ST. PAUL, Minn. (AP) — Gov. Mark Dayton outlined low-or-no cost initiatives Wednesday that he hopes will spur new hiring and move Minnesota toward economic recovery.
Chief among them was a directive ordering state investment managers to double the amount of money they deposit in community banks. That would mean up to $100 million more that local banks could loan to startup companies and small businesses anxious to expand.
In coming weeks, the first-term Democrat said his administration would produce action plans for streamlining regulations, upgrading state highways essential to commerce, boosting Minnesota exports and extending high-speed Internet and reliable cell phone coverage from border to border.
Many of Dayton’s ideas sprout from task forces he previously convened or respond to concerns voiced at a well-attended job summit a day earlier. Several require no legislative action, allowing for quick implementation.
That could give additional comfort to employers mulling new hiring and, in turn, produce opportunities for some of the 218,000 people still left jobless since the recession. Dayton made clear he’s chipping away at the employment problem in the absence of broader agreement between him and legislative Republicans on more sweeping strategies.
“It’s all one person at a time, one family at a time,” Dayton said at a Capitol news conference. “There isn’t a single answer. It’s a complex problem. It didn’t develop overnight. It’s not going to be resolved overnight.”
Howard Bicker, director of the State Board of Investment, said changes in federal banking insurance laws give the state room to purchase certificates of deposit of $1.5 million per bank, up from $750,000 previously. He said there won’t be additional cost to the state because investment managers will be diverting available cash officials might have put into lower-yield investments.
The goal is to invest more money associated with state pension funds into the lending stream that is closer to local borrowers. Big and small banks are on equal footing when it comes to the state deposits.
“We’re providing a lot of money to smaller institutions that have more trouble attracting capital,” Bicker said. “Generally speaking, the smaller institutions are the ones providing loans to the local individual who is trying to start a business.”
Joseph Witt, president of the Minnesota Bankers Association, said main street bankers welcome the recognition of their role in priming the economy. But he still needs convincing that the move will have the effect Dayton is after because banks are already far better off than they were at the depths of the recession.
“They have tons of lendable funds,” Witt said. “They are waiting for qualified borrowers who want the money to come through their doors because they have way more deposits than they have loan demand.”
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