Oregon Treasurer Ted Wheeler hopes a policy change will free up $600 million that banks can lend out to households and small businesses.
Currently, Oregon banks must put up collateral when the state treasury deposits public funds, to protect the state in the event of a bank failure.
Until now, the banks have had to post collateral that is equal to 100 percent of the money deposited. As of this week, Wheeler said, he is changing the required collateral to 75 percent, which will free up money for lending in the following way:
He estimates that $2.75 billion is now pledged as collateral for public fund deposits in Oregon, so a reduction in that requirement by 25 percent will make more than $600 million immediately available for banks to lend.
“We are helping to unlock Oregon’s lending power, and putting more of Oregon’s public fund deposits to work for Oregon families and businesses,” Wheeler said in a written statement. “Sparking more business financing will be a catalyst to help Oregon’s economy recover and grow.”
Read more at The Register-Guard.