Do we need the New Mexico Finance Authority?

As the scandal at the New Mexico Finance Authority continues to unfold, we at the Rio Grande Foundation attempted to answer the question “What is the NMFA and what does it do?” Our follow-up question, asked of any government agency is, “Why does the government need to do this or could the private sector handle it better?”

On the first point, NMFA acts as a bank for government agencies in New Mexico and as the article discusses, this is not the first time it has been at the center of a scandal. The primary mission, although by no means the only job of NMFA, tends to center on accessing capital (bond) markets for government agencies throughout New Mexico. The particular beneficiaries of this activity are smaller cities and governments.

Of course, when the NMFA was organized in 1992, the bond market was concentrated in a few major cities like New York. You can now find people willing to buy and sell bonds here in New Mexico and even if you are in New York, through the use of technology, you can likely undertake the groundwork necessary to underwrite government bonds.

The questions I have regarding NMFA are: “Does New Mexico really need the NMFA as currently organized? How much is this entity costing taxpayers? It would seem that the bond markets are pretty efficient these days and, with return rates depressed, there will be plenty of lenders eager to sell bonds to New Mexico’s cities, counties, and other governing entities. Am I wrong? Why not privatize the NMFA?

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2 Replies to “Do we need the New Mexico Finance Authority?”

  1. Another question about the NMFA is what are its operating costs or overhead? Perhaps the capital raising functions might be put out to bids and thus banks or brokerage firms could accomplish the fund raising aspects at lower costs.
    Or the State Treasurer’s office might be an adviser/manager.

    A better question is to review all state boards and agencies to determine their need and if they are needed, can the costs of operation be reduced.

    Certainly there is room to combine duplicate functions and in the limits of space, I will not detail ALL of the wasteful and redundant agencies.

  2. The short answer is: No, we do not need NM Finance Authority…and for the very reasons that you’ve mentioned.

    The question could also be posed another way: Do we need another redundant Governmental entity to dole out favors, money, or whatever, using the tax payer’s dime?

    Posed yet another way: Do we need another corrupted entity, with a political board that is asleep at the wheel at best, in order to spend time and effort investigating for wrong doing, which will more than likely unfold as small time skim of a relatively limited percentage of total funds that would have been accessible, and not held in trust?

    Yet one more way: Do we need to continue to scale-up Government’s influence and ability to manipulate any area of the financial markets…how’s that been working for us, and the rest of the globe, for the past few years (examples abound, here)?

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