Updated: 3:29 p.m.
The health care budget reconciliation bill appears to have a special carve-out for one of its most ardent critics — Senate Budget Chairman Kent Conrad (D-N.D.).
Though the measure would broadly eliminate government subsidies to banks that offer student loans, the Bank of North Dakota will continue to receive federal assistance for its student loan program.
Conrad said Thursday that the Bank of North Dakota “is a unique institution” because it is “owned by the people of North Dakota. … And they service the loans that they write, so they are not like these other institutions that have created this problem. They don’t farm out servicing of their loans. They retain it.”
He added that the bank’s “default rate is 1.8 percent. The default rate nationally is 7.2 percent. So we think there’s a pretty strong argument for them continuing to operate as effectively as they have.”
Republicans are already dubbing the carve-out the “Bismarck Bank Job,” just as they did for the “Cornhusker Kickback” and “Louisiana Purchase.”
Conrad said he did not make the inclusion of the provision a requirement for his support of the reconciliation measure.
“I was supportive of the education provisions before this,” Conrad said. “We did make the argument on behalf of our state at the behest of the governor, the Bank of North Dakota, the Industrial Commission that oversees the bank on behalf of the people of our state. But I would have been for those provisions even if we hadn’t gotten that provision.”
Still, Conrad has been a reluctant supporter of using reconciliation for any portion of the health care debate, and he made strong arguments against including the student loan provisions in the bill behind closed doors. His chief argument against reconciliation was that it could open up the bill to Republican procedural challenges. But House Democratic leaders successfully argued that including the student loan changes in the health care measure would help them round up votes in the House.
The student loan overhaul would funnel the money that had been used for bank subsidies into federal education grants, specifically the Pell Grant. Many colleges and universities have already begun to opt for the federal Direct Loan program, in which the government loans directly to students instead of guaranteeing loans offered by private banks.
Conrad acknowledged that he may be criticized after the uproar over “special” deals in the health care bill for Nebraska, Louisiana and other states.
“You know, one thing I’ve learned, you come under attack here no matter what,” he said. “We’ve tried to make a case about this for many months to our colleagues. I think they’ve recognized the unique situation, but it would apply the same to every state. Any state that has an institution like this would be exempt.”
The Bank of North Dakota is the only state-owned bank in the country, according to its Web site.
“In contrast to most commercial banks, Bank of North Dakota (BND) is not a member of the Federal Deposit Insurance Corporation (FDIC). North Dakota Century Code 6-09-10 provides that all deposits in Bank of North Dakota are guaranteed by the state,” the Web site states. “The deposit base of BND is unique. Its primary deposit base is the State of North Dakota. All state funds and funds of state institutions are deposited with Bank of North Dakota, as required by law. Other deposits are accepted from any source, private citizens to the U.S. government.”