SANTA FE MOVES A STEP CLOSER TOWARD CREATING CITY-OWNED PUBLIC BANK
Significant savings of taxpayer dollars and sizable predicted profits were just two of the positive results of a 10-month study undertaken by the City of Santa Fe, New Mexico, moving the city one step closer toward creating America’s first new publicly-owned bank in almost 100 years.
The study concludes that a public bank for the city is both feasible and would have a positive financial impact of over $24 million for the city over a seven-year period.
“While the findings are impressive, they don’t surprise us – publicly-owned banks are inherently more efficient and profitable” than private banks, said Walt McRee, Chair of the Public Banking Institute, “and this study adds powerful new evidence that civic policy makers across the country should be paying attention to.”
Santa Fe’s study was initiated to investigate an alternative to lagging city finances, a common reality of municipal managements around the country. The U.S.’s only public bank, the Bank of North Dakota, “has demonstrated in numerous ways that a public bank can help local governments greatly improve the financial climate of their communities,” McRee added.
Lead consultant Katie Updike, a former manager for the U.S. Farm Credit System and the Bank for Cooperatives, headed up the study with the assistance of Dr. Christopher A. Erickson, a professor of economics, applied statistics, and international business at New Mexico State University and an analyst at Arrowhead Center, a business development organization in the state. The authors write that a public bank in Santa Fe “has the potential to provide enhanced fiscal management, improved net interest rate margins, and a more robust local lending climate.”
“The projected fiscal and economic impact to the City exceeds $24 million in the first seven years, based upon assumptions of how much of the City’s deposits are deployed in self-funding and reduced collateral programs,” the authors conclude.
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