Florida boosts banking oversight, expands credit union reach

by | May 2, 2024

Gov. Ron DeSantis signed legislation to enhance protections for financial consumers, facilitating the filing of complaints against financial institutions, and expanding credit unions’ capabilities to manage public funds as Qualified Public Depositories.

Gov. Ron DeSantis authorized legislation on Thursday that enhances protections for financial consumers and allows credit unions to manage public funds.

The legislation establishes a direct process for consumers to file complaints with Florida’s Office of Financial Regulation (OFR) regarding account access issues at financial institutions. Under this law, institutions that restrict account access in bad faith could face investigations, penalties, or prosecution.

“If you look at some of the stuff with the financial institution, you’ve had a lot of examples of folks being discriminated against just based on on their views or what they’re doing — legal stuff,” said DeSantis.

The governor subsequently referenced conservative education advocacy group Moms for Liberty, who he said had their PayPal account unexpectedly frozen. DeSantis also cited the National Committee for Religious Freedom, a nonprofit organization, which had its bank account terminated for refusing to disclose their donor list.

“They want to be able to use their commanding positions in our society to twist in the direction that they want to do so,” said DeSantis. “We have addressed this provided protections for Florida.”

The law additionally expands the role of credit unions by allowing them to qualify as Qualified Public Depositories (QPDs). This revision enables credit unions to handle public deposits under specified conditions, diversifying the management of public funds previously dominated by traditional banks.

According to DeSantis, the inclusion of credit unions as QPDs is intended to offer public entities more competitive options for managing funds, potentially leading to better financial terms and improved stewardship of taxpayer money. The governor further insinuated that public investment funds have been co-opted by “agendas” predicated upon ESG principles, which  refers to how companies gauge investment responsibility metrics based on environmental, social, and governance factors.

“You can invest in what you want, but the goal is what’s the best return for the person on the pension,” he said. “It’s not to promote an agenda that you may want as an asset manager, or somebody else that has a high position in the financial in the financial system.”

DeSantis, and Florida Chief Financial Officer Jimmy Patronis, have long stood as proponents of subverting ESG principles, going as far as to divest from BlackRock. In December 2022, the Division of Treasury reallocated billions from BlackRock-managed assets in the long-duration portfolio to nine fund managers based on risk-adjusted ratings.

“At the end of the day, we wanted to create an environment where we want to get the maximum return on investment,” Patronis said on Thursday. “Some of the things that we have seen in some of our larger fund managers — they have started taking our own dollars and using it for their own political agenda.”

Florida’s $2 billion divestment — the largest of its kind by any state — came as a growing number of Republicans pushed back against ESG investment criteria, which lawmakers alleged to be a form of “woke capitalism.”

BlackRock oversaw investments including corporate obligations, asset-backed securities, and municipal bonds. Unlike the externally managed portfolios which are managed by 12 different asset managers, BlackRock exclusively managed the Treasury’s $600 million Short Term Investment Fund (STIF), which is a cash sweep vehicle it uses to assist long-duration, intermediate-duration, and short-duration managers in directing cash on a daily basis.

The fund subsequently used any excess cash that a portfolio manager may have at the end of the day to invest into very short, very liquid securities.


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