According to recent reports, of all the states in the union, last year New Mexico had the second-highest poverty rate. More than 20 percent of us, one out of every five, lived below the poverty line.
Surely New Mexicans are no less hard working, no less intelligent, no less innovative, but still general prosperity is elusive. Something is not working.
Listening to voices from across the state, to small business, to the Native American community, to the un-banked, to city councilors and mayors, a constant report is that we are experiencing consistent needs that our current system of financing cannot or does not reach. The state has substantial oil and gas revenues, a massive federal presence and a robust tourist industry. Still, for some reason, the money does not reach enough of us to keep us from coming in second among all the states as the most poor.
To this situation comes an idea that is finding legs in Pennsylvania, California, Vermont and Oregon.
The proposal is to support community banking, small business, education, health initiatives and other unmet needs through the creation of a public bank.
In Santa Fe, Mayor Javier Gonzales has become convinced that the idea should be studied and has directed city staff to begin the process.
The reasoning is this: public banks can address the local needs of any community that may not appeal to the global banks but that are nevertheless important to our families and businesses and to the fostering of local arts and culture.
Today, when governments finance through bonds, they pay interest to the bonding agencies. In the end, these interest charges may contribute 30 percent to 40 percent of the cost of any public project. When, on the other hand, governments finance through lending from their own banks they actually earn interest, reversing cash flow, making more public service possible.
In the current unstable international financial situation, the largest banks seem to be repeating the patterns that gave rise to the Great Recession of 2008. As they have become invested in trillions of dollars of derivatives, they are increasingly re-creating the situation that brought about the collapses of Lehman Brothers and Bear Stearns.
But this time the situation is different. The Congress has said it will not do any more bailouts. If one of these giants goes down, the whole industry of the largest banks is likely to go down together.
By contrast, the Bank of North Dakota has had a public bank since 1919. In the buildup to 2008, the bank kept its money at home; it did not participate in the derivatives markets, and was unfazed by the crisis. It did not need a bailout.
The model of North Dakota therefore provides an inspiring alternative to our current shaky reliance upon largest global banks.
To explore the public banking idea, Gonzales, the Public Banking Institute and the nonprofit group We Are People Here! are hosting a symposium on public banking this Saturday at the Santa Fe community convention center. The program will feature experts on public banking from around the country and from as far away as Germany.
Officeholders from around the state, leaders of nonprofit groups searching for ways to finance valuable public programs and citizens interested in discovering a new way to unleash funds and to put them to work locally will all be in attendance. The public is invited: Check out the website, bankingonnewmexico, for details.
Many of us last week were listening to the series on the Roosevelts on PBS. We were hearing about a Square Deal, a New Deal and a Fair Deal. Now it is time to consider a Sensible Deal. Public banking may just be the sensible answer to our financing needs.
Craig Barnes, author of “Democracy at the Crossroads,” lives in Santa Fe.
