New Mexico Needs a Public Bank ”Albuquerque Journal
By doug lyman
New Mexico is # 1.
In payday lenders per capita, ie.
According to a study by California State University-Northridge, we have nearly 10 times more payday lenders than McDonald’s restaurants.
Payday lenders are one of the worst forms of predatory capitalism, charging exorbitant interest rates on loans to desperate people.
Meanwhile, we are almost at the bottom of the rankings for U.S. states in global news and reports for education, economy, opportunity, tax stability, and crime. And we’re last in general child welfare, according to the Annie E. Casey Foundation.
Unsurprisingly, the Kaiser Family Foundation ranks us # 1 for per capita suicides.
And all of that data was pre-COVID-19, which brought our struggling condition to its knees, leaving us breathless.
The root of these systemic problems is the same: the lack of economic development. If we raise our standard of living, almost all other problems will begin to resolve.
But how do we get more money into our state?
A solution proposed by the Alliance for Local Economic Prosperity (aflep.org) is as simple as it is elegant: a public bank.
A what? I thought all banks were public.
I had never heard of this concept until recently and at first glance I would rather watch a Zoom on Tooth Decay presentation on an unstable internet connection than read on public banks.
Still, it’s an idea that has worked successfully in North Dakota for over 100 years.
With help from its state-owned bank, North Dakota is ranked # 4 in opportunity, # 5 in infrastructure, and # 13 in fiscal stability by US News & World Report. New Mexico should follow North Dakota’s lead.
A public bank is not a bank for individuals. It is a bank of bankers created by the State. It does not compete with community banks and credit unions. He partners with them to provide loans.
We deposit our public money with Wells Fargo Bank and then our money is invested almost everywhere but here. When our state needs loans to finance infrastructure projects, we borrow money from Wall Street bond companies, paying interest and fees for the lien.
In short, it is a form of state economic extraction that perpetuates the cycle of poverty.
A public bank could change that.
With a public bank in New Mexico, we could deposit some of our taxes there. This money would then be loaned for local economic development to businesses through community banks and credit unions, and to our cities, counties and state for infrastructure projects.
The interest and fees generated by these loans would produce income that we could lend again, creating a virtuous cycle of economic development.
Despite the economic hardships New Mexico faces, we have the money to do it now.
By investing $ 50 million from the Permanent Departure Tax Fund to capitalize the bank and starting with $ 50 million in income deposits, conservative estimates suggest that a New Mexico public bank could lend more than $ 500. million dollars locally within five years.
That’s a lot of post-pandemic economic development.
A public bank for New Mexico could help improve the lives of all New Mexicans. And that includes you. Because, never forget – your income comes from someone else’s expenses. No matter your level of wealth or poverty, this rule is impossible to break.
If we perpetually sell our state to vested interests that oppose a public bank, such as payday lenders and global banks, we are shooting ourselves in the foot at a time when we need a solid foundation more than ever. .
Let’s not stay at the bottom forever.
To help shake things up, how about a quick email to your lawmakers? You can find the names and contact details of your legislators by entering your mailing address at openstates.org.
Doug Lyman, financial advisor and former monk, lives in Santa Fe.