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FOR IMMEDIATE RELEASE
July 8, 2014
Governor Quinn Expands Banking Options for Government Deposits
CHICAGO – Governor Quinn signed Senate Bill 1812 on Monday, making it easier for public funds to be deposited into community banks and other local depository institutions. Under the guidelines established in the new law, state and local government agencies may deposit funds into fully insured demand deposit transaction accounts that allow for unlimited withdrawals as part of the Insured Cash Sweep (ICS) network.
Current law authorizes the use of ICS by public fund depositors when investing funds in savings deposits and certificates of deposits, but does not authorize deposit of funds in demand deposit accounts. Depositors who deposit funds in savings deposits through ICS may withdraw their funds only up to six times a month. SB1812 allows for the deposit of funds into insured demand deposit accounts and unlimited withdrawals as a part of the ICS network.
“This is a common sense way for local governments to support and utilize their neighborhood banks, savings and loans, and credit unions,” said Manuel Flores, Acting Secretary of the Department of Financial and Professional Regulation.
SB1812 enables public funds to be placed in community banks without pledging collateral, a burdensome requirement for both the community bank and the local government. The law takes effect immediately. Forty other states allow public fund depositors to deposit funds into demand deposit accounts as part of the ICS network. Currently, there is pending legislation to allow this practice in six of the remaining 10 states.