]

Re: The Mysterious CAFRs

Your response is typical from the conspiracy crowd.

Someday I really, really have to add a tin foil hat to my cow avatar.

[D-Mack]

Re: The Mysterious CAFRs

You're picking up a few select facts, blending them with negative adjectives, and including on an unrelated subject (cancer treatments and medical cures) which we are in no position here to evaluate adequately. I do not find such trash talking useful. I probably disagree with your implications regarding medical treatments, but will not enter into that discussion here.

I post this response primarily to raise a red flag for others to exercise due diligence in reading your post.

He wants full and independent audits, that's certainly crazy.

http://www.examiner.com/x-18425-LA-County-Nonpartisan-Examiner~y2010m5d24-CAFR-UC-budget-fully-funded-with-onefifth-of-one-percent-of-state-of-CA-investments

[reggie]

Re: The Mysterious CAFRs

I am sorry, but perhaps it wasnt clear earlier. There is no CAFR money laying around. Klatt (who may or may not even exist, I havent seen any evidence of him other than Burien's website) is just as crazy as Burien. For all I know he is a figment of Burien's imagination.

Do you understand that a CAFR is showing all government assets? Let me cut and paste the part that explains how to read a CAFR

I don't really get the response at all.

The CAFR is simply an audited financial statement published once per year by every public bureaucracy in the country, that's all. I never said about using the funds represented inthe financials for any particular purpose.

Further, since his passing I have corresponded with Gerald Klatt's son on a couple of occasions, and given the work on his website and my correspondence I have no reason to doubt Klatt's work, which is reflected on his website, which I posted a link to above.

As far as Burien and Brown, I've never followed them because I've never seen them as credible, and I've always been concerned that they would taint Klatt's work, which appears to be exactly what is happening.

[ThePythonicCow]

Re: The Mysterious CAFRs

He wants full and independent audits, that's certainly crazy.

I was responding to a post by nathanhulick that blasphemed Burien, Brown and Keller with various insults and allegations, some of them unrelated to the topic of this thread. Such posts distract from a sensible discussion of the topic at hand ... as evidenced by several of the last few posts on this thread.

I don't know why nathanhulick headed off into the weeds, nor do I really care. I've done as much myself (as reggie may recall, involving someone named Bill Joy ;)) so I'd be a bit hypocritical to get totally bent out of shape about it. But I do call B.S., and I do encourage anyone who has something sensible to say on this threads topic to ignore the last several posts from myself and nathanhulick.

[Rajiv]

Re: The Mysterious CAFRs

tpc, d-mack was backing you up on that -- I don't think NH read the Elaine Brown article -- where she confirmed with the various Government finance officers about the existence of these funds.

These funds are in various Wall Street institutions. Consider the impact on those very same institutions if that money was to migrate to a state owned bank -- such as North Dakota -- where by law, all state revenues have to be banked at BND.

$15B would capitalize a California state bank at the same level that BND is capitalized at. This would allow a "Bank of the State of California" to have assets of about $200B -- which would be an injection into the economy of California -- if the direct contributions match BND contributions, that would be a direct revenue of about $3B per year.

If we allow for the difference in CPI, then the required capitalization would be about $25B, and assets of around $350B. Conservatively, the $350B injection into the California economy should see tax revenues rise, because of the multiplier effect.

The difference between a private bank and a public bank lies in its charter. For example for BND

Bank of North Dakota (BND) was charged with the mission of "promoting agriculture, commerce and industry" in North Dakota. It was never intended for BND to compete with or replace existing banks. Instead, Bank of North Dakota was created to partner with other financial institutions and assist them in meeting the needs of the citizens of North Dakota.

The prime motive of a private bank is to produce profits for its shareholders. That is not the motive of a state bank, as can be seen above.

Thus in the current economy, when the private banks have stopped lending to small businesses, and sharply curtailed lending overall, that is not the case in North Dakota. BND in partnership with "small" banks continues to facilitate lending to North Dakota businesses (see BND FAQs)

[nathanhulick]

Re: The Mysterious CAFRs

I don't really get the response at all.

The CAFR is simply an audited financial statement published once per year by every public bureaucracy in the country, that's all. I never said about using the funds represented inthe financials for any particular purpose.

Further, since his passing I have corresponded with Gerald Klatt's son on a couple of occasions, and given the work on his website and my correspondence I have no reason to doubt Klatt's work, which is reflected on his website, which I posted a link to above.

As far as Burien and Brown, I've never followed them because I've never seen them as credible, and I've always been concerned that they would taint Klatt's work, which appears to be exactly what is happening.

I took a look at Klatt's site. Apparently he claims $600 billion dollars that government holds. This is a MUCH smaller number than Burien and Brown's pie-in-the-sky hundreds of trillions.

