Plain English Breakdown
The official summary contains contradictory instructions: one part says transfer a percentage (5-10%) of the Local Agency Investment Fund, while another explicitly states 'transfer $4 billion from the Pooled Money Investment Account.' The final funding mechanism is unclear based on this text alone.
Creating a Community Reinvestment Account for State Deposits
This law creates a new account within the Pooled Money Investment Account to deposit state funds with banks that lend to small businesses in underserved areas and support first-time or first-generation home buyers.
What This Bill Does
- Creates the Community Reinvestment Account inside the Pooled Money Investment Account.
- Transfers $4 billion from the Pooled Money Investment Account into this new account.
- Requires that at least 50% of the money deposited be used for affordable housing lending as defined by law.
- Lowers the required security value banks must hold to protect these deposits from over 100% to at least 90%.
- Mandates that receiving banks submit quarterly, nonidentifying performance reports on their lending activities.
Who It Names or Affects
- The State Treasurer who manages the funds and publishes public reports.
- Banks, savings and loan associations, or credit unions seeking state deposits from this account.
- Small businesses in underserved census tracts that receive verified loans.
- First-time or first-generation home buyers receiving lending support.
Terms To Know
- Pooled Money Investment Account
- A state fund where surplus money is invested to earn returns safely.
- Community Reinvestment Account
- The new account created by this bill for targeted lending deposits within the Pooled Money Investment Account.
- Collateral
- Assets like securities or letters of credit that banks must hold to protect the state's deposited money, now required at 90% value instead of over 100% for this account.
Limits and Unknowns
- The bill does not specify which exact census tracts qualify as underserved.
- It is unclear how much total lending will result from the $4 billion deposit beyond the required percentages.
- The official text contains conflicting language regarding whether funds are transferred based on a percentage (5% to 10%) or a fixed amount ($4 billion).