The Alliance for Local Economic Prosperity is calling on the Las Cruces City Council to approve a resolution in support of a public bank in New Mexico.
Angela Merkert, the executive director of the Alliance for Local Economic Prosperity, says the formation of a public bank will lead to greater economic health for the state.
“In New Mexico, state revenue and fees are deposited in large global banks. They use our deposits as leverage to make loans and investments in companies of their choosing to maximize profits for their stockholders,” Merkert said. “That doesn't help our local economy. If New Mexico had a state public bank for our revenues, our taxes and our fees, that bank could use our deposits as leverage to make loans for the problems of our communities—including infrastructure, small businesses, health clinic enhancements and more.”
The bank itself would not be run by the state of New Mexico, rather by a citizen’s board of directors managed by qualified bankers.
State Senator-Elect Carrie Hamblen spoke in support of the resolution. She highlighted the public Bank of North Dakota, which has served the state for over 100 years, as an example for New Mexico to look toward.
“The Public Bank of North Dakota earned $94 million last year in profits for North Dakota's 670,000 residents,” Hamblen said. “BND (Bank of North Dakota) deposits roughly half of its profits into the state general budget and uses the other half to increase its capitalization in order to make more loans. So, you may agree that we need to diversify our economy, and then we need to diversify our revenue streams, this is one way we can do that.”
Councilor Gabe Vasquez voiced his support for a public banking system in the state, saying he’s encouraged by the solutions being proposed and the potential for an economic boost.
“The public bank would not be perhaps a consumer facing entity like a regular bank, but I think in the macro view of our state economy, making access to capital easier, for especially low income folks that want to do things like start a business or buy a home, really helps our communities to start digging out of some of the economic challenges that we have that are really great,” Vasquez said.
Chris Erickson, a New Mexico State University economics professor, presented to the council on some of the concerns surrounding public banks. Erickson says he is not entirely opposed to a public bank but wants the council to understand the risk.
“It does represent a risk in the sense that it's investing in a relatively undiversified portfolio, in the sense that it’s lending only in New Mexico, especially compared to the state treasurer's office funds, which is a very secure way in investment,” Erickson said. “It could expose local governments to risk, but if it's done right, it could be helpful. I'm just saying, it is not the panacea that people are making it out to be.”
Councilor Kasandra Gandara was another city representative who spoke in support of a state public bank, stressing the need for money to stay in New Mexico.
“I'm supportive of this, for sure,” Gandara said. “I hate our money leaving, right. Wall Street gets to sort of dictate where that is. And when you listen to the finance committees and others, right, speaking to how they're investing our money, it's always outside of New Mexico. So, very interested in building community while ensuring that it’s equitable, that we close the gaps.”
The New Mexico Legislature is slated to consider the formation of a state public bank in 2021.