The Santa Fe-based organization has been promoting a state public bank for years, arguing that it is needed to pump more funds into much-needed public economic development projects throughout the state. New Mexico was ranked 48th, only beating out Mississippi and Louisiana, in a 2021 U.S. News and World Report list that measures how well each state is performing for their citizens based on the state's economy, health care, education, public safety and infrastructure.

ALEP also said the public bank would partner with credit unions and community banks to increase their lending capacity for small businesses that fuel most of the new jobs growth.

Paul Stull, president/CEO of the Credit Union Association of New Mexico in Albuquerque, endorsed the public bank bill and said the Independent Community Bankers Association of New Mexico threw everything but the kitchen sink to defeat it.

"They actually asserted that there was no need for more lending in New Mexico, that they had already lent every dollar that was needed," Stull said. "Being just about the poorest state in the country makes this argument hard to believe, but they sold it well."

The community bankers' association contended that there is no demonstrated need for the state to get into the business of banking, and that it was bad public policy for the state to compete with private sector banking.

"We're saying that this is really nothing more than trying to start a new state agency and calling it a bank," Jerry Walker, president/CEO of ICBANM in Farmington, said. "We have a number of agencies that have programs in place that provide assistance to private sector entities that are expanding in the New Mexico economy with loan guarantees, loan participations and in some cases, some direct funding through the state agency that provide low-cost or lower-cost financing or bonding for local projects for cities, counties and school districts."

Walker pointed out the public bank proposal would place $100 million of taxpayer money at risk because the capital would come from the state's general fund and from another fund that generates revenue from New Mexico's oil and gas industry.

However, Stull argued that the current state and federal financing falls far short of assuring New Mexico's progress in changing the current lack of economic development, jobs and opportunity.

"The public bank would have used credit unions and banks to funnel capital into our communities," Stull said. "This would have been a good deal for both. Credit unions could have expanded their lending and gained members. I saw it as a winning proposition for both our state and for credit unions."

He also noted the public bank would have been able to issue bonds at lower interest rates to finance public projects, while returning the interest paid to the state's public bank instead of relying on bonds from global banks and private investors.

"A public bank works for and is owned by the state," Stull said. "They replace the Wall Street crowd by putting money on the ground here in New Mexico where it is needed most."

Walker argued, however, that the local community banks have been and continue to provide funding for small businesses.

"Community banks, nationwide and here in New Mexico, now provide almost 60% of the lending to small businesses around this country and here in the state," he said. "Our banks are sitting with a loan to deposit ratio of 62% so we have a lot of capacity for growth in the community banking space, not counting the large regional and national banks, or even some of the credit unions in the state that have moved into this business lending territory."

Dan Mayfield, president of Leverage Point, an Albuquerque-based lobbying and public relations firm, who has been working with ALEP to promote the public bank bill, said he expects to regroup in a couple of weeks to see what the future path is once the legislative session ends.

"I'd like to bring the bills back," he said. "It's a good idea for credit unions."

Public bank proposals have been popping up around the nation over the last few years.

According to the Public Banking Institute in Santa Clarita, Calif., there are more than 25 initiatives for public banks in 30 states and several cities.