“Move Your Money” may be the name of the national movement, but state Sen. Gary LeBeau, D-East Hartford, wants to rename it something a little more explanatory like: “State Funds in Community Banks.”
LeBeau, chairman of the legislature’s Commerce Committee, said he raised the concept Thursday and is working on drafting the legislation.
“The idea is to build up liquidity and reserves within the local banks so they’ll have money to lend to Connecticut businesses,“ LeBeau said.
A recent Connecticut Business and Industry Association survey found that 27 percent of its members said credit availability is a problem for their company.
Connecticut’s community banks are much healthier than the national banks, which received federal bailout funds, LeBeau said. If the state was able to deposit more money in community banks and help them build up their reserves then it would help get money flowing back out in the form of loans or credit to small businesses.
Sen. Bob Duff, chairman of the Banks Committee, said his committee has also raised the concept and expects to hold a public hearing sometime in March. But Duff is a little more skeptical of the concept than LeBeau.
Duff said the state already does invest money with community banks under a law passed back in 2003. He said he understands that “right now the national banks are the villains, but the state banks were the villains during the savings and loan crisis,” more than a decade ago.
“It’s a major policy decision and we’ll have to weigh it very carefully,” Duff said. “I’m not committed to moving it forward.”
State Treasurer Denise Nappier helped initiate the 2003 legislation, which allows the state to invest up to $100 million in state and community banks. Nappier’s office said Friday that $302.5 million has been invested through this initiative since May of 2006 and about $13 million is currently invested in certificates of deposit.
However, those amounts pale in comparison to what New Mexico is trying to do. According to the Huffington Post, owned by Arianna Huffington one of the founders of the “Move Your Money” movement, New Mexico plans on allowing local banks to bid on $2 to $5 billion in state funds.
LeBeau said it will take more than the $100 million commitment the state currently has to make a difference. He said he’s not wedded to a certain amount, but was thinking bigger than $100 million.
Regardless of how far the state decides to go in adopting the concept, LeBeau said he hopes the discussion may prompt individuals to reconsider where they do their banking. A lot of individuals could do a lot of good in helping the economy by moving their money into local banks, LeBeau said.