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Saint Lawrence Seaway Development Corporations's Acquisition of Certificates of Deposit Under the Minority Bank Deposit Program

Published: May 12, 1978. Publicly Released: Nov 17, 1982.
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Highlights

The Minority Bank Deposit Program was initiated in October 1970 to stimulate the formation and growth of minority banks. The Saint Lawrence Seaway Development Corporation has participated in the Minority Bank Deposit Program since its inception. The Corporation routinely acquires certificates of deposit when funds are available, and, as funds have become available, certificates of deposit have been acquired from minority banks throughout the country. A composite of the Corporation's portfolio of 36 certificates of deposit valued at $720,000 and held at 35 minority banks as of February 1978 revealed the following: (1) one certificate at 4.5 percent; (2) one at 4.88 percent; (3) six at 5 percent; (4) one at 5.25 percent; (5) ten at 5.5 percent; (6) two at 5.75 percent; and (7) fifteen at 6 percent. The prevailing interest rate for the period January 1977 through February 1978 was 6 percent. Based on a 6-percent interest rate, the amount of interest lost on these certificates was about $2,950. As the present certificates of deposit become renewable, the Corporation should obtain bids from all participating minority banks to assure equal opportunity to all participants and to maximize interest received. Prime consideration should be given to those banks granting government units a higher interest rate than the prevailing 6-percent rate. The Corporation should acquire longer term certificates of deposit, at higher interest rates, for that portion of the $720,000 for which no immediate cash need is foreseen.

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