Miami DDA OK'd to limit deposits with Wachovia, find new home for other money
By Yudislaidy Fernandez
Miami's Downtown Development Authority has received board approval to limit its deposits with Wachovia and find a new home for some of the rest of its money.
The authority looks to ensure more liquidity and better interest rates, agency officials said.
Board member Tony Alonso, owner of La Epoca department store and other downtown properties, first asked about the security of the agency's finances as the bank-buyouts began and Wall Street tumbled in recent months.
After exploring its options, the authority's finance committee concluded it was best to split up its money in several financial institutions to guarantee liquidity in case the banking sector hits rock bottom.
The committee first considered splitting the money among three banks but opted for two. It is keep one money market account with Wachovia Bank — where it held all its assets in eight separate accounts — and selected City National Bank of Florida to deposit the rest of its funds, said Alvin West, board treasurer and head of the finance committee, at the Oct. 17 meeting. City National Bank of Florida is a Miami-based community bank with 15 branches in the state.
Mr. West said account protection was not a concern, because collateralized funds are always protected.
The issue, he said, was ensuring the authority would have speedy access to its funds if a bank failed to continue operating, a concern many businesses and organizations are having amidst the financial crisis.
The authority, which operates on an annual budget of about $8 million, is to open two checking accounts and three money market accounts at City National Bank. For now, it's leaving one money market account at Wachovia, said Meredith Nation, authority deputy director.
But the agency is searching for a better interest rate at Wachovia or other institutions. Its current rate is 1.35% — the rate is variable at the Federal Fund rate minus .15. "I need a good interest rate for the money market accounts," she said.
Ms. Nation said the agency is still to determine the exact balance breakdown as it's in the process of completing all required paperwork to make the bank move.