Dan Mayfield, vice president of government affairs for the Credit Union Association of New Mexico, is an advocate for a public bank. Courtesy Taos News.
By Dan Mayfield, Taos News | November 20, 2020
Community activists have renewed their efforts to create a New Mexico public bank, designed to provide needed capital for jobs and infrastructure spending across the state.
The initiative, to be introduced in the 2021 legislative session, could keep much more of New Mexico’s money in the hands of local communities, according to supporters.
New Mexico currently loses up to half of the money it spends on debt service with interest payments made to big banks. By creating a public bank, the state could fund new infrastructure projects without incurring those losses.
“Rather than putting our money in large national or multinational banks, we put it in something we own ourselves. That way, the bank keeps that money circulating in New Mexico,” said Dan Mayfield, vice president of government affairs for the Credit Union Association of New Mexico.
Public banks are designed to serve the public good rather than private shareholders. A public bank’s mission is established by local citizens, and could fund projects that include clean water, clean energy, agriculture, education, broadband, schools, airports and more.
Mayfield represents 42 credit unions across the state, and is leading the effort to create a public bank with the Alliance for Local Economic Prosperity. AFLEP, a nonprofit think tank, grew out of earlier efforts by Banking on New Mexico in Santa Fe and Public Bank for Central New Mexico in Albuquerque.
The proposed legislation, which could be formally presented as early as December, would ask for an initial $50 million to fund the public bank. The money — the state’s collected taxes and fees – would be moved from existing accounts held by private banks like Wells Fargo.
“One of the reasons we’re starting at that number is that UNM banking students estimated the first-year loan demand the bank could handle was $45 million,” said Mayfield. “So it made sense to start with $50 million.”
Mayfield and AFLEP have already secured sponsorship of the planned legislation from State Sen. Jeff Steinborn, D-Las Cruces, as well as support from Lt. Gov. Howie Morales. On Friday (Nov. 12) they presented their proposal to the Indian Affairs Committee, and Tuesday (Nov. 16), sought buy-in from the environmentalist group Renewable Taos.
On a video conference call, a dozen members of Renewable Taos spoke with Mayfield about the initiative’s potential impact on the state economy.
“New Mexico is in a renewable energy building race with the surrounding states. And we’re talking huge amounts of money just to meet the Energy Transition Act. So if I were you, I would go big,” said Gary Ferguson, a board member of Renewable Taos.
Mayfield explained that the $50 million would serve as a proof-of-concept, and with more buy-in from the state Legislature, could rapidly grow in scale.
Public banks have gained traction in the United States in recent years, although North Dakota began its 101 years ago. California and New Jersey have recently passed legislation to charter a public bank in their state. In Pennsylvania and Oregon, legislation is pending, and efforts are underway in more than two dozen other states.
Mayfield said that the big banks would not want to go along with the plan, because they want their fees and interest. “I would much rather see that money be put to use here in New Mexico by New Mexicans,” he said.