Bank Strength

The Bank of North Dakota’s headquarters in Bismarck. It’s the only state still operating a publicly owned bank, which opened in 1919. New Mexico Democrats hope to open a public bank, but unlike North Dakota’s, it wouldn’t be aimed at ordinary customers.

New Mexico’s strange motto is “It grows as it goes.” We should take that as a threat when the Legislature is in session.

Many Democratic lawmakers want to spend at least $100 million of your money to start a dicey venture. That’s the amount they are seeking to create a public bank.

Proponents make the idea sound like a panacea. With a state-owned bank, they claim, money would stay in New Mexico instead of being gobbled up by the wolves of Wall Street.

Bedeviled developers who want to build affordable housing would have a fresh shot at elusive financing.

Commercial banks would gain a willing friend in the state bank. The public operation could help the private sector offer loans that otherwise might be too risky.

North Dakota, the only state still operating a publicly owned bank, is making a go of it with a population that’s less than half of New Mexico’s. And the Bank of North Dakota opened in 1919. Boosters say this is proof positive a public bank is overdue in New Mexico.

All those blue-sky claims and many more flowed freely last week when House Bill 236 skimmed over its first hurdle. The House Commerce and Economic Development Committee advanced the proposal for a public bank on a 5-4, party-line vote. Democrats voted for the bill, and Republicans opposed it.

Put another way, Republicans were the voice of reason while Democrats waved their pompoms for a bill that is half-baked.

Many advocates of New Mexico creating a public bank like to talk about North Dakota’s experience. They omit that 10 other states once owned banks, but all of them exited the business.

More important, it’s a stretch to compare the Bank of North Dakota to what Democrats propose for New Mexico.

North Dakota’s public bank has one location in the capital city of Bismarck. The bank offers North Dakota residents basic services such as checking and savings accounts. It also provides student and business loans, plus a range of services for government agencies.

New Mexico’s public bank wouldn’t be geared toward ordinary customers.

“It would provide public dollars for public purposes,” Sen. Jeff Steinborn said in an interview.

Steinborn, D-Las Cruces, calls himself the main author of the House bill for a public bank and of its companion proposal, Senate Bill 313.

His description of the public bank serving “public purposes” sounds a lot like what a state agency already does.

The Legislature in 1992 created the New Mexico Finance Authority to help cities, counties and other government agencies pay for public works projects.

The Finance Authority explains its mission as one of providing “low-cost financing for borrowers, particularly those in disadvantaged communities, who might not otherwise be able to access the tax-exempt bond market.”

In sum, the Finance Authority serves as a bank for the public sector.

A legislative staff analysis of Steinborn’s bill contains a critique from the New Mexico Finance Authority’s managers.

Part of it states: “In order for the Public Bank to grow beyond the initial state commitment of $100 million, its lending activity must capture new deposits. The State Treasurer has the option, but not the requirement, and likely not the incentive, to make deposits beyond the initial commitment specified in the Act. The Public Bank will need to attract deposits from either the public sector or the private sector, or both, with no market advantage in doing so.”

Steinborn’s bill would launch the public bank by taking $50 million from the state general fund and another $50 million from the State Severance Tax Permanent Fund.

This is enough to hurt other state programs, but insignificant for a bank. By comparison, North Dakota’s public bank had a loan portfolio of $4.5 billion, according to its annual report issued in July.

How did the frigid, rural state put that much money in the bank? It’s the law. All state funds must be deposited in the Bank of North Dakota.

Presidents of community banks in New Mexico testified against Steinborn’s bill. One reason is governments are customers of hometown banks.

“We have significant amounts of money — public fund money — on deposit that stay in our communities, that we use to reinvest in our communities,” said Jason Wyatt, president of banks in Carlsbad and Clovis.

Some will argue that community banks just don’t want competition from a public bank. They are the same people who claim community banks help Wall Street instead of Main Street.

Jerry Walker, president and CEO of the Independent Community Bankers Association of New Mexico, countered that argument.

“We have some 33 in-state headquartered, home-owned banks,” Walker said. “We employ some 2,800 people around the state [with] 220 locations in every corner, every county.”

Another myth is a public bank headquartered in Santa Fe will invigorate hometown economies.

The bill’s financial analysis states: “HB 236 does not provide the Public Bank with an exception to the Inspection of Public Records Act, which may prove to be problematic if it is to participate in economic development lending.”

The public bank might ask for secrecy while seeking more and more state money — “It grows as it goes.”

