Wednesday, February 18, 2009

Zweifel: Remove Interest Cap On State Bank Investments

State Treasurer Clint Zweifel is calling on lawmakers to increase eligibility in the state's Linked Deposit Program, to reinvest $1 billion dollars statewide.
Zweifel's plan would increase eligibility in Linked Deposit and increase the amount of state funds invested in Missouri community banks.
"I am looking forward to talking about Invest in Missouri with all legislative leaders, so that we can start putting investments back into Missouri as soon as possible," Zweifel said Tuesday.
The Linked Deposit Program is designed to place State funds with community banks at below-market rates so the community bank can issue loans to borrowers at a reduced rate. Loan savings are usually 2 to 3 percent to the borrower, according to the Treasurer's office. The program, which has a statutory $720 million cap on it, is about 30-percent utilized currently.
Zweifel's plan would streamline the application process and reduce obstacles for program eligibility.
Current state law actually includes a disincentive, discouraging the state from placing deposits in community banks, according to Zweifel. "Missouri is one of two states in the nation, and the State Government is the only government entity in Missouri, which caps the interest rate taxpayers receive when their funds are invested in community banks," Zweifel said. "By removing the cap, and combining with the Missouri Linked Deposit Program, our office can reinvest $1 billion in Missouri communities."
Zweifel said a changing the interest-rate cap would result in an additional $10 million dollars coming back to taxpayers.

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