We all know that New Mexico’s national level is weak in terms of socio-economic development, rehabilitation agriculture, early childhood education, alternative energy and infrastructure development. We also know that after 2022, when the Federal Epidemic Recovery Fund disappears and fossil revenues fall in the coming years, investing in these and other priorities will be a big challenge for the legislature and the governor.
But what if the one-time $ 50 million pandemic investment turned it into a sustainable lending institution without the need for additional government support, from $ 400 million to $ 600 million? And what if that credit institution is locally focused on credit unions, community banks, and community development financial institutions (CDFA)? What if we promote capitalism at the community level? This is the promise of the New Mexico People’s Bank.
Yes, the legislature provides financial assistance through various government departments, including the Economic Development and the New Mexico Financial Authority. These are good programs. But there is a significant difference between the way they work and the public bank. They are revolving funds, allocated annually by the legislature, to be paid in loans and interest.
New Mexico’s public bank has expanded its asset base by eight to 10 times its fair share of banks. Thus, the $ 50 million capital capitalization can provide up to $ 500 million in loans in the first year without any additional benefits.
Here are some of the benefits of public banking for the growth and development of the community economy:
u Located, non-profit bank, New Mexico public bank loans are focused on the needs of the local community. Deposits, like other banks, are used to pay interest on treasury accounts, not for national and international investment and shareholders.
u New businesses were started, additional GRT revenues and new jobs were created.
u State Bank Loans support the government’s new 20-year strategic economic development plan, prioritizing “completion and cooperation”.
u Working with their lenders (credit unions, community banks, and CDFs), public bank lending will increase access, reduce inconsistent loan requirements, and create innovations, especially in agriculture and our food security businesses. Mortgages that are small, short-term or historically unsecured are more applicable because public banks can estimate the risk of borrowing high but unreasonable low interest rates.
u New Mexico Public Bank does not compete with partner lending programs. In fact, for starters, partner lending programs are increasing the pressure on the integration of Fintech, Technology Bank and Regional Bank by expanding their business by creating new customers.
u Supporting local business owners and entrepreneurs who have not previously served, increasing the value of public banking involves reducing the need for small business owners to meet with payday lenders or raising their credit cards. Two destructive high interest options currently employed.
u The Federal Reserve has set a four-fold increase in interest rates by 2022. New Mexico’s public bank can reduce the impact, as a nonprofit, lends at low interest rates.
The Bank of New Mexico works with a variety of business, community and state board members on democratic principles. So when it comes to visibility for the owner, the state, there will be local resources. According to government bank charter, New Mexico’s public banking system complies with the requirements of FDIC and the Federal Reserve.
Now is the time to awaken capitalism in our society. Now is the time to establish New Mexico Public Bank.
Peter Smith is a board member and Angela Merkel is the executive director of the Alliance for Local Economic Prosperity. Smith lives in Santa Fe, where he is a board member of KSFR Radio.