Hoeven Differs With Conrad Account Over Carve-Out for North Dakota Bank

Posted March 19, 2010 at 4:53pm

North Dakota Gov. John Hoeven (R) is pushing back against Sen. Kent Conrad’s (D-N.D.) contention that he worked with the governor to get a special carve-out for the state-owned Bank of North Dakota in the health care reconciliation bill.

After Republicans seized on what they dubbed the “Bismarck Bank Job,” Conrad asked the House to eliminate the bank’s exemption from provisions that would end government subsidies for student loans offered by private banks.

Still, Hoeven spokesman Don Canton said the governor did not ask for a special deal for the bank. Hoeven, who as governor is a member of the Industrial Commission that governs the bank, is running this year for the Senate seat being vacated by retiring Sen. Byron Dorgan (D).

“He thought the right thing to do would be to oppose the bill,” Canton said. “He didn’t ask for a special exemption for the bank.”

But Conrad’s staff said the governor appears to be trying to have it both ways. Hoeven penned several letters to Conrad over the past year asking him to oppose the student loan changes because of the negative effect it would have on the state bank.

In a Nov. 27, 2009, letter from the entire three-member Industrial Commission, Hoeven and others write, “We request that you advocate for choice in student loan origination and servicing and oppose the proposal to require all schools to use only the Direct [Loan] Program.”

Additionally, one Conrad staffer said the Senator’s chief of staff and legislative director talked to Bank of North Dakota President Eric Hardmeyer last week to tell him the provision could become a lightning rod, but Hardmeyer urged them to press forward. When asked, Hardmeyer told Conrad’s staff that the governor also supported moving forward with the carve-out.

Hardmeyer was traveling and not available for comment Friday. A bank spokesman declined to comment on whether the conversation occurred as described by Conrad’s staff.

“It is quite clear that the Senator was acting based on an agreed upon approach to protect the Bank of North Dakota’s student loan programs and the thousands of students they service,” the Conrad staffer said.

The staffer added, “If the head of the bank is not communicating with the governor or the governor is not communicating with the head of the bank, then that’s another problem.”

Documents provided by Conrad’s staff show that the Senator has been working on trying to shield the bank from the elimination of student loan subsidies since President Barack Obama unveiled the proposal in his fiscal 2010 budget last year.

The Bank of North Dakota is the only state-owned bank in the country, and much of its profits are deposited into the state’s general treasury. The bank has a large student loan business that reaches outside the borders of the state, according to published reports.

In a statement, the bank’s spokesman said, “Regardless of whether or not the bill is passed by Congress, Bank of North Dakota has a substantial student loan portfolio that consists of both existing [subsidized] Program loans and our Dakota Education Alternative Loans. BND will continue to have a role in student loans in North Dakota and will work with the Department of Education to determine what other scenarios we may be a part of in the future.”