Unfortunately, he is also wrong, although at least he seemed to understand more about how to read the financials than the other two. The numbers that he includes are not counting capital assets or fiduciary funds, but they are still counting funds that are used for things like police, fire, mass transit, hospitals, etc. The idea that every government at every level should run without a single penny in emergency money is crazy.

A great example is Katrina. Under Klatt's proposal, the police, fire department, bus system, and hospitals would not have been able to pay the employees. The first paycheck with overtime on it would have wiped out their cash, and all those people would be working for free.

If you want to make the argument that government spends too much money, or that government has too much cash sitting in their account, that's one thing, but to add up all the bank accounts of every government agency and divide it by the population and then determine that the government owes everybody two grand is asinine. Is it really possible that every single police department, fire department, city bus service, motor pool, road crew, etc. all have too much cash in their account? Obviously not. Go find one specific police department that you think has too much money in their account. Then find out why, specifically they have that amount.

The truth is, there are already people who do this. You think these government entities are not audited? You think that government employees do not have to define specifically why they have X amount of dollars left over to the bean counters? If you have really been researching this for years, as you claim, you would have interviewed some of these auditors and realized that this is conspiracy nonsense.

[nathanhulick]

Re: The Mysterious CAFRs

He wants full and independent audits, that's certainly crazy.

http://www.examiner.com/x-18425-LA-County-Nonpartisan-Examiner~y2010m5d24-CAFR-UC-budget-fully-funded-with-onefifth-of-one-percent-of-state-of-CA-investments

It certainly is crazy, considered there already are full, independent audits. They are actually done by professional auditors, who went to school and trained so they actually could understand what they are talking about.

Somehow, every single one of the tens of thousands of auditors in this country seemed to have missed the fact that the government is secretly hiding all this money from us. Luckily, people like Walter Burien and Carl Herman are on the job. Neither of them ever took an accounting class, and they didn't bother to look at any of the source documents, just the audited statements, but they were able to find trillions of dollars in these financial statements while they were cruising the internet.

I have some very nice bridges for sale if you are interested.

[c1ue]

Re: The Mysterious CAFRs

Thus in the current economy, when the private banks have stopped lending to small businesses, and sharply curtailed lending overall, that is not the case in North Dakota. BND in partnership with "small" banks continues to facilitate lending to North Dakota businesses (see BND FAQs)

Let's first be clear then that the state of North Dakota state finances has little or nothing to do with the Bank of North Dakota. Between oil, natural gas, minerals, and what not, the direct contribution of higher energy prices has very much been a bigger factor than any possible state bank's effect.

Having said that, I don't disagree per se that having a state bank is a bad thing. However, I would note that just because there is a state bank, doesn't mean that the exact same problem faced by the small private banks in California would not have been faced by a state bank in California.

North Dakota, for example, has a much higher property tax than California: the average across the state is 1.8% - and it is assessed yearly as far as I can tell.


http://www.city-data.com/city/Grand-...th-Dakota.html

http://www.ci.fargo.nd.us/Residential/PropertyTaxes/

Net net, North Dakota did not experience the property tax bubble like in California - and similarly the BND has not experienced the effects of a burst property bubble on residential and commercial real estate loan failure rates.

It is precisely this failed previous lending to businesses and individuals which is preventing lending by those same (failing) small banks now.

The other problem to keep in mind is if, on the other hand, there is any type of favoritism given the to the state bank, that this also is a potential factor in negative growth effect.

After all, if the Fed and the Treasury can be irresponsible to the entire United States, why then is a state bank immune to the same behavior at a state level?

Just think of all the plum jobs a governor or legislature could fill in a state bank.

[nathanhulick]

Re: The Mysterious CAFRs

I was responding to a post by nathanhulick that blasphemed Burien, Brown and Keller with various insults and allegations, some of them unrelated to the topic of this thread. Such posts distract from a sensible discussion of the topic at hand ... as evidenced by several of the last few posts on this thread.

I don't know why nathanhulick headed off into the weeds, nor do I really care. I've done as much myself (as reggie may recall, involving someone named Bill Joy ;)) so I'd be a bit hypocritical to get totally bent out of shape about it. But I do call B.S., and I do encourage anyone who has something sensible to say on this threads topic to ignore the last several posts from myself and nathanhulick.

Blasphemed? Didn't know you worshipped these guys...

Regardless, as I have said, and as the guy who posted the writeup on that other site said, go ahead and refute any of the facts if you can.

Nobody has yet. I would be happy to find out that I am completely wrong and Uncle Sam has all this money available he can give me. I'd also like a Ferrari and a date with Megan Fox....

[ThePythonicCow]

Re: The Mysterious CAFRs

tpc, d-mack was backing you up on that --

Ah - good. I was unsure what d-mack meant.