Maryland lawmakers will consider a bill that would require the state treasurer to give a preference to banks with less than $5 billion of assets when doling out state banking business.

A bank would have to promise to increase its small-business lending by twice the amount of deposits it receives from the state under the Lend Local Act of 2012, the Baltimore Business Journal reported on Tuesday. Democrats from Montgomery County, Sen. Rob Garagiola and Del. C. William Frick, are the primary sponsors of the bill.

Supporters of the legislation, including Eagle Bancorp Inc. of Bethesda, Md., argue that the legislation would spur lending to small businesses in Maryland, which would allow these businesses to expand.

Opponents, including the Maryland Bankers Association, contend that the bill doesn't simplify the process for smaller banks to compete for state business, the Baltimore Business Journal reported. The banker group opposed a similar bill when it was introduced, and ultimately defeated, last year.

Other state and local governments, like the District of Columbia, are considering similar proposals to place more public deposits in local banks in an effort to stimulate lending. Washington, D.C., Councilman Jack Evans has introduced legislation that would require the city to move some of its deposits to community banks, as long as recipients agree to lend out $2 for every $1 of city deposits they receive to local businesses. The city currently has most of its deposits at Bank of America Corp.

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