A state-owned Public Bank benefits New Mexicans
Our world is shifting in ways that we can only partially understand. One of those ways is in our changing climate and the impact we experience in our local communities. We are working to reduce our impacts on climate through local generation of electricity from our abundant renewable energy resources, and in the conversion of our homes and transportation systems to that renewably generated electricity. In addition, we now have a New Mexico Energy Transition Act (ETA, 2018) that, by 2030, calls for much more renewable energy that we already have in place. How do we reach these ETA goals when our state depends so heavily on the monetary returns from the fossil fuel industry? If it were just the state of New Mexico, that would be one thing, but these mammoth economic shifts are driven by global forces. Therefore, we must learn to take advantage of our other world-class assets, and adapt. What tools do we have to deal effectively with these colossal economic shifts?
A Public (or State) Bank could provide a mechanism to help deal with these and other issues related to improving local economies and legislation is now being developed for the upcoming Legislative session.
A Public Bank:
1. Will be owned by the people of New Mexico dedicated to the benefit of New Mexico.
2. Provides a safe, low cost place to deposit funds for local and state government funds.
3. Benefits the public by serving state and local community needs.
4. Provides a way to save state and local governments money, eliminating fees, and providing loans at lower interest rates.
5. Provides a source of funding for major New Mexico initiatives in economic development, infrastructure, renewable energy and affordable housing. And, most importantly, continues to invest all bank profits in New Mexico.
6. Employs qualified bankers serving a public mission.
7. Will be held to strict accountability and transparency.
8. Spurs economic growth that creates new jobs by supporting the strategic interests of New Mexico.
9. Partners with and supports – rather than competing with – local community banks and credit unions.
10. Lends money during times of stress and crisis. The COVID-19 pandemic has spotlighted serious needs in our state; our need for better access to healthcare, more numerous small business loans and additional broadband services.
How can a public bank help? Currently, our state revenues are being deposited in large Wall Street banks. If we establish a public bank, at least a portion of our state’s income would be deposited there and kept safe and local. Further, those deposits could be funneled into low-cost loans for local small businesses, farmers, infrastructure needs and many other economy-building purposes. More of our taxpayer dollars will be invested and managed in New Mexico.
A public bank is more powerful than public loan funds because a bank can leverage its deposits to up to 10 times the original deposit. For instance, $50 million in deposits could be leveraged to $500 million in available loan money. The interest earned on those loans would go partly to the state coffers and partly to the bank so that it continues to grow its lending capabilities; an innovative use of our tax money.
But wouldn’t this be unfair competition to the local private banks? To the contrary, a public bank will actually help credit unions and local community banks thrive and expand by providing a conduit for issuing more loans than they would normally be able to offer with lowered risk.
Note that the state public Bank of North Dakota (BND) has operated for over 100 years, recently bringing in record earnings for 16 years in a row and helping to provide North Dakota with a low unemployment rate, state budget surpluses and a thriving economy. In 2019 alone, the BND had earnings of $169 million. Public Banks are currently being explored by at least two dozen cities and states across the country. And just last year, California passed legislation that allows for the creation of up to 10 public banks.
If you agree, please contact our legislators and offer your support for this approach. For more information on a public bank, visit the website for Alliance for Local Economic Prosperity aflep.org. The Taos News provides contact information for our elected officials [weekly in Favor, pages A8-A9]. (RenewableTaos.org)