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Relating to the investments by state banks to promote community development.
No fiscal impact to the state is anticipated.
Currently, state-chartered banks are allowed to invest up to 10 percent of their unimpaired capital and surplus in public welfare projects such as housing, services, or "jobs promoting the welfare of low-income and moderate-income communities or families." For the purposes of this 10 percent cap, loans are considered to be investments.
HB 1175 would rename "Investments For Public Welfare" as "Investments To Promote Community Development", increase the investment cap to 15 percent of unimpaired capital and surplus, and strike "loans" from the definition of "investments". The bill would also cap a state bank's exposure to any particular investment at 25 percent of its capital and surplus unless the bank receives prior written approval by the insurance commissioner in response to a written request. The provisions of this bill would clearly allow significantly more money to be invested in community development projects by state-chartered banks.
Without commenting on the relative wisdom of significantly increasing investments in these types of projects, we see no conflict with our liberty principles since the bill's provisions are permissive rather than mandatory. We remain neutral on HB 1175.