The people of Portland display a widespread love of all things local. Sometimes, this is the whole reason people come to Portland in the first place.
In addition to the support for locally-grown food and local bands, there is an insistence that the city does all that it can to support local businesses and the local economy, which includes the investment of tax dollars into local credit unions and community banks.
Mayor Sam Adams has released the draft of an ordinance that would allow the city to do just that: invest more of its money in local credit unions. It is currently prohibited from doing so by its own rules.
Currently, the city has approximately $37.4 million in banks. It has been prohibited from putting large amounts of money into credit unions. The city’s deposit into a credit union cannot exceed the credit union’s federal insurance limit, which is normally around $250,000.
Compared to the $29.9 million it currently has invested in Umpqua Bank and the $7.2 million it has in Wells Fargo, the amount that the city can invest in credit unions is very miniscule.
But if the ordinance is approved, the city would have more flexibility in investing its money.
In order to generate the best rate of return, the city relies on a conservative investment policy. This is why the city’s tax dollars are invested mostly in federal banks. The $37.4 million is divided up between five banks (Umpqua, Wells Fargo, Albina Bank, US Bank and Key Bank), all of which are either Oregon banks or national banks. The exception is Albina, which is a local community bank into which the city invests the allotted $250,000.
According to Mayor Adams, the proposal that would allow the city to invest in credit unions has been discussed for more than a year, but gained momentum because of the Occupy Portland movement, during which the city and local government were pressed to invest in credit unions.
The pledge is partially meant to address some of the frustrations the Occupy movement was founded upon. Economic inequality, banking practices and the influence of corporations and money in politics drove Portlanders to join in on the occupy movement and inspired a greater enthusiasm for some form of economic equality.
People want to see more of the city’s tax dollars in credit unions because there is a correlation between credit unions and positive outcomes in the local economy that the people of Portland want to see. Credit unions allow for an increased proportion of loans to local businesses, which in turn would eventually create more jobs and improve the economy.
By investing in credit unions, the city would side with the people and at the same time establish practices that allow them to have the best rate of return, as well as meet the liquidity needs of the city. It all depends on the treasurer’s selection of credit unions.
A credit union is a financial cooperative that is owned by the people who put money into it. Therefore, the city would have a partial ownership of every credit union in which it deposits money.
However, the fact that the city would be allowed to put more money than the allotted $250,000 into a credit union does not mean that it has more of an ownership than the credit union’s other members would, No matter how much money a member of a credit union invests, every member has an equal amount of influence among the members of the credit union.
The main difference between a credit union and a federal bank is that a credit union is a not-for-profit; credit unions claim to serve people and the community instead of profit.
What most of this seems to be about is the city’s investment of more money into credit unions as a statement of support for the people. Because Portlanders generally seem to be in favor of everything local, and the economy in Portland is in a terrible state at the moment, the city would make a statement by siding with the people in their favor of credit unions.
Because of their image as a community-oriented collective, credit unions are gaining popularity in Portland. When one takes money out of a bank to put it into a credit union, it is not always because of dissatisfaction with the bank but because of the allure of a credit union and the belief in its mission. By investing more of its money in credit unions, the city would be standing by the same mission.
Though the people’s interest in seeing Portland’s tax dollars grace the vaults of credit unions may seem far-fetched, it cannot be a bad move if it would help the people and improve morale. Community and “all things local” are what Portland values, and it would only be right for the city and local government to stand in support of these values.