With recent bank failures in the news, you might be wondering whether taxpayers’ money used to fund Evanston city government operations is secure.

After all, the city had $146 million in cash and investments as of the end of the first quarter this year, with the vast majority of it split among just three banks — Byline, Fifth Third and Wintrust — in amounts far beyond the $250,000 Federal Deposit Insurance Corporation guarantee.

Numerous private businesses found themselves at risk of disaster when they had millions in uninsured funds on deposit at Silicon Valley Bank earlier this year, and the rush to extract those funds was a major contributor to the bank’s collapse.

But Evanston’s chief financial officer, Hitesh Desai, says the city’s funds are fully secured by pledges or collateral agreements held by other banks that are tied to holdings of federal government securities.

If the bank were to fail, the city could take the pledged securities to make up for any loss to its deposited funds.

Desai says the city follows the best practices recommended by the Government Finance Officers Association for the collateralization agreements and always makes sure that the collateral amounts cover 100% or more of the funds the city has on deposit with each bank.

Collateralization rules for government entities are also part of the state’s Public Funds Investment Act.

Desai says that thanks to the recent runup of interest rates, the city has been earning better than 4% on the money it has in local banks for the last several months.

Bill Smith is the editor and publisher of Evanston Now.

Leave a comment

The goal of our comment policy is to make the comments section a vibrant yet civil space. Treat each other with respect — even the people you disagree with. Whenever possible, provide links to credible documentary evidence to back up your factual claims.

Your email address will not be published. Required fields are marked *