Create a green fund, public bank
Regarding the New Mexican editorial (“Use legislation to establish a ‘green bank,’ ” Our View, June 16) on obtaining federal climate funds, at the Alliance for Local Economic Prosperity, we endorse the goal of supporting New Mexico in addressing the challenges of climate change and the efforts underway to create such a green fund in New Mexico.
However, what is being proposed is a green fund — not a green bank — to receive appropriations and use those funds to match federal dollars. And it will earn interest on loans it makes. While we support the creation of such a green fund, we want to keep the terms accurate and ensure the public understands the difference between a green fund and a public bank.
Here’s the difference: With a green fund, a $10 million appropriation could earn back as much as the $10 million in payments, plus interest. That’s a terrific outcome, but it is different from what a bank would do because a bank both creates and makes money. A state public bank, with deposits and capitalization of $10 million each, can leverage that amount into up to $100 million in loans. It also earns interest on that $100 million, further increasing its capacity to lend funds.
The Alliance for Local Economic Prosperity has been advocating for a state public bank that would especially focus on providing more capital for agriculture and rural economic development. One tool we propose that would increase the capital would be investing New Mexico revenue in New Mexicans through partner lending programs between that bank, credit unions and local commercial banks. Capitalizing the bank would automatically make possible up to 10 times that appropriation for lending because that’s how a bank functions.
We need both a green fund and a public bank in New Mexico if we are going to grow local economic strength and protect our environment.
Peter Smith is a Santa Fe resident and board president of the Alliance For Local Economic Prosperity. Angela Merkert is executive director of AFLEP and lives in Albuquerque.