underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
HOUSE BILL 130
57
TH LEGISLATURE
-
STATE
OF
NEW
MEXICO
-
FIRST SESSION
,
2025
INTRODUCED BY
Patricia Roybal Caballero
AN ACT
RELATING TO PUBLIC FINANCE; ENACTING THE PUBLIC BANKING ACT;
CREATING THE PUBLIC BANK OF NEW MEXICO; ESTABLISHING A BOARD OF
DIRECTORS AND THE STRUCTURE OF THE PUBLIC BANK OF NEW MEXICO;
PROVIDING DUTIES; PERMITTING CERTAIN INVESTMENTS, LENDING
ACTIONS, PURCHASES AND PROPERTY TRANSACTIONS; PROHIBITING
CONFLICTS OF INTEREST; CREATING THE STATE BANKING FUND;
PROVIDING PENALTIES; MAKING APPROPRIATIONS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. [NEW MATERIAL] SHORT TITLE.--Sections 1
through 7 of this act may be cited as the "Public Banking Act".
SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the
Public Banking Act:
A. "bank" means the public bank of New Mexico;
B. "board" means the board of directors of the
.229874.1 underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
bank;
C. "director" means a member of the board; and
D. "fund" means the state banking fund and shall
include all assets, liabilities, equity, income and expenses of
the bank.
SECTION 3. [NEW MATERIAL] PUBLIC BANK OF NEW MEXICO--
ESTABLISHED--BOARD OF DIRECTORS.--
A. The "public bank of New Mexico" is created as a
public body politic and corporate, constituting a governmental
instrumentality, which shall be chartered pursuant to the laws
of the United States.
B. The bank shall constitute a public body
corporate by the name set forth in the incorporation
certificate and by such name may sue and be sued, have the
capacity to make contracts, acquire, hold, enjoy, dispose of
and convey property real and personal, accept deposits, grants
and donations, borrow and lend money, incur indebtedness,
impose fees and assessments and do any other act necessary or
proper for carrying out the provisions of the Public Banking
Act.
C. The bank shall be governed, and all of its
functions, powers and duties shall be exercised, by the board
of directors. The board consists of eleven voting members, who
shall be appointed with input from the public, as follows:
(1) two members appointed by the New Mexico
.229874.1
- 2 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
legislative council who have successful management experience
in banking finance or banking operations in a regulatory
environment; provided that the two members shall not be members
of the same political party;
(2) one member appointed by the New Mexico
legislative council who has successful community economic
development experience;
(3) one member appointed by the New Mexico
legislative council with at least five years of community
development experience working to address community needs;
(4) two members appointed by the governor who
have successful management experience in banking finance or
banking operations in a regulatory environment or who are
entrepreneurs with successful, sophisticated business borrowing
experience;
(5) one member appointed by the governor who
has successful community economic development experience, which
may be evidenced by experience with organizations;
(6) one member appointed by the governor with
at least five years of community development experience working
to address community needs;
(7) the chief executive officer of the New
Mexico finance authority;
(8) the state treasurer; and
(9) the secretary of economic development.
.229874.1
- 3 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
D. The directors appointed pursuant to Subsection C
of this section shall be residents of the state and shall serve
for terms of four years and shall not serve more than two
consecutive terms, except as provided in Subsection E of this
section.
E. The initial board shall establish membership
terms for the directors appointed pursuant to Subsection C of
this section so that:
(1) four of the initial appointed members are
appointed for an initial term of two years; and
(2) four of the initial appointed members are
appointed for an initial term of four years.
F. A person currently serving as a board member, or
equivalent position, for a community development financial
institution, credit union, trust or other banking institution
or an employee of a community development financial institution
or credit union shall not be eligible to serve as a director.
G. Public members of the board of directors shall
receive per diem and mileage as provided in the Per Diem and
Mileage Act and directors shall receive no other compensation,
perquisite or allowance.
H. Directors, officers and employees of the bank
shall be governed by the provisions of the Governmental Conduct
Act.
I. Directors shall elect a chair of the board.
.229874.1
- 4 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
J. If a vacancy occurs among the directors, the
appointing authority of the former director shall appoint a
replacement to serve out the term of that director. If a
director's term expires, the director shall continue to serve
until another member is appointed.
