State Rep. Brian Egolf's pitch to start a state-run investment bank isn't lacking in populist rhetoric.
---"We're going to find a way to keep New Mexico's money in New Mexico for the benefit of New Mexico's small businesses," he tells SFR.
At times, Egolf, D-Santa Fe, can sound as if he's affiliated with the tea party: "We are going to help our community banks and credit unions deal with really oppressive new federal regulations."
Yet obviously, starting a government-run bank doesn't mesh well with the principles small-government advocates. Egolf wants to take $100 million from the state's permanent fund to build the bank. He envisions it would partner with the state's small banks and credit unions to provide $1 billion worth of loans to small and local businesses.
His point of contention is that community-owned banks and credit unions felt new, disproportionate pain after Washington bailed out the big banks with the controversial Troubled Assets Relief Program in 2009. After TARP, new regulations required all banks to increase the amount of capital on their reserves to prevent future bailouts. Egolf says the banks had only three options:
"Either they could go out and get new investors to give them money, which in 2009 was not happening," he says. "Or they called in loans or simply stopped making loans."
The last two options—seeking loans or halting loans—hurt the small businesses that needed reliable access to credit in order to make payroll, Egolf says.
His other talking point is that local banks are best suited to help small businesses.
"If you go in to Wells Fargo or Bank of America and you're a small business, they're going to make you fill 1,800 forms and it's going to be a complete bureaucratic disaster," Egolf says. "If you go to Los Alamos National Bank, [they'll] work with you and make it easier."
Although big banks pride themselves on doing just the opposite—Bank of America recently started an ad blitz affirming its commitment to small businesses—loans to small businesses are down nationwide.
Egolf first introduced the bill in January. This time around, he's aiming hard for an endorsement from state's Independent Community Bankers Association. The organization, which represents community banks across the state, came one vote short of endorsing the bill during the last regular legislative session.
"They did not like that [the bill] included the word 'bank,'" Egolf says, "so this time we're going to call it the 'New Mexico Small Business Investment Trust.'"
The nation's only state-run bank, established nearly a century ago, is located in North Dakota.
Photo courtesy www.BrianForSantaFe.blogspot.com
