In a recent My View in The New Mexican, retired senior bank loan officer Jim Lodes (“A public bank for Santa Fe? It’s too expensive,” June 12) suggested we don’t really need a public bank in Santa Fe. Here are the reasons why a public bank is a fiscally responsible pathway toward greater social and economic justice for our community. A public bank in Santa Fe could decrease the amount the city pays in interest for borrowing, most often with bonds, increase the lending power and movement of money in our community, and fund important local priorities.
In my view, creating a public bank for Santa Fe, chartered by New Mexico, managed by a politically independent board and professional banking staff, into which our money is deposited after it’s collected from us by the city for taxes, fees, fines and licenses, is an opportunity we should seize. Being a real bank, chartered by the state, has the following huge advantages:
When the city deposits its money in a public bank, it would very likely earn slightly higher interest than if deposited in a “big 10” global bank like it is now.
When the bank makes loans, interest paid on those loans would remain in Santa Fe as profits for the public bank. Some of these profits can then be used to make new loans or to invest in local programs here in Santa Fe, and some of those profits could go directly to the city’s revenue stream. For example, over the last 21 years, the Bank of North Dakota, our country’s only state-owned public bank, generated almost $1 billion in profit, and nearly $400 million of that, or about $3,300 per household, has been transferred into the state’s general fund to help keep taxes down and fund public programs. The population of North Dakota is just over 700,000, only 10 times that of the city of Santa Fe.
But most importantly, our public bank for Santa Fe will be a real, chartered bank — just like Wells Fargo or U.S. Bank or First National.
Why is that so important? Because real banks are able — because of the rules of the Federal Reserve, America’s bank for banks — to lend up to 90 percent of the funds they have on hand. The formulas are complex and the terms around the Fed’s rules complicated, but this ability is only available to chartered banks. It is a powerful engine for economic growth and will be most meaningful in our city, if our money remains in our hands in our public bank.
It’s essential, that we, the people, create a real bank, a chartered bank, our own public bank, which will create new lending power right here at home.
Over the past few months, two major studies about a public bank for Santa Fe have been undertaken, one by the city and the other by Banking on New Mexico. Both studies were conservative in their assumptions, modeling low interest rates paid for borrowing — low interest rates paid on deposits and slow, cautious growth. Both studies concurred that a chartered public bank in Santa Fe would be profitable in year one and could be a powerful engine to stimulate our local economy. It’s time we bring that power back to the people of Santa Fe.
It’s why our mayor and many city leaders support a public bank. It’s why the Bank of North Dakota has succeeded for a century. It’s why 40 percent of the world’s money is in public banks. It’s why I’ve supported public banking since the late Craig Barnes identified it as a primary pathway to greater social and economic justice for our community.
Elaine Sullivan has worked on many community initiatives, including the Santa Fe Business Alliance and the Living Wage Network. She was a founding member of WeArePeopleHere! and is the board president. Banking on New Mexico is an initiative of WeArePeopleHere! advocating a public bank for Santa Fe.
Elaine Sullivan – Santa Fe
