Bill proposes investing in local banks

State Rep. Brian Egolf is taking the `keep it local’ mantra to the extreme.

Under a bill he’s carrying this session, the state would pull the roughly $1.4 billion it has in a Bank of America account and invest it in New Mexico banks.

Egolf, D-Santa Fe, says the move would be one of the best ways the state can improve its own economy.

“This is one of the few ways we can really stimulate our local economy,” he said. “Putting that money into community banks means they are going to be more able to loan money to people who need it, because large banks are not lending on the kind of level community banks are right now.”

The measure doesn’t name any specific banks to hold state money, but calls for the funds to be moved to sound community banks throughout the state. The state Treasurer’s Office, Department of Finance and Administration and Board of Finance would oversee the process.

Under the measure, the state Board of Finance by the end of the year would make it possible to divvy up the cash from the state’s general fund into various accounts that could be invested around the state.

Although the state’s budget is about $5.5 billion, only about $1.4 billion of that is in a cash account, Egolf said.

He said New Mexico, not large out-of-state corporations, should benefit from the interest earned on its money.

“The goal needs to be moving away form Wells Fargo and Bank of America. They get enough help. Now it’s time to help local banks.”

Egolf said he’s not sure how many other states have tried banking locally, but said it “just makes sense.”

His bill is one of many to be introduced the 30-day session that started Tuesday related to the budget. It’s unclear how far it can get due to the narrow nature of measures Gov. Bill Richardson has placed on the agenda.