Depositing Public Funds in Local Banks – Minnesota (Proposed)

Date: 29 Mar 2010 | posted in: Banking | 0 Facebooktwittergoogle_plusredditpinterestmail

Sponsored by Representative Tim Mahoney, this bill (HF 3205) was introduced too late in the 2010 session to make it through the committee process, but will likely be considered in the 2011 session.

This bill gives local banks and credit unions a 10 percent pricing preference when bidding to manage the state’s bank accounts.

Currently, the state maintains 264 major accounts, including its general fund account and accounts for various agencies. The total amount of money on deposit in these accounts varies considerably over time, but can be as high as $100 million. Every five years, the state bids out these accounts as a package, awarding their management to a single bank. U.S. Bancorp, the nation’s 11th largest bank holding company, won the most recent bid.

The state also maintains 397 minor accounts for various state agencies and functions that hold a total of roughly $8 million. As of March 2010, 268 of these accounts were at community banks, 84 at U.S. Bancorp and 45 at Wells Fargo.

The bill also orders the Minnesota Commissioner of Management and Budget to produce a study analyzing the deposit practices of local governments and the benefits of shifting municipal and county funds to local financial institutions.