Placing more than $1 billion in state deposits into Indiana-based banks that regularly lend to small businesses can help spur job development, said Pete Buttigieg, the Democrat candidate for state treasurer.
“We are in a critical time in our economy and every dollar belonging in this state needs to be creating jobs whenever possible. The way you have dollars create jobs is you put them where they recirculate in our communities and is available to small businesses,” Buttigieg said Friday outside the Vigo County Courthouse.
He was in Terre Haute on the last of a three-day statewide tour, touting a plan to create a transparent set of criteria to evaluate banks' eligibility for public deposits and other state business.
Buttigieg will face Republican incumbent state Treasurer Richard Mourdock in the Nov. 2 general election. Mourdock, 58, of Darmstadt, was first elected in 2006.
The state treasurer oversees about $7 billion in up to 74 trusts, but about $1.5 billion is invested annually in bank deposits such as certificates of deposits, money markets and savings accounts.
Having available funds to lend to small business is important, Buttigieg said, as small businesses create more than two-thirds of new jobs in the national economy.
“I would like to take Indiana’s money and make sure more of it stays in Indiana and goes into areas where it is likely to recirculate through the economy, going into small businesses,” Buttigieg said. “A bank that has a strong track record of lending to small business ought to get the lion’s share of the state’s business when it comes to where we send our money.”
The candidate said the top five deposits for state funds have been made with out-of-state banks, with a majority in Ohio and one in New York.
The 28-year-old Buttigieg (pronounced "Boota-judge"), a first time candidate, graduated from Harvard and studied economics at Oxford as a Rhodes Scholar. Prior to leaving his job to become a full-time candidate, Buttigieg worked in the private sector at a top consulting firm, where he specialized in economic development, retail strategy, energy and logistics. A resident of South Bend, Buttigieg is a co-founder of the Democratic Renaissance Project, serves as a Fellow at the Truman National Security Project, and has worked on a number of political campaigns.
Buttigieg said the state is a “very lucrative customer for banks. The treasurer, on behalf of Indiana taxpayers, is charged with depositing about $1.5 billion in banks of his or her choosing. Those banks, in turn, make millions off of the stable cash flow taxpayers provide.
“Currently, there is very little information available on how the state treasurer decides where to place our money. Not only does this lack of transparency muddle the rules of the road, it squanders an opportunity to encourage better banking practices,” he said.
Under current law, a nine-member State Board of Depositories is charged with compiling a list of banks eligible to hold Indiana's money. From that list of 197 approved institutions, the state treasurer has discretion in selecting which of those banks actually receive public deposits.
If elected, Buttigieg said he would standardize the decision-making process and make it more transparent. Some key criteria for selection includes if a bank has a headquarters, or at least 50 percent of employees, in Indiana; if a bank is in the top two-thirds of Indiana banks for percentage of commercial lending going to small businesses; if a bank is in the top two-thirds of Indiana banks for percentage of commercial lending going to minority-and women-owned businesses; and offers simplified versions of all major products, including mortgages and checking accounts, to consumers.
Other considerations would be a bank’s history of community-oriented financial innovation, such as lending to micro-enterprises and offering financial awareness programs; record of resolving distressed home mortgages through re-negotiation; and issues reported via the "early warning system" for financial misconduct.
That early warning system would be a dedicated telephone number, as well as website, for Hoosiers to call in or e-mail about transactions with banks.
“We would open up a direct line into the treasurer’s office, so that if you are having an issue with your bank, and that is a bank that does business with the state, that gives me as treasurer a reason to call up that bank and ask what is going on. So through the Web and a phone line, citizens will be empowered to let my office know what they are seeing on the ground as customers in dealing with financial institutions,” he said.
“I am not trying to be a regulator. I am just trying to make sure that where we put our state’s money reflects our values and expectations,” Buttigieg said.
If elected, Buttigieg plans to immediately form a committee of financial, business, labor, academic and consumer advocacy leaders to formalize criteria and develop reporting procedures that could be implemented within his first 60 days in office.
Howard Greninger can be reached at (812) 231-4204 or email@example.com.