City faces hurdles to create public bank

Task force lays out myriad issues as group continues to study idea

Whether there will someday be a Public Bank of Santa Fe was not decided Monday night, but concerned community members got an earful of the myriad regulatory and capitalization hurdles that must be resolved or further studied before such an initiative — or even an application for one — could move forward.

At a forum in City Hall, the city’s Public Bank Task Force reported on its ongoing investigation into whether the city should establish a chartered public bank, presenting an unvarnished view of the potential stumbling blocks they have intensively researched since August.

Many of the roughly 40 community members in attendance might have hoped for more validation of their interest in the idea, one advocates say could reduce debts and generate income for the city while removing the necessity of outside banking giants.

But the task force progress report came in shades of gray, revealing the path to a prospective public bank is cluttered with potential obstacles and concerns requiring more clarity, from whether the city has the statutory authority to establish a public bank, to whether some functions of a municipal public bank would violate the state’s anti-donation clause, to whether the city has enough money available to get a bank off the ground.

“The city has to have the unrestricted liquidity to make this work,” said Randolph Hibben, a task force member with experience in community banking. “I don’t believe it does.”

Many aspects of the public bank proposition have not yet been determined, including how its independent governance would be established; how it might be staffed, operated and governed; and whether its functions might be limited to the city and other public institutions or might be expanded into a broader community model.

These and other regulatory concerns remain to be studied further, task force members said.

“We’re deep into it,” said David Buchholtz,

an Albuquerque attorney who chairs the panel. “Do we have all of our answers yet? Probably not.”

Tasked with identifying the pros and cons of a public bank and then delivering “the information needed to make an informed decision” to the City Council in early 2018, the ninemember volunteer task force recommended by Mayor Javier Gonzales and approved by the council has met regularly since August.

Monday’s forum marked the first wide-ranging checkup on the progress made by the advisory panel and its various subgroups. Their work follows a feasibility study authorized by the City Council in 2014 and completed early last year.

That analysis determined the city could save money if a public bank were established but cautioned any initiative ought to start small and emphasize transparency.

Whether the task force is expected to deliver to councilors a recommendation one way or the other or simply a report on their analyses is unclear. Buchholtz said he would seek clarity from councilors on the Finance Committee in December.