K. The board shall meet quarterly and at the call
of the chair. A majority of the directors constitutes a quorum
for the transaction of business, and the support of a majority
of the quorum is required for adoption of any action.
L. The board shall maintain minutes of all meetings
of the board and maintain other appropriate records, including
financial transaction records in compliance with state and
federal law and adequate to provide an accurate record for
audit purposes pursuant to the Audit Act.
M. Members of the board shall be subject to the
Financial Disclosure Act.
N. The bank shall be subject to all applicable
regulatory and reporting requirements that allow access to the
federal reserve and shall obtain a blanket bond on all
employees of the bank.
SECTION 4. [NEW MATERIAL] CHIEF EXECUTIVE OFFICER--CHIEF
RISK OFFICER--DUTIES--STAFF.--
A. The chief executive officer of the bank shall be
hired by the board and receive a salary to be determined by the
board. The position of the chief executive officer shall be a
.229874.1
- 5 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
full-time position, and the chief executive officer shall not
engage in any other occupation or profession or hold any other
public office, appointive or elective.
B. The chief executive officer shall be an
individual qualified by experience in the field of investment
management, investment risk management, corporate governance,
investment accounting or finance. The chief executive officer
of the bank shall direct the affairs and business of the bank,
subject to the policies, control and direction of the board.
The chief executive officer shall have substantial experience
successfully running a financial institution of a comparable
asset size or greater and shall be responsible for achieving
the community and economic development purposes as described in
the Public Banking Act. The chief executive officer shall be
responsible for:
(1) the management of the bank;
(2) managing the bank's relations with
creditors, banking and credit union partners and local
communities;
(3) maintaining and improving the financial
health and the internal operations and overall performance of
the bank; and
(4) maintaining compliance of the bank with
fiscal and regulatory requirements.
C. The chief executive officer shall:
.229874.1
- 6 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
(1) annually prepare a budget for the bank
that shall be reviewed and approved by the board. Any funds
provided for the operating budget of the bank shall be provided
from bank income and equity;
(2) hire all employees of the bank, including
chief a chief risk officer;
(3) keep accurate and complete records and
accounts concerning all transactions involving the bank;
(4) report to the board on all matters
pertaining to the bank; and
(5) report quarterly to the board on the
investments made pursuant to the Public Banking Act and on the
available and encumbered funds of the fund. Annually, a report
shall be submitted no later than October 1 each year to the
legislative finance committee, the revenue stabilization and
tax policy committee and any other appropriate interim
legislative committees. The bank shall make the report
available to the public by publishing the report on the
internet.
D. The chief risk officer of the bank shall report
to the board and to the chief executive officer. The chief
risk officer shall assist the chief executive officer in
strategic planning to achieve the corporate objectives and
regulatory expectations of the bank. The chief risk officer
shall hold the credential of a certified risk manager or an
.229874.1
- 7 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
equivalent credential within that professional field.
SECTION 5. [NEW MATERIAL] INVESTMENTS--LENDING.--
A. Subject to the limitations, conditions and
restrictions provided by law or by policy adopted by the board,
the bank may:
(1) make purchases, sales, exchanges,
investments and reinvestments of the assets of the fund;
provided that all transactions be made pursuant to the Public
Banking Act and the Uniform Prudent Investor Act;
(2) make, purchase, guarantee or hold loans:
(a) to state-chartered or federally
chartered lending agencies or institutions;
(b) to instrumentalities or political
subdivisions of the state;
(c) to an organization that has been
granted exemption from the federal income tax by the United
States commissioner of internal revenue as an organization
described in Section 501(c)(3) of the federal Internal Revenue
Code of 1986 and subject to the provisions of the Nonprofit
Corporation Act;
(d) obtained as security pledged for, or
originated in the restructuring of, any other loan properly
originated or participated in by the bank; and
(e) originated by local financial
institutions authorized to do business in this state;
.229874.1
- 8 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
(3) buy and sell federal bonds;
(4) lease, assign, sell, exchange, transfer,
convey, grant, pledge or mortgage real and personal property;
(5) purchase bonds, lend to other state
financing programs, acquire securities or make loans to
political subdivisions of the state for the purpose of
providing financing for a public project;
(6) purchase participation interests in loans
made or held by state-chartered or federally chartered
financial institutions; and
(7) enter into agreements or develop memoranda
of understanding with credit unions, community development
financial institutions or community banks for the purpose of
facilitating lending opportunities and carrying out the
provisions of the Public Banking Act.
