Should a state be permitted to deposit funds in a bank in which the governor holds stock?
Bankers in Missouri think so, and they are supported by some influential lawmakers. But others say a legislative proposal that would let the state's governor, treasurer, and auditor be owners, officers, or employees of a Missouri bank that accepts state deposits would create an obvious conflict of interest.
The proposal is contained in two bills that would expand a popular loan program for small businesses.
Currently, high-ranking state officials cannot own stakes or hold key positions at banks with which the state does business. In fact, officials at the American Bankers Association and at the National Conference of State Legislatures say they do not know of any state that lets a bank receive state deposits if the state's top officials have ties to the bank.
The provision, included in both the House and Senate versions of the bill, has had its detractors in the Missouri General Assembly since it was introduced last month but generally received little attention until The Kansas City Star, the state's largest newspaper, published a story on it March 13.
"For all the talk this year about moral values in government, little protest has arisen over a proposal that would legalize a conflict of interest," the story said.
Since then, though, the Senate bill's author, Sen. Delbert Scott, has found himself on the defensive and now says he might consider striking the provision entirely.
Sen. Scott said the provision was initially included in the bill because bankers were concerned that they could be precluded from bidding for state deposits if state officials, at some point, inherited stock in their banks.
The provision would apply only to banks that are headquartered in Missouri, dozens of which either have depository relationships with government agencies or are eligible to receive deposits. It would also require top officials to disclose relationships with a bank that does business with the state.
The treasurer's office said that Treasurer Sarah Steelman does not own stock in any bank. It was not immediately known if the current governor or auditor own stakes in Missouri banks that are trying to win business with the state, or if the three officeholders are in line to inherit stock in banks headquartered in Missouri.
Jessica Robinson, a spokeswoman for Gov. Matt Blunt, said that the governor, a Republican, has no official position on the bills at this point, but that his office is "definitely watching them."
On Feb. 16, Sen. Joan Bray, a Democrat, proposed an amendment to strike the provision from the Senate bill, but the predominantly Republican Senate rejected the amendment that day on a voice vote - at Sen. Scott's urging.
"At best, it would be an appearance of conflict," Sen. Bray said last week. "Why would you want to get people wondering when you have enough to deal with?"
Still, because there is widespread support for expanding the loan program, both bills easily passed in their respective chambers. Senate Bill 270 is now being considered by a House committee, while House Bill 468 is being considered by a Senate committee.
In an interview last week, Sen. Scott said he is not sure what all the fuss is about.
The provision "is absolutely inconsequential, and people and the newspapers are trying to make a big deal out of nothing," he said. "So long as these state officials disclose their ownership in the bank - and that they'll no longer invest in that bank - it should be OK.
"And I don't see what statewide official is really going to be an officer of a bank anyway," he said.
According to Sen. Scott, the provision was actually added by a legislative staff member, and until now he has not seen any reason to fiddle with the bill. But he acknowledged that if the public continues to make an issue of the provision, he will consider introducing an amendment to eliminate it.
The Missouri legislative session is scheduled to end May 13.