Phoenix wants to put $50 million of city funds into federally insured accounts at local banks and credit unions that are chartered in Arizona or have a physical presence in Maricopa County.
“By investing in our local banks, we are investing in our city’s economy and our future,” Mayor Greg Stanton said last week.
“Not only is the city following a policy that provides for prudent and efficient investment, but provides additional funds for consumer and small-business loans in the local economy,” he said.
State law requires municipal bank deposits to be insured by the Federal Deposit Insurance Corp., which means the $50 million would have to be split into deposits of $250,000.
The city has some $1.5 billion in investments, most of which are restricted. The bulk of the funds are currently invested in federal government securities.
The banks and credit unions have been asked by the city to submit proposals outlining their investment strategies. The institutions must stipulate that the accounts are federally insured and will provide a higher rate of return than U.S. Treasury securities.