Guv: NM in better financial position than most states

Gov. Bill Richardson says New Mexico is in a better position than most states to weather the current economic crisis, and he’s hopeful that the federal government will “quickly follow through with its promises to intervene and restore confidence in the financial markets.”

The Bush administration has proposed a $700 billion bailout plan to buy mortgage-related assets that have been a drain on the economy. Congressional Democrats are negotiating with the administration over the details.

The historic move comes during the worst financial crisis since the Great Depression. Following a Thursday-evening meeting of Washington leaders, Sen. Chris Dodd, D-Conn. and chairman of the Senate banking committee, said those leaders were told “that we’re literally maybe days away from a complete meltdown of our financial system.”

Richardson said in a news release that he met with top financial experts, including state Treasurer James B. Lewis, on Friday to discuss the situation.

“I am encouraged that New Mexico is in a better position than most states because of our conservative investment strategy and our efforts to diversify our portfolio,” he said in the release. “Our permanent funds are still strong, and I am hopeful that the federal government will quickly follow through with its promises to intervene and restore confidence in the financial markets.”

Richardson said the state’s $15 billion permanent funds have declined in value by 6.5 percent this year, less than half the losses experienced by the S&P 500 index. The state’s unemployment rate, though rising, is lower than the national average. In addition, fewer New Mexicans are foreclosing on homes than in many other states.

Richardson said he supports the Bush Administration’s “proposal for a comprehensive federal approach, including a new institution modeled after the Resolution Trust Corporation, that would take over distressed assets and offer new confidence in the financial markets.”

Domenici says bailout is necessary

Meanwhile, U.S. Sen. Pete Domenici, R-N.M., said in a news release that he is also “pleased that Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke have proposed a large, strategic plan to stabilize financial markets.”

“I saw the success of the Resolution Trust Corporation during the savings and loan crisis and that eventually the taxpayer was made whole at the end of the day and markets were stabilized. I hope the plan that emerges from negotiations this weekend will yield a similar result over time,” Domenici said in the Friday release. “We need to act within the week and, in my view, the plan should be very simple and the legislation free from other matters. We cannot let this critical mission descend into a legislative ‘Christmas tree.’”

Domenici said Americans need to understand that the proposal “is not a bailout of any particular industry. It is an effort to protect the life savings of working men and women, to help businesses grow and hire more workers, and to keep municipalities and pension funds from bankruptcy or serious financial impairment. This plan is critical for everyone who wants credit to pay for a college education, or to expand a small business, or to retire with sufficient wherewithal.”

Domenici, former chairman of the Senate Budget Committee, said he is “aware of potential taxpayer exposure. However, that theoretical long-term exposure seems to me less dangerous than a complete freeze of the international credit markets.”