Public Funds Bill Draws Big Bank Opposition in Portland, Nears Passage in Washington
February 16, 2012
February 16, 2012
The Oregon Bankers Association is opposing Portland, Ore., Mayor Sam Adams’ Responsible Banking Resolution, which includes a mandate to move some city funds to local credit unions and smaller banks. The bill would also increase credit unions’ capacity to accept those public funds.
“This is just positioning on behalf of the Oregon Bankers Association and nothing new,” said Stacy Augustine, NWCUA senior vice president and general counsel.
The bankers association and Wells Fargo oppose the proposal, which would direct the city treasurer to deposit up to $250,000—the maximum that is insured—into 10 credit unions and other community banks during 2012. The city also would deposit more than $250,000 in a single credit union if it meets certain criteria.
In a letter to the mayor sent late last week, Linda Navarro, CEO of the Oregon Bankers Association, said that “credit unions were meant to serve people of modest means” as opposed to city governments and small businesses. The letter went on to claim that the city would lose tax revenues if it moved its deposits to credit unions.
Wells Fargo, which had won the bidding process in 2009 to provide financial services to the city, said in another letter it considered itself a local bank that makes lending decisions locally and keeps deposits in the Portland market.
According to an article in the “Portland Business Journal,” public sentiment heavily favors the proposal, with 15 of 17 comments on the city’s website supporting the plan. In addition, 12 comments that were e-mailed to the mayor also favored the move.
“How the public’s money is safeguarded and managed should indeed be the paramount concern for the City of Portland when it comes to its banking relationships, just as [Oregon Bankers Association CEO Linda] Navarro pointed out,” Augustine said. “We just think the city should consider keeping local funds local.”
Meanwhile, Senate Bill 5913, the Washington Public Funds Bill, continued its steady progress through the Washington State Legislature this morning when it received a do-pass recommendation from the House Business & Financial Services Committee. The vote was 10-2 with one excused, with Rep. Cary Condotta, R-12, and Rep. Joel Kretz, R-7, casting the votes against. Rep. Derek Stanford, D-1, was absent and excused from the vote.
The bill is now headed for the Rules Committee, having passed the Senate last week by a significant majority.
Washington Bankers’ Association lobbyist Denny Eliason testified against the bill, pointing to familiar complaints regarding tax exemption more than the specific legislation.
“This has not been one of the higher priorities of the bankers association,” he said. “We appreciate the fact that the bill limits public deposits in credit unions. Banks have broader concerns regarding this legislation. Credit unions compete against banks every day on an untaxed basis.”
“The benefits of this move are clear to our legislators,” said Northwest Credit Union Association (NWCUA) Vice President of Legislative Affairs Mark Minickiello. “It saw broad support in the Senate, and we expect it to move quickly through the Rules Committee and through the House as well. We are extremely optimistic that this piece of legislation is going to continue to progress with few roadblocks.”
Questions? Contact a member of the Association’s Legislative Affairs team: