Image: trueStatement: “We have moved over $100 million into local banks so banks would have money to lend because that helps indirectly to create jobs,” County Supervisor Ron Roberts said on the KPBS program These Days last week.

Determination: True

Analysis: During a roundtable discussion with District 4 candidates for county supervisor, KPBS host Maureen Cavanaugh asked Roberts, the incumbent, to explain what the county is doing or should be doing to create more jobs.

Part of Roberts’ response referred to a little-known program called the Local Banking Initiative, which he and Treasurer/Tax Collector Dan McAllister announced in 2006.

McAllister’s office manages and invests a multi-billion-dollar fund made up of assets from various local agencies, from school districts to cities to the county itself. The goal: protect the initial assets, gain investment returns and provide cash flow for the agencies.

Much of the funds are invested in East Coast institutions and Wall Street banks, but a few years ago the county began placing some funds in local banks.

The county took out no-risk, interest-yielding financial products called CDs from the local banks. The program launched with a total of $1.7 million invested in $100,000 chunks with 17 local banks. The investments, kind of like one-year savings accounts, are guaranteed by the federal government, and the county receives a return on that investment that beats the return on one-year U.S. Treasury notes, a popular benchmark for safe investing.

After the first year, the county reinvested the previous year’s money, and took out even more CDs — more than $35 million’s worth. In 2008, the county grew the program dramatically, taking out $100 million worth of CDs.

Now, because of the banking tumult, the county has ratcheted back the program temporarily, McAllister said. The county currently has between $60 million and $65 million invested in these one-year CDs, McAllister said.

The idea behind having some of the money invested locally: With the county’s deposits, the banks have more money to lend in the community. Those loans help the local economy to grow, providing more money to the county in the form of tax revenues. And the whole cycle continues. (When the program was launched, Roberts called it a “win, win, win” for the banks, the government agencies and local taxpayers.)

The program encourages the banks to deploy the funds in loans for local residents who want to buy or build real estate — thereby increasing the need for businesses to hire contractors and construction workers, creating jobs.

For this initiative, the participating banks change somewhat every year, but there’s a list of banks in this 2008 press release.

We’ve determined the statement is “True” because the county has placed well over $100 million in local banks throughout the life of the program and Robert’s tenure. The program at one point passed $100 million a year and is down now to significantly less, but over the life of the program, Roberts’ statement holds up.


Summer Polacek

Summer Polacek was formerly the Development Manager at Voice of San Diego.

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