A growing number of states and cities are considering or enacting policies that move government bank accounts to small community banks and credit unions.
These bills have two primary motivations:
- To withdraw public funds from big banks that have imposed high fees on customers and engaged in predatory mortgage lending, redlining, and other practices that destroy community wealth.
- To channel public funds to the small banks and credit unions that are the primary source for small business loans and other productive local investments, which in turn create jobs and generate tax revenue.
Model State Legislation Outline Developed by SEIU
Large institutions, like universities and hospitals, can also move their funds:
Guidance on harnessing university deposits for community investment
Local and Responsible Banking Resolution — Portland, OR
This resolution directs the City Treasurer to shift up to $2.5 million in city funds to local financial institutions.… Read More
Responsible Banking Act — Los Angeles
Banks that wish to do business with the City of Los Angeles must annually submit information on their lending and investments in each of the city's census tracts. … Read More
Depositing Public Funds in Local Banks – Massachusetts
Just 18 months after establishing the Massachusetts Small Business Banking Partnership, the state treasurer has moved over $270 million in state funds to 50 local banks. These 50 banks in turn have made over 2,500 new small business loans, many directly attributable to the state's deposits. … Read More
Depositing Public Funds in Local Banks – Multnomah County, Oregon
On November 18, 2010, the Multnomah County Board of Commissioners approved a measure that creates a Community Advantage Banking Program, under which the county will invest $10 million of its funds with qualifying local community banks and local credit unions. The investment is expected to expand local lending, particularly to small businesses.… Read More
Depositing Public Funds in Local Banks – Maryland (Proposed)
This bill would give local banks and credit unions a 10 percent pricing preference on bids to manage both state and municipal bank accounts.… Read More
Depositing Public Funds in Local Banks – Minnesota (Proposed)
This bill gives local banks and credit unions a 10 percent pricing preference when bidding to manage the state's bank accounts. … Read More
Depositing Public Funds in Local Banks – New Mexico (Proposed)
The bill would give New Mexico-based banks and credit unions that otherwise meet the state's banking requirements a 10 percent preference in bidding to be the state's fiscal agent, the institution that manages its day-to-day banking business. The bill also requires the New Mexico Treasurer and the State Investment Council to develop an investment policy for funds held in CDs (certificates of deposit) that would increase community bank lending to local residents and businesses.… Read More
