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Current Location: STBTC
Referrals: STBTC/SFC


SB 313 PDF  |  SB 313 FIR

Scheduled on - Date:  Time:   Location:

2/01/2021 [3] - Sent to location Senate Tax, Business and Transportation (STBTC)

 Senate Bill 313 (SB 313) enacts the Public Banking Act and creates the Public Bank of New Mexico and the State Banking Fund.  


 Senate Bill 313 (SB 313) enacts the Public Banking Act (Act), which creates the Public Bank of New Mexico (Bank) and the State Banking Fund (Fund).

The Bank is a public body politic and corporate and a governmental instrumentality.  The Bank has the rights and duties necessary to carry out the Act.  The Bank is governed by a Board of Directors (Board) consisting of 11 members, appointed by the legislature, the Governor, the chief executive officer of the New Mexico Finance Authority, the State Treasurer, and the Secretary of Economic Development.  Board members must be residents of the state and may serve up to two, four-year terms.  The Act sets out the qualifications for board members, and prohibits certain persons from serving if they are already on a board of, or work for, a banking institution.   Board members are not paid a salary but receive per diem.  The Act details that the Board must select a chair, that they must meet quarterly, maintain records, are subject to the Financial Disclosure and Governmental Conduct Act.  The Bank is subject to applicable regulatory and reporting requirements that allow access to the federal reserve.  

The Board must hire a Chief Executive Officer (CEO) who must be qualified in investment or finance.  The CEO must hire a credentialed Chief Risk Officer.  The Act details the duties of the CEO, such as preparing a budget, hiring employees, keeping records, and reporting to the Board and the Legislative Finance Committee.  

The Act allows the Bank to make purchases and investments of the assets of the Fund, and make the following types of loans: (1) to state-chartered or federally chartered lending agencies or institutions, (2) that are insured by the U.S; (3) to instrumentalities or political subdivisions of the state; (4) to non-profit organizations; (5) obtained as security for another loan; and (6) originated by financial institution authorized to do business in the state.  The Bank can buy and sell bonds, deal in real and personal property, and purchase bonds and make loans to political subdivisions of the state to finance public projects.  

The Bank is not allowed to make loans to a private individual or entity except they may develop lending programs that make financing available to communities throughout the state.  The Bank may cooperate with small business development centers, regional economic development districts in providing services to new and emerging businesses and make equity or debt investments in New Mexico business.  

The Act requires the Board, officers and employees of the Bank to disclose conflicts of interest in any contract with the Bank and forbids those with such an interest from participating in any action with respect to that contract.  A person with a conflict of interest who participates in any transaction involving the conflict or failing to notify the Bank of the conflict is guilty of a misdemeanor.  

The Act creates the State Banking Fund (Fund) which is administered by the Bank and used in accordance with the Act.  The State Treasurer must deposit $50,000,000 into the Fund within 30 days of its incorporation.  Also, the State Investment Officer must invest $50,000,000 of the Severance Tax Permanent Fund into the Fund within thirty days of the Bank’s incorporation.  

The bill amends Section 7-27-5 NMSA 1978 by authorizing the State Tax Permanent Fund to be invested in the State Banking Fund. 

This bill is effective July 1, 2021. 


Current Law:There is currently no Public Bank of New Mexico.

Bill Comments:
Position: Opposed   Priority: High
ICBA/NM Opposes creation of a "public bank" (state-owned and operated depository institution) for numerous reasons: 
* There has not been a demonstrated public policy need supporting the creation of a public bank in New Mexico. There is no need for additional liquidity and no shortage of community bank locations to serve New Mexico consumers and small businesses.
*  A public bank would pose significant risk and loss of investment income to the state.
*  Corporate governance would be a concern which could expose the bank to political and financial risk.
*  Capitalizing a public bank will divert needed state revenues from more immediate needs that have been exacerbated by the COVID-19 Pandemic.
*  The likelihood of a public bank receiving access to the Federal Reserve payments system or deposit insurance from the Federal Deposit Insurance Corporation (FDIC) is practically nil.  Not having FDIC Insurance places taxpayer deposits with the bank at risk.
*  Without access to the Federal Reserve payment system a public bank would be severely limited in its abilities to process payments in a timely manner or have access to the fed’s short-term liquidity funding program that federally insured institutions are granted.