Interesting Legislation from D.C.

The District of Columbia City Council is considering legislation that would deposit a larger portion of the city's $2 billion of cash in local community banks.  Currently, most of D.C.'s funds are deposted in large national enterprises such as Bank of America and Wachovia.  Up to 10% of the city's funds could be deposited in smaller banks without the requirement of competitive bids.  The current version of the bill would set the asset size of banks exempt from submitting a bid at $550 million.       

Although the legislation may result in lower interest rates, proponents believe this would be far outweighed by the benefit to the community.  Proponents believe that community banks are more likely to lend to local businesses.