Press Room & Media
AFLEP in New Mexico
Base public bank discussion on facts
MY VIEW – Peter Smith
Santa Fe New Mexican | August 13, 2022
Let’s have a fact-based discussion about a public bank for New Mexico.
What do we call it when a person who knows the facts of a specific situation fails to state them fairly and accurately, and tries instead to confuse and mislead people? That is what Jay Jenkins did in his op-ed piece against a public bank for New Mexico in The New Mexican last week (“Public bank won’t help what ails N.M.,” My View, Aug. 9).
I am writing to say that, if there is a case to be made against a public bank, do so honestly and in a straightforward manner, not with outright and purposeful misrepresentations.
- Jenkins says the public bank will compete with community banks. Not true! The core of the public bank proposal is exactly the opposite. The bank will only support loans brought to them by credit unions and community banks. And, as he points out, the North Dakota public bank does exactly that.
- Jenkins says the bank will not have FDIC deposit insurance. In fact, to be chartered in the state, the bank must meet the FDIC’s “gold standard” regulations and requirements. However, since the bank is working solely through partnerships with community banks and credit unions, it will not have depositors in the traditional sense. So, it won’t need FDIC deposit insurance coverage. The state will be the bank’s only depositor.
- Jenkins says the bank would be susceptible to political pressure. But, ironically, given that the bank can only work in collaboration with existing banks, the only politics, if such existed, would be at the community level and with those institutions.
- Jenkins says the bank might make risky loans due to inexperience. But the only loans the bank can consider would be those brought to it for shared support by the credit unions and the community banks.
- Jenkins says a New Mexico public bank would not be viable financially. In fact, when Santa Fe did such a study, it was determined the city was too small financially to support the concept. But North Dakota is significantly smaller than New Mexico and is doing very well. And several other places are also planning a public bank.
A public bank would strengthen community banks’ and credit unions’ ability to serve their communities by collaborating with them on loans that are different, loans that support more entrepreneurial business plans, loans that, without the public bank’s support, might be considered high-risk.
In closing, let me say that, yes, I serve on the Alliance for Local Economic Prosperity board, the organizational advocate promoting the public bank. But this letter is from me as an individual, asking for an honest and accurate debate as the concept moves forward.
Peter Smith lives in Santa Fe and is a supporter of the proposed public bank.
AFLEP Presents to NM Legislative Interim Committee
On Monday, August 8, 2022 in Gallup NM, AFLEP presented to the Economic Development & Policy Committee (EDPC), an Interim Committee of the New Mexico State Legislature. The EDPC is made up of both Senators and Representatives. AFLEP was represented by Harold Dixon, former President and CEO of State Employees Credit Union, Sarah Manning, AFLEP Outreach Coordinator and Angela Merkert, Executive Director. You can watch the hearing proceedings .
State Employees Credit Union, former CEO Harold Dixon talks about why he sees a need for a public bank in New Mexico
May 28, 2022 – Retake Our Democracy’s Paul Gibson explores public banking mis-information with Harold, and some key ways a public bank can improve New Mexico’s economy – like expanding the lending capacity of community banks and credit unions, reducing State bond outlays and addressing unmet community development needs. Harold co-chairs AFLEP’s Public Bank Implementation Task Force and serves as an Advisory Board Member.
Report From Santa Fe – Senator Jeff Steinborn recap of 2022 Session
Public bank puts community capitalism to work
MY VIEW – Peter Smith and Angela Merkert
Santa Fe New Mexican | January 8, 2022
We all know that New Mexico’s national rankings are poor when it comes to community economic development, regenerative agriculture, early childhood education, alternative energy and infrastructure enhancement, among other things. And we also know that, when the federal pandemic recovery funds fade away after 2022 and fossil fuel revenues decline in the years ahead, continuing investment in these and other priority spending areas will be a huge challenge for the Legislature and the governor.
But what if there were a solution that turned a one-time $50 million investment of pandemic money into a continuing $400 million to $600 million lending institution with no additional state support required? And what if that lending institution was locally focused, working through credit unions, community banks and Community Developmental Financial Institutions (CDFIs)? What if we promoted capitalism at the community level? That’s the promise of the Public Bank of New Mexico.
Yes, the Legislature does fund lending programs through various state departments, including Economic Development and the New Mexico Finance Authority. These are good programs. But there is a critical difference between the way they operate and the public bank. They are revolving funds, what is appropriated by the Legislature year to year, loaned and repaid with interest.
