The New Mexico public banking law has run out of time
Time is running out for a New Mexico public bank bill, a move approved by the state credit union but strongly opposed by the state bankers’ association.
Although HB 236 was narrowly accepted by the Committee on Trade and Economic Development in February with a 5: 4 vote, it was presented on March 5 by the Budget and Finance Committee of the House of Representatives. And with the New Mexico legislature slated to end on March 20 at 12:00 noon, there’s little chance or time for committee action on Senate Accompanying Law, SB 313.
“We are grateful that we had the two hearings and the opportunity to create even more awareness and information about the benefits of a public bank for our state’s financial system,” said Angela Merket, Executive Director of the Alliance for Local Economic Prosperity (ALEP) .
The Santa Fe-based organization has been promoting a state-owned public bank for years, arguing that it is needed to pump more money into much-needed public economic development projects across the state. New Mexico finished 48th, beating only Mississippi and Louisiana in one List of US News and World Report 2021 this measures how well each state is doing for its citizens based on the economy, health care, education, public safety, and infrastructure of the state.
ALEP also said the public bank will work with credit unions and community banks to increase its lending capacity for small businesses, which are driving most of the new job growth.
Paul Stull, President / CEO of the Credit Union Association of New Mexico in Albuquerque, approved the public bank bill, saying the Independent Community Bankers Association of New Mexico threw everything but the kitchen sink to defeat them.
“They actually claimed that there was no need for further lending in New Mexico, that they had already loaned every dollar needed,” Stull said. “Since we are currently the poorest state in the country, this argument is hard to believe, but they sold it well.”
The community’s bankers association claimed that there was no proven need for the state to get into banking and that it was bad public policy for the state to compete with the private sector.
“We’re saying this really is nothing more than trying to create a new government agency and call it a bank,” said Jerry Walker, President / CEO of ICBANM in Farmington. “We have a number of agencies that have programs in place to assist private sector businesses expanding in the New Mexico economy with loan guarantees, loan contributions, and in some cases direct funding from the government agency that offers low-cost funding or lower-cost funding or binding for local projects for cities, counties and school districts. “
Walker pointed out that the public bank’s proposal would put $ 100 million in taxpayers’ money at risk, as the capital would come from the state’s general fund and another fund that generates revenue from the New Mexico oil and gas industry .
However, Stull argued that current state and government funding is nowhere near enough to ensure New Mexico’s progress in changing the current lack of economic development, jobs and opportunities.
“The public bank would have used credit unions and banks to inject capital into our communities,” said Stull. “That would have been good business for both of them. Credit unions could have expanded their lending and gained members. I saw it as a gain for our state and for credit unions. “
He also noted that the public bank would have been able to issue bonds at lower interest rates to fund public projects while returning the interest paid to the state’s public bank rather than relying on bonds from global banks and private investors leave.
“A public bank works for the state and belongs to it,” said Stull. “They’re replacing the Wall Street crowd by putting money on the ground here in New Mexico where it’s needed most.”
However, Walker argued that the local community banks have and continue to fund small businesses.
“Community banks across the country and here in New Mexico now provide nearly 60% of small business loans in this country and here in the state,” he said. “Our banks have a loan-to-deposit ratio of 62%, so we have a lot of growth potential in the community banking space without the big regional and national banks or even some of the state credit unions that have stepped into this business lending space.”
Dan Mayfield, president of Leverage Point, an Albuquerque-based lobbying and public relations firm that worked with ALEP to push public banking accounts forward, said he expected to regroup in a couple of weeks to see how the future path will be as soon as the legislature ends.
“I’d like to bring the bills back,” he said. “It’s a good idea for credit unions.”
In recent years, proposals for public banks have surfaced across the country.
According to the Public Banking Institute in Santa Clarita, California, there are more than 25 public banking initiatives in 30 states and multiple cities.