Montgomery County Moves Money to Community Banks

Today, the county government announced a new initiative to invest its bank deposits in county businesses. I worked with business leaders in the county to request this initiative and I applaud the County Executive and his expert finance team for launching it.
Montgomery County collects and spends more than $4 billion a year. As part of running the government, the county has to maintain large bank deposits through which it can manage payroll, vendor payments, debt service and other expenses. As of June 30, 2011, the county’s cash and cash equivalents totaled $626 million. Most of this money is deposited with PNC Bank, a regional bank that ably provides the financial services needed by the county, which are very demanding. But while PNC is a sound institution, it is not rooted in our local community. PNC loans our deposits far and wide, and we don’t know how much of that money comes back to the county to generate local economic growth and improve our quality of life.
We have an opportunity to change that by investing a portion of our deposits in community banks, which target their loans to small businesses in local communities. Montgomery County is home to a number of these banks, including Capital Bank, Congressional Bank, EagleBank, Monument Bank, OBA Bank, and more. The county government has announced a new program that would invest up to $10 million in county-headquartered community banks over the next year. In return, those banks would have to loan that money along with $10 million of their own money to county-headquartered small businesses. The banks would have to report on their loan activity and the number of jobs those loans create.
This will be a great test of the value of community banking for governments. If it works, we should expand the amount of money that we invest with the community banks. At the same time, we will be developing a valuable policy framework that we can leverage into our county’s RFP for our overall banking relationship, which comes up for bidding in two years. We may be able to structure the RFP in such a way as to further these goals.
This program shows a lot of promise for leveraging county assets into local job creation. I’m happy that the County Executive is moving forward with it and I will be watching to make sure it works.

Daily journal, 10-12-11

Tonight’s youth town hall was a huge success. Yes it was contentious
but it was very healthy. Naturally the young people there raised many
objections and criticisms about the proposed curfew. For my own part I
tried not so much to convince everyone of my views so much as to
explain how I look at this issue and what I want to accomplish.

Alan Xie, the student member of the board of education, asked
questions about education funding that were sufficiently detailed to
provoke some guffaws from the council. I hope he didn’t take that the
wrong way. Everyone is just tense over the budget because we have no
money and next year isn’t looking very good either.

You can catch the town hall on county cable and on demand at our website.

I also continued my work today on the Fenton Street Market. You may
have seen the market announced that it plans to close rather than
compete for the RFP for veterans plaza. I reviewed the RFP and I can
imagine a document like that does not look friendly (you can see a
copy at the market’s website).

If you care about this issue please tell Hannah and the County
Executive and the Council that the community wants this market to
continue! I believe we can find a solution. One day Hannah is going
to have her markets all over Montgomery County.