CNJ staff photo: Sharna Johnson A Bill introduced in the state House of Representatives would require state agencies to bank in state and would give local banks preference over out-of-state banks for state investments.
By Sharna Johnson: CNJ staff writer
Local bankers believe a bill introduced in the state House of Representatives could strengthen local economy.
Introduced Jan. 20, HB 66 would create a preference for community banks and credit unions, mandating state agency accounts be held in community institutions and pushing the investment of cash from the state’s general fund away from large, national banks to local institutions.
The legislation is a great idea that would stimulate and invest in local communities, said Doug Stone, chief executive officer of Clovis National Bank and member of the Independent Community Bankers Association.
“It puts money in the banks in the state of New Mexico that regularly loan to New Mexico businesses,” Stone said.
“I think it’s a great idea. It puts the state money back at work here.”
That was precisely what Rep. Brian F. Egolf, D-Santa Fe County, said he was thinking when he and Sen. Timothy M. Keller, D-Bernalillo County, drafted the bill.
The legislation, “would start the process of moving New Mexico’s $1.4 billion main account … from Bank of America to community banks and credit unions around the state,” Egolf wrote in a blog.
“If we succeed in moving our money, we will be able to make a HUGE investment in our state and in the community banks and credit unions that do so much for regular folks statewide. This investment by the state will greatly expand the access to credit that so many need and will also keep New Mexico’s money in New Mexico, where it belongs.”
Now in the House Business and Industry Committee, the bill would require the state’s finance and administration department to choose local banks and credit unions over out-of-state institutions in bidding scenarios.
If the Bill meets with committee approval it will be placed before the House for vote.
It would also require the state treasurer to dedicate a portion of the state’s general fund operating cash depository account — unneeded for short-term liquidity — to an investment program with instate institutions, that would encourage lending to New Mexico businesses.
Keeping money local is always an investment in community, said Randy Harris, president and CEO of the Bank of Clovis.
Though Harris said he has not followed this particular legislation, he said he supports the philosophy.
“I believe that all government organizations whether it be city, county, state, those funds were raised from taxes from the local area and those fund should be reinvested in the local area,” he said.
“The reality is that those community banks are the banks that are meeting the needs of the community in which they serve … There’s a multiplier effect in investing money back within the state. Quite simply, the money should stay here.”
Stone said not all banks — there are about 50 community banks in the state — will pursue state money.
All community banks are supporting community businesses, however, he said some of the banks, “Won’t need the state money because they already have excess deposits that are already funding their local business loans.”
“But it will be a great tool for some of the banks that need deposits to loan out to local business.”