Tarrant lawmaker seeks to create Texas Bullion Depository
Call it the Rick Perry gold rush: The governor wants to bring the state's gold reserves back from a New York vault to Texas.
And he may have legislative support to do it. Freshman Rep. Giovanni Capriglione, R-Southlake, is carrying a bill that would establish the Texas Bullion Depository, a secure state-based bank to house $1 billion worth of gold bars owned by the University of Texas Investment Management Co., or UTIMCO, and stored by the Federal Reserve.
The idea isn't entirely new. Some Republicans worked on a gold bill last session that was never filed. And gold-standard-backing Ron Paul, the former Lake Jackson congressman, has raised repeated concerns about the safety of states' gold supplies.
"If you think gold is a hedge, or a protection, you always want it as close to the individual and the entity as possible," Paul told The Texas Tribune on Thursday. "Texas is better served if it knows exactly where the gold is rather than depending on the security of the Federal Reserve."
Bringing Texas' gold home has gained traction this session because of Perry's vocal support. On conservative radio host Glenn Beck's show Tuesday, the governor said Texas is "in the process" -- the legislative process, he later clarified -- of "bringing gold that belongs to the state of Texas back into the state."
He argued that the state is at least as capable as the Federal Reserve of safeguarding Texas' "physical gold."
"If we own it," Perry said, "I will suggest to you that that's not someone else's determination whether we can take possession of it back or not."
Rep. Lon Burnam, D-Fort Worth, said he is familiar with Capriglione's bill but is skeptical that it addresses a legitimate problem facing the state.
"We've got plenty of real problems that we're not going to deal with this session," Burnam said. "Let's deal with them."
Capriglione said he was at a Tea Party event in Tarrant County this year where Perry spoke about the state's gold investments as an economic development tool. Since then, he has worked with Perry's office on the bill.
"Something on the scorecards of a lot of these businesses in deciding whether they want to come to Texas is stability and gold as being one of those items," Capriglione said. "I think it's been in his consciousness for a while in trying to get some sort of depository in the state of Texas."
He has also spoken with UTIMCO, which owns the 6,643 gold bars housed underground in New York City.
"We're trying to figure out the right amount of gold to have here in Texas," Capriglione said.
"We don't want just the certificates. We want our gold. And if you're the state of Texas, you should be able to get your gold."
The United States and many other countries stopped pegging their currencies to the gold standard decades ago. Capriglione said the bill is not about putting Texas on its own gold standard. Rather, a depository would give the state a reputation as being more financially secure in the event of a financial crisis.
'Cures a problem'
"For us to have our own gold, a lot of the runs on the bank and those types of things, they happen because people are worried that there's nothing there to back it up," Capriglione said. "So I think this cures a problem before it can happen."
Transporting gold from New York City or other banks to Texas would be impractical from a security and logistics standpoint, Capriglione said.
He believes that it makes more sense to sell the gold that Texas has elsewhere and repurchase it within state lines.
He said the measure wouldn't pose a significant expense, because the gold bars could be safeguarded in a small area, no bigger than 20 square feet.
Capriglione said he is working to revise the bill to address some concerns.
He plans to make sure the bill would not cause the state to change its asset portfolio to be more heavily invested in gold.
To lower costs, he expects to change the language to allow the private sector to handle some of the administrative expenses of building and running the depository.
Such a bill might not divide lawmakers strictly along party lines. Sen. Rodney Ellis, D-Houston, called it "an interesting concept" but said he wants to learn more about it and talk to "colleagues in the financial industry" before weighing in on its merits.
Source:
The Texas Tribune
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