New Mexico’s bills for a public bank need years of study, preferably in icy Fargo or Minot. Better yet, send the bills straight to the scrapheap.

Ringside Seat is an opinion column about people, politics and news. Contact Milan Simonich at or 505-986-3080.

(22) comments

Stefanie Beninato

I think many people support the idea of a public bank because they think it will be like a private bank they use--open to all depositers who then can ask for a loan etc. If it is only for those borrowers/depositers who need support for public purpose projects, then I think most public bank supporters will be sorely disappointed.

Khal Spencer


Joseph Hempfling

Change is always scary especially around money and I for one support and encourage it in seizing the moment including the moral courage to creating a local New Mexican public bank and thereby keeping new Mexicans hard earned dollars at home and away from the new york banksters to use and cry over. sorry boys

Joseph Hempfling

perhaps a little more facts are in order as to why I support the City Different having it's own public bank 1)it will be locally owned; 2)serve as the depository for local government funds;3)required to benefit the public by serving local community needs 4)save millions, yes millions by cutting out middlemen and private shareholders, eliminating fees and financing projects at lower interest rates;5)reinvest bank profits into the community. NEED I SAY MORE? and if you want more info google IT WILL MORE THAN ANSWER ANY AND ALL YOUR CONCERNS I AM SURE.

Khal Spencer

We have credit unions for those who don't like banks.

Khal Spencer

How many more Rail Runner boondoggles can we expect if the Legislature has its own in-house bank? Paid for, of course, at taxpayer expense.

Stefanie Beninato

I believe the Railrunner gets a substantial amount of federal funding--it is not all based on the state. Public transportation usually is a loss leader--have you checked the buses for example that serve comunters? How much profit do they generate? Do they even break even? Just asking

Paul Davis

Indeed, there are almost zero public transportation systems worldwide that break even (let alone turn run a surplus. And yes, the exceptions prove the rule.

There's a simple reason why this is perfectly OK (within limits, at least): people who do NOT use the public transportation systems still gain a benefit from its existence. One can argue about whether the RR brings any benefits to anyone at all, and obviously if the answer is "no", then the argument is moot.

But you don't have to ride the rails to benefit from their existence. The benefits of public transportation in Santa Fe (or even the entire Las Cruces-ABQ-SF-LA corridor) are going to be a bit different from what you'd see in, say, metro NYC. Despite the endless complaints, we don't have traffic congestion issues that are going to be improved by subways and busses. But that doesn't mean that the other benefits of these systems can be ignored. Promoting development, providing transportation for the car-less, and yes, even a little bit of a reduction in automobile use ... everyone benefits from this, not just those who ride.

Of course, there are those firmly wedded to the idea that for one reason or another, Santa Fe and the southwest in general will never grow large enough to have "problems" with transportation that require the subsidies inherent in a public transportation system. Water could well be one reason why this might be true. For myself, I'd prefer to see the region gamble on the benefits, even though I acknowledge that population growth along the corridor may stall out and nowhere but ABQ can really justify an expanding system.

We now return you to the regularly scheduled whiners and complainers of the SFNM comment threads ....

Khal Spencer

Save your closing ad hominem, Mr. Davis, as logical fallacies and insults don't do your argument any good. Vague generalities are nice for politics, but they don't justify wasting tax dollars. Especially, hundreds of millions of dollars in a poor state. Usage on the choo choo is so low as to make it a loser for reasons I mentioned. There could have been better ways to invest in public transit using existing resources. For example, dedicated bus lanes on the I-25 corridor using those nice intercity buses would allow much greater flexibility and changes in destinations to better try to meet demand. Esp. since the state keeps widening I-25 to provide more capacity.

Your defense of the indefensible is one reason people should reject a state boondoggle, er, I mean, bank.

Once you lay down track, you are stuck.

Its not like we don't have right

Khal Spencer

New Mexico owes almost half a billion dollars in debt towards the Rail Runner. It was poorly thought through, wishful thinking. If that's the kind of "investment" the state will invest money in from a so called state bank, we will see more pie in the sky, politically motivated boondoggles.

There is a wealth of information on commuter rail. It works well in high density areas such as found in major east coast cities. We have neither the density or the connectivity at the stations nor easy connections to ultimate destinations to have made the Rail Runner work. Even at four bucks a gallon, people drive. Why? Because they value their time. Pie in the sky bureacrats love big ideas. Joe and Jane Sixpack just want to get to work or the store without a major inconvenience and time sink. That's why transit often fails.