B. The bank shall not make loans to a private
individual or private legal entity, except as provided in
Paragraph (2) of Subsection A of this section.
C. The bank shall pursue a policy of developing
loan programs for public benefit to further agriculture,
commerce and industry. In pursuit of this policy, the bank
shall:
(1) cooperate with small business development
centers, regional economic development districts and parties
that have demonstrated abilities and relationships in providing
.229874.1
- 9 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
financial services to new and emerging businesses; and
(2) evaluate loan performance on the basis of
both risk analysis and public benefit.
D. The chief executive officer of the bank and the
board are trustees of all funds under their control.
SECTION 6. [NEW MATERIAL] CONFLICTS OF INTEREST--
PENALTY.--
A. If any director, officer or employee of the bank
has an interest, either direct or indirect, in any contract to
which the bank is or is to be a party, such interest shall be
disclosed to the board in writing. The director, officer or
employee having such interest shall not participate in any
action by the bank with respect to that contract.
B. Any person who has a conflict of interest as
provided in this section and participates in any transaction
involving that conflict of interest or knowingly fails to
notify the bank of that conflict is guilty of a misdemeanor and
upon conviction shall be sentenced pursuant to the provisions
of Section 31-19-1 NMSA 1978.
SECTION 7. [NEW MATERIAL] STATE BANKING FUND--CREATED.--
A. The "state banking fund" is created as a
nonreverting fund within the state treasury. The fund consists
of appropriations, capital, retained earnings, deposits and
investment income of the fund. Except as otherwise provided in
the Public Banking Act, money from payments of principal of and
.229874.1
- 10 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
interest on loans and payments of principal of and interest on
securities held by the bank shall be deposited in the fund.
B. Until the bank is chartered, the state treasurer
shall administer the fund, and money in the fund is
appropriated to the state treasurer to be used for the purpose
of carrying out the provisions of the Public Banking Act.
Disbursements from the fund shall be made by warrant of the
secretary of finance and administration pursuant to vouchers
signed by the state treasurer or the state treasurer's
authorized representative.
C. When the bank becomes chartered pursuant to
federal law:
(1) the fund shall be transferred to the bank;
(2) the bank shall administer the fund;
(3) money in the fund is appropriated to and
retained by the bank for the purpose of carrying out the
provisions of the Public Banking Act; and
(4) money in the fund shall be disbursed on
vouchers signed by the chief executive officer of the bank or
the chief executive officer's authorized representative.
SECTION 8. A new Section 6-10-27.1 NMSA 1978 is enacted
to read:
"6-10-27.1. [NEW MATERIAL ] PROVISIONS INAPPLICABLE TO THE
PUBLIC BANK OF NEW MEXICO.--The provisions of Chapter 6,
Article 10 NMSA 1978 shall not apply to the public bank of New
.229874.1
- 11 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Mexico."
SECTION 9. APPROPRIATION.--Fifty million dollars
($50,000,000) is appropriated from the general fund to the
state banking fund for expenditure in fiscal year 2026 and
subsequent fiscal years to capitalize the public bank of New
Mexico and to carry out the provisions of the Public Banking
Act; provided that no more than four million dollars
($4,000,000) shall be used for the purpose of establishing and
chartering the public bank of New Mexico and developing the
bank's lending programs. Any unexpended or unencumbered
balance remaining at the end of a fiscal year shall not revert
to the general fund.
SECTION 10. CONTINGENT APPROPRIATION.--Sixty million
dollars ($60,000,000) is appropriated from the general fund to
the public bank of New Mexico to be deposited in an account
with the bank. Any unexpended or unencumbered balance
remaining at the end of a fiscal year shall not revert to the
general fund.
SECTION 11. EFFECTIVE DATE--CONTINGENT EFFECTIVE DATE--
NOTIFICATION.--
A. The effective date of the provisions of Sections
1 through 9 of this act is July 1, 2025.
B. The provisions of Section 10 of this act shall
become effective upon incorporation of the public bank of New
Mexico and the bank receiving its formal charter. The
.229874.1
- 12 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
secretary of state shall notify the director of the legislative
council service and the New Mexico compilation commission that
the bank becomes incorporated and receives its formal charter.
- 13 -
.229874.1