Don’t take the bait on an NM public bank

There’s been huff and fluff in support of two bills in the Legislature that would establish a New Mexico public bank. But it’s time for a reality check. This is a road only one state traveled, and that was over a century ago. Today, it seems an expensive, risky and unproven experiment for New Mexico.

In 2019, resolutions proposing a feasibility study for a state public bank went nowhere. This session’s bills aren’t for a feasibility study. They’re intended to lock in and fund a public bank.

There’s no indication of any analysis of whether this is feasible, practical and needed, or of any long-term business plan for such a bank.

We don’t know what problems it is intended to solve (and whether existing programs and functions of state/local governments already have remedies).

We don’t know what the costs to the public will be for funding, operations, board salaries, etc. (other than raiding a state permanent fund for $50 million initial investment). We don’t know whether this is legal and practical (anti-donation law matters, etc.).

We don’t know whether this comparatively small bank could have any meaningful impact on the state’s economy (or might, in fact, be harmful, if commercial banks lose business and pay lower taxes).

And further, New Mexico citizens should be wary that a state public bank’s workings and projects would have less transparency than government, where actions are subject to open records and meetings laws. Is this a reason those advocating a public bank are pushing the issue — to move public money to pet projects without public awareness, scrutiny or evaluation? Does a public bank run by people appointed by state officials run the risk of doing insider, backroom or crony deals that may not make economic sense?

Public bank advocacy groups have run into roadblocks elsewhere. It could be the national anti-Wall Street group lobbying for public banks sees New Mexico as an easy mark now, with a possibly receptive state government, and perhaps they see New Mexico as unsophisticated in such matters and likely to take the bait.

It’s a scheme that needs to be promptly shelved.

BERL BRECHNER SANTA FE