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Let's discuss the approved investments for public funds in LA
Posted on 9/18/14 at 7:02 am
Posted on 9/18/14 at 7:02 am
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I've had varying degrees of involvement with public money, but it blows my mind how illogical the approved investments can be.
A municipality can invest in investment grade commercial paper, as well as municipal bonds from any state in the US, but it CANNOT invest money in a bank CD unless it is domiciled or had a branch in Louisiana. It blows my mind that brokered CDs are off the table for any public money in the state of Louisiana, but you are free and clear to buy California municipal bonds.
I've had varying degrees of involvement with public money, but it blows my mind how illogical the approved investments can be.
A municipality can invest in investment grade commercial paper, as well as municipal bonds from any state in the US, but it CANNOT invest money in a bank CD unless it is domiciled or had a branch in Louisiana. It blows my mind that brokered CDs are off the table for any public money in the state of Louisiana, but you are free and clear to buy California municipal bonds.
1
Posted on 9/18/14 at 8:25 am to slackster
While the muni bond market is risky, I can see some instances where you wouldn't want to ban it.
Putting government money in CD's is really dumb. This was just some kind of vote buying legislation from some time in the past that isn't worth changing because no one is actually buying CD's.
Additionally, allowing for OOS CD's would bring in the risk of investing with a secretly failing bank that happens to be selling high interest CD's to keep liquidity. Even worse, buying some international CD's a la Allen Stanford.
Putting government money in CD's is really dumb. This was just some kind of vote buying legislation from some time in the past that isn't worth changing because no one is actually buying CD's.
Additionally, allowing for OOS CD's would bring in the risk of investing with a secretly failing bank that happens to be selling high interest CD's to keep liquidity. Even worse, buying some international CD's a la Allen Stanford.
Posted on 9/18/14 at 10:30 am to TheHiddenFlask
quote:
This was just some kind of vote buying legislation from some time in the past that isn't worth changing because no one is actually buying CD's.
I'm sure this is it. Probably some lobbyist representing some group of state banks many years ago got this law passed to force banks to keep money in state. But no one buys CDs currently, so it doesn't matter.
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