Issue 2 • 2022 9 the most recent term of Congress. In March, the U.S. House of Representatives voted in support of the Securing a Strong Retirement of 2022. The proposed retirement bill, which is known as SECURE Act 2.0, builds on the original SECURE Act – the Setting Every Community Up for Retirement Enhancement Act-from 2019. The SECURE Act raised the RMD starting age to 72. But SECURE Act 2.0 goes a few steps further. Workers would have to begin making withdrawals from their retirement account at age 73 in 2023, 74 in 2030 and 75 in 2033. In addition, if you miss an RMD, SECURE Act 2.0 would also reduce the tax (from 50% to 25%) for failure to take an RMD. Serving as the foundation for the Senate’s counterpart to the House-passed SECURE Act 2.0, the Senate Finance Committee voted 28-0 to favorably report an amended version of the Enhancing American Retirement Now (EARN) Act, which includes a series of proposals aimed at helping more Americans save. It is likely that the Senate will approve the bill and begin working with the House on merging the differences between the two proposals before Congress adjourns this year. The Senate EARN Act contains several provisions that are substantially similar to the House Secure 2.0 including increasing the age for a required beginning date for RMD. II. Public Bank of New Mexico As noted in Jay Jenkins' President's Message, it would appear that a bill creating the Public Bank of New Mexico will be introduced in the 2023 Legislature. The Alliance for Local Economic Prosperity, which has been the principal backer of the public bank legislation during the 2021 and 2022 sessions, recently testified before the Legislative Investment and Pension Oversight Committee to discuss their revised proposal (business plan) for the public bank. The legislation itself is still on the drawing board. Significant details include: • Funding: The bill will include an appropriation of $50 million from the state general fund to capitalize the public bank, and specifically “creates liquidity to fund the bank with a $60 million deposit from current holdings from national banks managed by the State Treasurer.” The State Treasurer will be “encouraged” to increase deposits in the bank as the bank matures and demonstrates integrity in its mission. This will increase the bank’s lending capacity. The goal is a loan deposit ratio of 70-80%. • Financial Aid Business Plan: The bank will be profitable in two years. In the bank’s first seven years, at no cost to the state, the bank’s equity/capital will increase from $50 million to more than $92 million and it’s lending capacity to more than $940 million. The bank will become operational in nine-12 months following the July 1, 2023 effective date. The return on equity would be a seven-year equity growth rate of 9.18%. The general fund appropriation of $50 million can turn into over $400 million in lending. • Lending: The bank will work with, not compete with, the state’s commercial banks and credit unions. Potential initial lending programs include accelerated growth, business development, and value-added guarantee. Other loans include: small business startups and expansions, entrepreneurial loans, and cooperatives ($1.5 million-2 million each); smaller loans ($100,000-$200,000), longterm loans, including home solar ($10,000-$20,000), and medical students and new clinic loans. The bank will provide financing for small businesses, rural and tribal development needs, and provide the capacity to adapt to climate change and financing for post-wildfire development. We will withhold our comments on the revised business plan once we have had an opportunity to review the actual legislation. However, our position, as noted in this edition’s NMBA President’s Message, is that the NMBA is opposed to the creation of a public bank as it is unnecessary and will provide no real benefit to New Mexico residents or businesses. The implications of creating a public bank posed risks to New Mexico’s taxpayers and would likely saddle the State with significant, unwarranted costs to replicate a highly competitive, regulated, and federally insured banking system that exists in communities across New Mexico. III. Safe Banking Act It appears doubtful that Congress will approve the Secure and Fair Enforcement Act (SAFE Banking Act) in this term of Congress. The U.S. House of Representatives this year voted 220-204 to pass the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, which would de-schedule cannabis n continued on page 10
RkJQdWJsaXNoZXIy ODQxMjUw