Is pub­lic bank­ing sound pol­icy for city?

Santa Fe New Mexican - - OPINIONS -

The Pub­lic Bank­ing Task Force started its work over the sum­mer. For three years now, Santa Fe’s been ex­plor­ing es­tab­lish­ing its own bank, an ob­jec­tive of some city of­fi­cials. What’s driv­ing this, and is it sound pub­lic pol­icy?

Be­hind this ef­fort is the Pub­lic Bank­ing In­sti­tute, an anti-Wall Street group or­ga­nized in 2010, in­clud­ing a board mem­ber from Santa Fe. The We Are People Here! group in Santa Fe is al­lied with them, and has had on its web­site that it is “re­spond­ing to the rise of plu­toc­racy and the role in­ter­na­tional banks play in it.” A sub­group, Bank­ing on New Mex­ico, ad­vo­cates lo­cally for a pub­lic bank. A city­op­er­ated bank could save money and bet­ter serve the com­mu­nity, they sug­gest.

Bank­ing on New Mex­ico’s ties to lo­cal of­fi­cials go back to at least 2014. Their Sept. 27, 2014, pub­lic bank­ing sym­po­sium fea­tured Mayor Javier Gon­za­les and Coun­cilor Joseph Maes­tas as speak­ers. A month later, Mayor Gon­za­les and Coun­cilor Maes­tas were two of four spon­sors of a res­o­lu­tion di­rect­ing city staff to ex­plore a Santa Fe pub­lic bank. A no-bid con­tract for a $50,000 fea­si­bil­ity study fol­lowed. Last April, Res­o­lu­tion 2017-32 es­tab­lished the task force to drill into de­tails.

No city in the U.S. has a pub­lic bank. The sole state pub­lic bank was cre­ated 98 years ago in North Dakota to serve farm­ers’ in­ter­ests. New Mex­ico tried for a pub­lic bank in 2011. House Bill 290 called for the New Mex­ico “Small Busi­ness Devel­op­ment Bank.” Fac­ing a slew of pro­ce­dural, reg­u­la­tory and pol­icy is­sues, it died in com­mit­tee.

And what about the mayor-ap­pointed task force it­self ? One mem­ber is the city’s fi­nance di­rec­tor. Among the eight mem­bers of the pub­lic, there is bank­ing ex­per­tise, but do some har­bor pre­con­cep­tions and bi­ases?

Mem­bers’ “let­ters of in­ter­est” to the city, ob­tained with a pu­bic records re­quest, are re­veal­ing. Six of the eight show con­nec­tions to, or sup­port of, the pub­lic bank­ing con­cept or the pub­lic bank ad­vo­cacy groups. One ex­presses a “pas­sion for pub­lic bank­ing.” An­other wants to take in­for­ma­tion from this pub­lic bank­ing ef­fort to help her tribe in Oregon cre­ate a bank. The chair­man of the task force, David Buch­holtz, an Al­bu­querque at­tor­ney, is quoted ina New Mex­i­can ar­ti­cle (“Mayor lines up choices for Pub­lic Bank­ing Task Force,” June 28) say­ing, “I did some le­gal work for the We Are People Here! foun­da­tion’ ” and, “‘I’ve been talk­ing to those folks.’ ” The 2014 Bank­ing on New Mex­ico sym­po­sium pro­gram lists him, also, as a speaker. One writes that her po­ten­tial ap­point­ment “could pos­si­bly be a con­flict of in­ter­est, since I work for the same agency that your task force will be work­ing with to ob­tain a char­ter for the pub­lic bank.” She was ap­pointed, nonethe­less. Task force ap­pointee Elaine Sul­li­van is a Bank­ing on New Mex­ico founder, board mem­ber and pres­i­dent, in­volved with “con­duct­ing re­search and out­reach” on a city pub­lic bank.

Will this task force zeal­ously ex­plore “pros and cons,” as it is charged to do, fo­cus­ing on risks and re­al­i­ties: at pos­si­ble fraud in a city where au­di­tors rou­tinely find flaws; at the com­plex­i­ties and true costs of people and sys­tems needed to run a bank in com­pli­ance with myr­iad laws and pro­ce­dures; at im­pacts on lo­cal busi­nesses and banks; at se­lec­tion and salaries for direc­tors; at the tax­pay­ers’ ex­po­sure if the bank goes south; and at whether this could be­come a po­lit­i­cal slush fund? Pri­vate banks han­dle gov­ern­ment ac­counts be­cause they have ex­pe­ri­ence and ex­per­tise, in­de­pen­dence, pro­fes­sional and tech­ni­cal re­sources in place, and ef­fi­cien­cies of scale.

Hun­dreds of mil­lions of tax­payer dol­lars are at stake. Should Santa Fe be a test case on a com­plex busi­ness like this?

Berl Brechner has had a ca­reer in media and pub­lish­ing, and now lives in Santa Fe.

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