The Public Bank of New Mexico will expand its asset base, the way banks do, by eight to 10 times the amount of its equity. So, $50 million appropriated to capitalize the bank will make possible up to $500 million in lending in its first year with no additional appropriations.
Here are a few of the advantages that the public bank would bring to community economic growth and development:
As a locally-focused, nonprofit bank, the Public Bank of New Mexico’s loans are focused on local community needs. Deposits, earning interest from Treasury bills just like other banks, would be leveraged entirely for local economic and community development, not national and international investment and shareholder profit.
New businesses would be started, additional GRT revenues generated and new jobs created.
Public bank loans will support the priorities of “Empower and Collaborate,” the newly released state 20-year strategic economic development plan.
Working through their lending partners (credit unions, community banks and CDFIs), the public bank will increase access to lending support, reduce inconsistent borrowing criteria and increase support for innovation, especially in our agriculture and food system businesses. Loans that are smaller, shorter term or made to historically underserved populations and businesses will become more feasible because the public bank enables the assumption of more, but not unreasonable, risk in lending at lower interest rates.
The Public Bank of New Mexico will not compete with its partner lending programs. In fact, as the entry points for borrowers, the partner lending programs will develop new customers, thus expanding their business while ameliorating the pressure generated by fintech, technology in banking and regional bank mergers.
While supporting previously underserved local business owners and entrepreneurs, the public bank value-add also includes reducing the need for small-business owners to engage with payday lenders or maxing out their credit cards, two destructive high-interest-rate options currently employed.
The Federal Reserve has signaled it will raise interest rates four times in 2022. The Public Bank of New Mexico can reduce the impact of the increases since, as a nonprofit entity, it will issue loans at lower interest rates.
The Public Bank of New Mexico would function with a board of diverse business, community and state government members, operating under democratic principles. Thus there will be local input while assuring visibility to its sole owner, the state. Chartered as a state bank, Public Bank of New Mexico practices will conform to FDIC and Federal Reserve compliance standards.
Now is the time to energize capitalism in our local communities. Now is the time to establish the Public Bank of New Mexico.
Peter Smith is a board member and Angela Merkert executive director of the Alliance for Local Economic Prosperity. Smith lives in Santa Fe, where he also is a board member of KSFR radio.
Transforming the State’s Economy with a Public Bank
By Dorothy Gamble
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Green Fire Times | Jan/Feb, 2022
Currently, New Mexico’s money—three to nine billion dollars on any given day—is deposited and managed globally for profit elsewhere. The proposed Public Bank of New Mexico (PBNM) would safely invest our taxes and fees to improve the well-being of all New Mexican communities. Establishing a public bank will put the state’s financial investments and outcomes in the hands of the people, democratizing our money.
Defining a Public Bank
The Bank, guided by a mission statement to mobilize and redirect public revenue, will invest in healthy, culturally appropriate, environmentally sound, socio-economic development. It works in collaboration with local banks, credit unions, tribal entities, municipalities and Community Development Financial Institutions (CDFIs) by forming partnerships for local lending programs.
The PBNM is not a retail bank. It does not accept individual deposits and therefore does not compete with local community banks and credit unions. Its operational costs are reduced because it has no branches, tellers, ATMs, retail services or expensive marketing. The PBNM does not make loans to private individuals.
