Mayor Javier Gonzales wants to study the feasibility of creating a public bank in Santa Fe to grow the local economy by keeping taxpayer money in the city.
Gonzales, who talked about the idea on the campaign trail, organized a presentation Tuesday for city councilors and others to understand the basics of public banking, which leverages a government’s assets to stimulate investment in the community. Examples of public banking include offering low-interest loans to local businesses or low-cost financing for public projects, such as housing and infrastructure.
After the presentation Tuesday by the Public Banking Institute, Gonzales said he wants the city to issue a request for qualifications to conduct a feasibility study over the summer. The results of that study could be available before a public symposium on public banking that’s scheduled in Santa Fe in September.
“This is going to be a very slow, long, methodical process,” Gonzales said. “No one is going to rush into creating a public bank, and we’re going to make sure that the public fully understands and supports it before it even gets to that type of decision-making process.”
While public banks exist in other parks of the world, the only public bank in this country is the nearly century-old Bank of North Dakota, though there are efforts to create more public banks in the U.S.
“It’s not an easy idea to implement,” said Gwen Hallsmith, executive director of the Public Banking Institute.
Hallsmith, one of the presenters Tuesday, said the state of Vermont, where she lives, has taken “several steps” toward a state-owned bank, though it hasn’t obtained a banking license.
“We have an administration that’s relatively open to it,” she said. “They’re a little nervous about the banking part because the bankers are so opposed to it. That’s another reason that it hasn’t happened. Big banks push back. They’re powerful. People are afraid of powerful entities.”
Hallsmith said public banks don’t compete with private banks at the state or local level. Public banks actually serve as a backstop for smaller banks, she said.
“They are competition for the big banks, the too-big-to-fail banks, because those tend to be the banks that get the public deposits,” Hallsmith said during Tuesday’s presentation. “But the smaller banks that are doing economic development, they actually help them and support them.”
Gonzales said he heard about public banking early in the campaign season from Craig Barnes, founder of We Are People Here, a local nonprofit that believes the global banking industry is the “major root cause of much of the misery and inequality” in the world, according to the group’s website.
Barnes said during Tuesday’s presentation that the city of Santa Fe can’t rely on others to stimulate the economy.
“The state of paralysis in the Congress is such that we’re not going to get help from the federal government,” he said. “We’re going to have to do whatever we do on our own. We have to create the mechanisms.”
Gonzales said he’s trying to keep all options open, even when they’re unconventional.
“We need to see what public banking would mean here before we can even go to the next level,” he said, referring to the feasibility study. “And maybe at that point when it’s completed, we determine we can’t go any further. But we’ve studied it. I think the people of Santa Fe want us to look at every means possible to make sure that we’re able to grow this economy in a way that helps all families.”
By Daniel J. Chacón
The New Mexican