(NASHVILLE), February 28, 2017 — The full Senate voted overwhelmingly on Monday in favor of legislation sponsored by Senator Doug Overbey (R-Maryville) to require that funds donated to a campaign be deposited and maintained in a traditional bank or credit union account insured by the Federal Deposit Insurance Corporation (FDIC). Current law allows campaign funds to be invested in a private or publicly traded company, causing ethics concerns and a gap in transparency in the state’s campaign finance laws.
Senator Overbey, who is Chairman of the Senate Ethics Committee, said the legislation would put Tennessee in line with other states that limit lawmakers to maintain funds in federally-backed accounts.
“I think we all understand that campaign funds should not be invested in private companies,” said Senator Overbey. “This legislation will end that practice. Campaign funds should only be placed in bank accounts, CDs (Certificates of Deposits), or other safe investment vehicles, not in private corporations. Such investments should be off limits.”
The legislation comes after an audit showed a former member of the Tennessee House of Representatives invested $100,000 in campaign funds in a company owned by a donor.
Under Senate Bill 377, sponsored by Senator Doug Overbey (R-Maryville), any investment not authorized would be prohibited and the candidate, or in the case of a multicandidate political campaign committee, the treasurer, would be subject to a civil penalty by the Registry of Election Finance of not more than $10,000 or 115 percent of the amount invested. It also requires that any interest, dividends or income earned on campaign funds by an investment made legally, such as CDs, be reported on the candidate’s financial disclosure.
The bill now goes to the House of Representatives Local Government Subcommittee where it is sponsored by Representative Gerald McCormick (R-Chattanooga).