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|Rutherford Works on State Finances in Light Over Federal Debt Ceiling Fiasco
|(IRN) -- The state treasurer says treasury bonds are still a viable option for state investments if interest rates are reasonable.
State Treasurer Dan Rutherford says he has been meeting with investment experts in his office twice daily to explore options to keep the state's investments safe. He says in no way will he risk the state's two biggest portfolios that his office oversees, worth about $17 billion combined.
Rutherford says there will likely be a small amount of treasury bonds available when $7 billion in state funds and local funds overseen by the treasurer become liquid and must be reinvested in less than 30 days. He believes treasury bonds will remain safe even if Congress can't reach an agreement on raising the debt ceiling by the Aug. 2 deadline.
But with other states likely scrambling to invest in treasury bonds and return rates likely to be low, Rutherford remains committed to another option which would funnel state money into non-interest bearing FDIC-insured accounts. Unlike individual FDIC insurance which covers total deposits of up to $250,000, a special provision for state treasurers allows a higher liability limit. Putting money in non-interest bearing accounts means the state would not get $5 million in interest per month, based on June interest return rates.
"Taxpayers deserve to earn as much interest on their state portfolio as possible but asset security is the priority," Rutherford said Friday.
The required length of investment in treasury bonds could also weigh on the decision, as the state must be able to access cash at certain points in time to pay bills. The treasurer's office says a combination of treasury bonds and FDIC accounts may also be a scenario.
(Illinois Radio Network)
|07 30 11 by Newsroom
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