By Bob Plain in Rhode Island’s Future
Rhode Island is taking
money away from Mr. Potter and giving it to George Bailey, to put General
Treasurer Seth Magaziner’s latest initiative into “It’s a Wonderful Life”
terms.
More specifically, the state is taking money out of big, nationwide
banks and investing it with local, Rhode Island lenders.
“We want to support
institutions that support Rhode Islanders,” said Magaziner, at a press
conference announcing the new “Bank Local” program.
The idea is to move
money out of “some of the bigger banks,” to smaller banks and credit unions
located in Rhode Island while incentivizing them to make loans to local
businesses, Magaziner explained. It’s a brainchild of Tom Sgouros, Magaziner’s
former policy adviser.
Participating
institutions include People’s Credit Union, Navigant Credit Union, Home Loan
Investment Bank, Washington Trust, Bank RI and Customer’s Bank. Citizens Bank,
based in Rhode Island, is not participating and could lose business from Rhode
Island as a result of the new program, Magaziner said.
The state will invest
up to $30 million with the six participating banks as those lenders invest in
Rhode Island.
When one of the six
banks makes a loan of $250,000 or less to a local business with fewer than 100 employees,
Rhode Island will match the amount of the loan with a equal-sized deposit to
that bank.
So far, the six banks
have already made 47 such loans and the state has subsequently deposited about
$4.5 million with those banks.
One of those loans
went to Hare on Mane, a new beauty salon in Wakefield.
“I want to thank the
treasurer’s office for partnering with my credit union by providing financial
support through the ‘Bank Local’ program,” said Stephanie Keenan, the owner of
Hair on Mane. “Programs like this one have a positive impact on small business
in our state.”
Added Brian Murphy,
the CEO of Home Loan, “Small business is the lifeblood of Rhode Island and
capital is the lifeblood of small business. So many entrepreneurs, despite
their determination, creativity, and desire to make a difference in our
economy, our hindered by a lack of access to funding.
The Bank Local
program, he added, “will help address that issue, and we look forward to
partnering with Treasurer Magaziner to support small businesses throughout
Rhode Island.”
Magaziner said it’s
the first such program in the nation, though he said some Midwestern states
have similar programs for farm loans.
He also said it’s the first time Rhode
Island has done banking with credit unions, a kind of investment Joe
Mollicone’s savings and loan scandal of the late 1980’s made a third rail in
Rhode Island politics for a generation.
Credit unions are banks that are
structured like a co-op. In other words, credit unions are owned by the
customers.
At any given time,
Rhode Island has between
$500 million to $1 billion in the bank.
Bob Plain is the
editor/publisher of Rhode Island's Future. Previously, he's worked as a
reporter for several different news organizations both in Rhode Island and
across the country.