Government finance: deposits.

Plain English Breakdown

The bill summary does not provide specific details on the performance standards required for financial institutions.

Government Finance: Deposits for Community Reinvestment

This law creates the Community Reinvestment Account within the Local Agency Investment Fund, requiring the Treasurer to transfer at least $4 billion from the Pooled Money Investment Account and setting rules for financial institutions that receive deposits.

What This Bill Does

• Creates the Community Reinvestment Account inside the Local Agency Investment Fund.
• Requires the Treasurer to transfer at least $4 billion from the Pooled Money Investment Account to the new Community Reinvestment Account.
• Sets rules for financial institutions receiving money from this account, requiring them to lend to small businesses and first-time home buyers in underserved areas.
• Changes security requirements for deposits made by these institutions, allowing a lower collateral value compared to other state funds.
• Requires quarterly reports on how the money is used and makes this information public.

Who It Names or Affects

• The Treasurer of California
• Financial institutions that receive deposits from the Community Reinvestment Account
• Small businesses and first-time home buyers in underserved areas

Terms To Know

Local Agency Investment Fund

A fund where local government money is kept and invested.

Pooled Money Investment Account

An account that holds state surplus funds for investment.

Community Reinvestment Account

A new part of the Local Agency Investment Fund that gives money to financial institutions helping underserved communities.

Limits and Unknowns

• The bill does not specify how much exactly will be transferred from the Pooled Money Investment Account, only that it must be at least $4 billion.
• It is unclear what specific performance standards are required for financial institutions to receive deposits from this new account.

Official Summary Text

AB 2214, as amended, Jackson.
Local Agency Investment Fund: Community Reinvestment Account.
Government finance: deposits.
Existing law provides that all moneys in the Local Agency Investment Fund, which is continuously appropriated, is held in trust in the custody of the Treasurer and shall be deposited, invested, and reinvested in the same manner and to the same extent as if it were state moneys in the State Treasury. Existing law authorizes the Treasurer to invest the moneys of the fund in prescribed securities and to elect to have the moneys in the fund invested through the Surplus Money Investment Fund, as specified, so as to achieve the objective of the fund which is to realize the maximum return consistent with safe and prudent treasury management.
Existing
law requires the Treasurer to invest, or deposit into banks and other financial institutions, specified state moneys designated as surplus as a part of the Pooled Money Investment Account and determined to be available for that purpose by the Pooled Money Investment Board.
Existing
law, for purposes of a savings and loan association or credit union being eligible to receive deposits of state funds, specifies which securities may be accepted as collateral, and includes within that
list of eligible securities a letter of credit issued by the Federal Home Loan Bank of San Francisco that, notwithstanding requirements that a savings and loan association or credit union
law generally requires banks and other financial institutions to
deposit with the Treasurer securities in a value at least 10% in excess of the amount deposited with the
savings and loan association or credit union, shall be in an amount in value of at least 100% of the amount deposited with the savings and loan association or credit union.
institution to be eligible to receive deposits of state funds, except as specified.
This bill would create within the
Local Agency Investment
Fund
Pooled Money Investment Account
the Community Reinvestment Account from which deposits shall be made to institutions that meet specified performance standards including verified small business lending in underserved census tracts and first-time or first-generation home buyer lending. The bill would require the Treasurer to
establish the percentage of funds, not less than 5% and not exceeding 10%, in the Local Agency Investment Fund that shall be transferred
transfer $4 billion from the Pooled Money Investment Account
to the Community Reinvestment Account. Because the
fund is
moneys invested and reinvested as part of the Pooled Money Investment Account are
continuously appropriated, this bill would make an appropriation. Notwithstanding the
provisions described above applicable to savings and loan associations and credit unions, the bill would authorize a letter of credit issued by the Federal Home Loan Bank of San Francisco accepted as collateral
above-described securities requirement, this bill would instead require securities,
for a deposit from the Community Reinvestment Account
or under the Small Business Lending Time Deposit Program,
to be in an amount in value of at least 90% of the amount deposited with the institution.
The bill would require the Treasurer to deposit moneys from the Community Reinvestment Account with qualified institutions that have committed to specified lending activities, including, among other things, that at least 50% of the moneys from the account are used for affordable housing lending, as defined and specified.
The bill would require institutions that receive deposits from the Community Reinvestment Account to submit quarterly, nonidentifying, performance reports to the
Treasurer and the Treasurer to publish the data it receives in a publicly available report.

Current Bill Text

Download Bill PDF