How a Public Bank Will Work
As proposed, the PBNM would collaborate with the state’s public and private financial institutions to invest in community development. The return on local investments will grow, becoming a steady revenue source. Economic models based on an initial $50-million capitalization from the state’s general fund and $60 million in deposits from which to leverage loans in the first year can, by the seventh year, have total gross loans amounting to more than $485 million. Growing such a lending fund changes the current problem of depending on boom and bust resources from volatile industries. The PBNM alone will not solve all of the weaknesses of NM’s finance system and low rankings on socioeconomic measures of well-being. However, it does set up a springboard for how to tackle those low rankings. In partnership with local banks, credit unions, municipalities and tribal entities, the PBNM’s collaborations can boost investment in local entrepreneurs who want to:
- Increase local agriculture and food growing and processing ventures
- Invest in renewable energy and related technological endeavors
- Invest in health clinics and community educational systems that recognize the most productive and creative people in any community will be healthy, knowledgeable and open to learning at any age
- Contribute to the diversification of the economy by helping small entrepreneurial activities grounded in local cultural and environmental regeneration
- Gain equitable access to financial resources in the parts of the state often neglected by national and statewide programs
Why the PBNM Would Be Transformative
Lending money is more powerful than saving money. The PBNM can leverage its capital by lending up to 10 times its equity value and still be profitable. That means money the PBNM lends and the profits can be the state’s next economic stimulus. Over the course of several years Public Bank supporters have studied the needs of local communities through work with academic and financial experts who understand the way the PBNM could be established. Review of NM Finance Authority (NMFA) and Economic Development Department (EDD) programs, work with faculty of the UNM Anderson School of Management and others with investment experience, and interviews with principals in the Bank of North Dakota, (the only existing state public bank in the U.S.), has convinced supporters as well as many N.M. legislators that there are needs in the state that the PBNM could effectively address. As a nonprofit, state-owned entity, the bank can make loans at a discount for regional, county, municipal and tribal projects. This precludes the need to engage in the bond market, which can add up to 30 percent to money borrowed. Right now, New Mexican tax dollars are slipping away from the state to stockholders of corporate financial institutions or gaining tax credits for people of wealth, many out of state.
Empowering Communities To Meet Local Needs
Public banks hold a bank charter legally subject to applicable state and federal banking rules, regulations and oversight. While the NMFA is the primary state agency designated for organizing bonds to loan money for county and regional projects, it does not have the authority to take advantage of all the possibilities a public bank offers. The NMFA has revolving funds only and cannot leverage its holdings tenfold as a bank can do. Also, the NMFA does not have access to the Federal Reserve System and therefore cannot increase its potential loan capacity. The PBNM could more effectively and efficiently make funds available quickly because of its partnerships with community banks and credit unions and its relationship with regional and tribal community development organizations. These local organizations are closer to people in smaller communities and know the needs, cultural strengths and community contexts.
The PBNM would collaborate with the state’s public and private financial institutions to invest in community development.
An October 2021 Report from the NMEDD entitled Empower and Collaborate pointed out obstacles to New Mexico’s economic future and strategies to achieve progress. Among the priorities listed were modernizing the economic development ecosystem, strengthening N.M.’s communities, reimagining education and training, promoting equity through economic justice, enabling high-quality home-grown innovation and diversifying the economy. Collaborative efforts with a N.M. public bank would respond to each of these priorities.
Community banks often have limitations on the kinds of loans they can make. Typically, community banks do not make shorter-term loans, loans for amounts under $100,000 or longer-term loans for three years or more. In addition, community banks are not usually
Examples of Why New Mexico Needs a Public Bank
- An Albuquerque manufacturing facility that produces fresh juices and other products had to obtain financing from a bank in Chicago rather than through local banking options.
- A retiree from Los Alamos National Laboratories invented an allergy remedy now sold in pharmacies throughout the Southwest. He was unable to secure a loan and was forced to use his own funds to finance his start-up company.
- A veterinarian who works at a small vet clinic about to be sold to a franchise wanted to buy the clinic but was unable to get a loan.
- A well-established farmers’ market in northern N.M. wanted to refinance the mortgage for its building. The group’s lender told them that it did not work on local deals anymore, and it had to turn to an out-of-state, regional bank for refinancing.
- A woman from Gallup who sells pottery found that her only financing option was a $7,000 loan from a payday lender, who charged 100 percent annual interest.
- Neither a coffee shop owner in Las Cruces nor a print shop
Support the Establishment of a Public Bank of New Mexico
Legislation for the PBNM continues to gain strength among N.M. legislators. First introduced as a “memorial” to study the benefits of a Public Bank in the 2019 legislative session, it was introduced as a bill to create a Public Bank in 2021. It was heard by several committees but did not get a full session hearing. Numerous organizations testified in support of the PBNM, including the N.M. Food and Agriculture Policy Council, the Young Farmers Coalition and the Healthy Soils Working Group. In addition, the state Credit Union Association, three city councils and four county commissions endorsed the establishment of a Public Bank. Support has come from more than a dozen legislators who have a strong interest in pursuing legislation in 2022 that will respond to the investment needs for their communities.
