By Jason Wyatt, NMBA President
New Mexico banks are again at the forefront in providing our customers access to the second round of PPP loans. As of Feb. 1, New Mexico has a loan count approval of 3,557, totaling $343,539,227.00. Not bad!
I want to wish everyone a belated Happy New Year. I think most of the nation was looking forward to putting 2020 behind us more than any other year in my lifetime. In my personal opinion, 2020 was one the most absurd, dangerous and eye-opening years in our nation’s history-a real train-wreck. I think we have all learned valuable lessons during this most difficult time and can only look forward to better times in the future.
This being my first President’s article of 2021, it is a perfect time to reflect on where we have been and where we are heading. Most of us had never heard of or even thought about the term “Essential Business” until the COVID pandemic of 2020. Most bankers have always been aware that banking and access to currency is a vital part of the American economy. After health, an individual’s finances and access to those finances are crucial in obtaining other basic necessities such as food, shelter and transportation. Although we get little credit, banks played a major role in our economy surviving 2020. I believe banks and bank employees should be counted amongst the real hero’s of 2020. Without the banking industry and our aid delivery systems used to provide financial safety nets, our entire economy might have potentially collapsed. Even faced with the challenges of constantly closing and re-opening of our lobbies, installation of Plexiglas and other PPE, establishing new health policies and procedures, mandatory quarantines, etc., we were able to go above and beyond in meeting the needs of our customers and providing much needed financial aid to our communities. We accomplished all of this in addition to our normal daily duties as bankers.
Our industry’s biggest success story of the past year has been the execution of the Paycheck Protection Program (PPP). Despite the haphazard way this program was implemented by the Federal Government, New Mexico bankers worked tirelessly to ensure our customers received the assistance they desperately deserved and needed at the time they needed it the most. New Mexico banks are again at the forefront in providing our customers access to a second round of PPP loans. As of February 1, New Mexico had a loan count approval of 3,557, totaling $343,539,227.00. Not bad! Once again, outside of the health sector, New Mexico banks are arguably doing more for the people of our state than any other entity or government organization.
Our industry’s biggest success story of the past year has been the execution of the Paycheck Protection Program (PPP). Despite the haphazard way this program was implemented by the Federal Government, New Mexico bankers worked tirelessly to ensure our customers received the assistance they desperately deserved and needed at the time they needed it the most.
Another major turning point in our nation since our last article was the election of a new President, Joe Biden. The 2020 campaign and election can only be described as one of the most negative, frustrating and damaging in the history of our country. We experienced the largest voter turnout in history resulting in Democratic control of the U.S. House, Senate and Presidency. Democrats last controlled the House, Senate and White House from 2009-2011, when the American Health Care Act (AHCA) and Dodd-Frank were passed into law. What can we expect as an industry from a Biden presidency? I can only speculate that this administration will be very similar to the Obama-Biden administration of 2009-17. The Obama administration featured historical increases in oversight and regulation combined with historically low interest rates. All we can do at this point is stay involved and wish for the best.
As far as New Mexico is concerned, our state Legislature has been in session since January 19th. Due to the pandemic, the capitol is closed to the public and lobbyists. Only legislators, staff and some media are allowed in the capitol for the most part-committee hearings and floor sessions are conducted on a virtual basis. In normal circumstances, our lobbyists would be roaming the hallways of the capitol protecting our interests. But with the capitol closed, that is not happening. My fear is that without all parties and stakeholders in conversation that major legislation will not be properly developed or vetted and many new laws will be passed to the detriment of our State and our industry. The session ends on Saturday, March 20.
Although there are many controversial issues being debated, those that are most pertinent to the banking industry include changes to our liquor laws, new laws to limit or all out ban the extraction of fossil fuels, and the proposed creation of a public or state bank. I will focus on only the public bank issue in this article given limited space.
Legislation pertaining to the creation of a public bank are SB 313 (Steinborn-Las Cruces) and HB 236 (Roybal Caballero-Albuquerque), which call for the charter of the Public Bank of New Mexico. The NMBA is adamantly opposed to a public bank as we believe it is unnecessary and would provide no benefit to New Mexico residents or businesses. The implications of creating a public bank pose enormous risks to New Mexico’s taxpayers and would saddle the State with significant risks, and unwarranted costs to replicate a highly competitive, regulated and federally-insured banking system that already exists in our communities. In addition, it will eradicate hundreds of millions of dollars out of our local communities that are currently being utilized for urgent needs such as health and safety, infrastructure, community development and job creation and instead centralizing those funds in Santa Fe.
Other reasons for the NMBA’s opposition of this legislation are as follows:
- There is currently only one public bank operating in the U.S., The Bank of North Dakota. The Bank of North Dakota was chartered in 1919 to address circumstances that no longer exist in that state or anywhere else. Because it was created nearly 100 years ago, the Bank of North Dakota existed before most banks in that state were created. It provides banking services to businesses and consumers directly and serves as a bankers’ bank for other banks in the state.
- Banks are either regulated by the State of New Mexico and the Federal Deposit Insurance Corporation (FDIC), or they are regulated at the federal level by the Office of the Comptroller of the Currency (OCC). Deposits in these institutions are all insured by the FDIC up to $250,000 per depositor per account. There would be no FDIC insurance for deposits in the State Bank, nor would the State Bank be subject to extensive federal regulations and examination oversight, which are necessary for protecting depositors and preserving the safety and soundness of the bank.
- New Mexico banks currently pay interest for these public funds and pledge collateral in the form of securities. This may not be true for a public bank.
- There is a significant potential of lending and other banking decisions being affected by political influence, agendas and pet projects rather than adhering strictly economic feasibility and sound lending practices.
- Political appointees only will provide oversight of the public bank, including the hiring of employees, creating an even greater political influence on any decisions made on behalf of the public bank.
- A state bank most likely violates the New Mexico Constitution “Anti-Donation Clause” and would potentially require an amendment to the constitution.
- A public bank could potentially impact the State’s credit risk rating causing public borrowing to become much more expensive.
The NMBA will continue to follow these bills closely and voice our concerns. After the session ends and the Governor has had time to sort through those bills that reach her desk, we will provide you a list of victories and, hopefully, no defeats. As our EVP John Anderson told me, “Success come to those who make things happen, not to those who let things happen.”
