Is public banking sound policy for city?
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.