Since its origins in 2018, the Alliance For Local Economic Prosperity (AFLEP) has advanced a vision that supports the socio-cultural, environmental and economic needs of all New Mexicans, especially rural, Native American and Hispanic residents. A PBNM would democratize tax money by bringing it under the control of the state’s residents. We will again introduce legislation in 2022 based on the stories of New Mexicans who just want a chance to participate in building lively, economically active, healthy communities where the environment and cultural perspectives are respected and preserved. You can help this effort by learning more (visit AFLEP.ORG) and by writing to the governor and your legislators about how the PBNM could invest in your community’s needs.
Dorothy “Dee” Gamble is an outreach volunteer with the Alliance for Local Economic Prosperity.
This article is reprinted from the Green Fire Times, January/February 2022 issue.
Retake Our Democracy: Angela Merkert on the 2022 Public Bank Legislation
Angela Merkert, AFLEP Executive Director recaps the public banking movement in New Mexico, the 2021 launch of public bank legislation and unveils the comprehensive Public Bank Act bill slated for the 2022 Session. Host Paul Gibson asks why the Community Bank sector has emerged as a primary opposition to public banking when the statewide association of Credit Unions supports it. Angela speaks to the misinformation, highlighting the ways a public bank will expand community bank lending and target under-financed economic needs across the state.
Letter to the Editor: A public bank would improve life in New Mexico
Image by 3D Animation Production Company from Pixabay
By Clifton Chadwick, Santa Fe New Mexican | August 29, 2021
The piece by Sen. George Muñoz (“Stimulus — spent right — will promote opportunity,” My View, Aug. 23) about “not squandering” New Mexico’s share of federal stimulus money is right on, well, the money. And who knows the needs and concerns of New Mexicans better than New Mexicans?
Imagine having financing available for projects that “support and enhance existing industry while also diversifying our revenue streams, improving quality of life through enhanced education, roads and health care systems, and retain and attract a quality workforce” as Muñoz writes — financing run by New Mexicans rather than out-of-state shareholders.
That possibility, a New Mexico Public Bank, presented to the state legislators during the 2021 legislative session, will likely be presented in 2022. The Alliance For Economic Prosperity (aflep.org) has advocated for a public bank precisely because “We must utilize and invest those dollars in a way that will foster new growth in the economy and improve quality of life for all New Mexicans.”
Letter to the Editor: Taos County needs a public bank
Photo by Lochaven (CC BY-SA 2.0)
Justin Friedman, Taos News | March 31, 2021
The legislation to create a New Mexico State Public Bank did not progress in this year’s legislative session. It received two committee hearings and died in the second one. The critical piece for Taos County is the related failure to locally fund startup small businesses in solar installation, home improvement, forest management and a diverse, far reaching number of local initiatives. Failure to enact this legislation further exacerbates the ongoing crisis of a non-diversified State economy reliant on fossil fuel extraction. Thanks to all who supported our efforts to implement this potential cornerstone for New Mexico economic development.
Letter to the Editor: Public bank needed
Image by mustofa agus tri utomo (Pixabay)
By Dee Gamble, Santa Fe New Mexican | March 2, 2021
Thanks to Milan Simonich for highlighting the bills (House Bill 236 and Senate Bill 313) to create a New Mexico Public Bank and promoting public discussion (“Public bank bill belongs on scrapheap,” Ringside Seat, Feb. 21). However, the New Mexico Public Bank would not replace the New Mexico Finance Authority, it would complement, not duplicate or compete with it. More importantly, the public bank, as a chartered bank, would grow money (yes, “grows as it goes”), which the New Mexico Finance Authority cannot do. The bills do not create a bank that lends directly to individuals, as the Bank of North Dakota does for college loans. Rather, it would partner with community banks and credit unions to finance loans to small businesses and entities including municipalities and tribes for underfunded community development investments.
If financial investments are just fine as they are, why is New Mexico at the bottom of all the measures for well-being? New Mexico communities have many unmet needs, and it’s high time we do something bold that is successfully functioning elsewhere and is currently being considered by dozens of other states.
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Episode: Everyone deserves a public bank
“I had the good fortune to work on this initiative before Bernie kidnapped all my time. This is one of those no-brainer initiatives that only the 1% could oppose. It has the potential to save the state millions of dollars by vastly reducing the cost of its bonds to improve infrastructure funding. in a public bank, our state funds can be used to build our local economy and our local infrastructure.”
– Paul Gibson
Retake Our Democracy