As a Transportation Advisory Board member, I was on the planning committee for Atomic City Transit up in Los Alamos back when that was just an idea. A lot of thinking went into that project and there are always risks and one has to treat it like a public utility (but not a money sink); one has to decide what is worth risking. Putting in a rail line locks you into a mistake. There were other options- that were reversable. I-25 is very far from at maximum capacity and indeed, we keep widening it so to make it easy to drive so guess what? People drive.

Mike Johnson

As Gideon John Tucker once said: "No man's life, liberty, or property are safe when the Legislature is in session". This is a perfect example, thank you Milan.

Richard Reinders


Paul Davis

Nothing like a little hyperbole to stoke the fires of anti-government agitation, eh? Look, there are some real problems with the public bank concept as presented in this bill, possibly insurmountable ones. But it's not a thread to your or my "life, liberty or property". It's just a bill, flawed as they all are, though potentially fatally so. Why not just explain what you don't like about it rather than reaching for absurd hyperbole?

Also, you know what you get when you spend decades explaining to the American people that government cannot work? Yep, government that doesn't work.

Mike Johnson

Everyone with half a brain knows government doesn't work. Look at any poll of normal citizens you will see politicians who run government are the least trusted and least respected of any profession........the majority knows government doesn't work, they see it every day, every legislative session, and most any interactions they have. Try MVD sometime.....

Paul Davis

After at least 40 years of being told how bad government is, how could you expect anything else? Ever since Reagan (and arguably even before), the non-stop message from the conservative right has been "government is bad for you, government is incompetent, government can't do anything". No wonder that a large chunk of people now believe this. But do you see the culture similarly filled with discourse about how incompetent corporations are, and all the stupid stuff they do and all the mistakes they make? You do not - corporations are bright and shiny and competent and the supposed model for how things should be, despite their regular incompetence, inefficiency and stupidity.

There are problems in government, just like there are in corporations. But the solution to corruption, ignorance and stupidity in government is to fix the corruption, ignorance and stupidity, not get rid of the government.

My experience at NM MVD was pretty excellent. Compared with going to Verizon to try getting a new phone on my hotspot-only data plan, MVD was a model of efficiency, intelligence and curteousness. I do notice that NM seems to have an overly-loud population of people who whine about how bad things are. While the statistics for the state in many respects are not great, my interactions with contractors, tax dept people, septic service, county permitting and inspection, MVD, transfer/dump/recycling stations and more have all been really good. Compared to somewhere like Philadelphia, outright amazing.

Mike Johnson

Mr. Davis, I guess I have been going to the wrong MVD, where the clerks all act like Gestapo officers, rude, short, and you never have the right "papers". As for the SF Co. building inspectors and the gauntlet of unnecessary and ridiculous red tape, paperwork, inspections, etc., that have turned my simple garage project into something I suspect even most shopping centers in other states would not have to go through (4 months to even get a permit), I can say my experiences are not even close to yours. Are you sure you live in SF Co.?

Lee DiFiore

Given NM government's skill at doing almost anything (read unemployment insurance and vaccine distribution as just 2 recent examples), you want to put your money (or tax dollars) in a bank run by NM? Under my mattress would be safer.

Khal Spencer

Yet another left wing boondoggle with our money. Kill this idiotic venture.

Devin Bent

In the battle of the New Mexican columnists, I call this a TKO by Simonich in one minute of round one. Shanahan wants a public bank so developers can build more full cost housing. Frankly, I have no idea why that is even the business of a public bank. Subsidized housing, yes. Non-subsidized, that is the business for the private sector. There are a lot of banks -- if a builder can't find a loan there, then it is probably a bad idea. The simple fact is: builders go bankrupt with a distressing frequency.

Ann Maes

A ridiculous and unnecessary venture. If you want to keep the money in New Mexico, just join your local State Employees Credit Union. We’ll all be using cryptocurrency within 5 years anyway.

Kim Shanahan

Ask Jerry Walker how many of his local banks have offered non-recourse infrastructure loans for any subdivisions in the past 10 years as they did before the housing crash of 2008. Ask the NMMFA if they have ever offered such loans for anything other than 100% subsidized affordable housing projects. The answers, which will be none, is why we have a housing shortage crisis.

Jim Clark

The public bank is an excellent idea. It takes time to get any venture up and running, it is worth the effort. It would be good for all sectors of the economy.

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