Treasury Auctions $13 Million in Certificates of Deposit Online

State government needs to embrace technology in order to do a better job for taxpayers. Whether its something as simple as making interactive forms available on an agency’s Web site or as complex as taking credit card payments over the Internet, Louisiana citizens ought to have the opportunity and convenience of going online to do business with the state.

At the Louisiana Department of the Treasury, we are putting technology to work for taxpayers. This year, we conducted our first online bond sale, made our Web site more interactive with downloadable forms and email notifications for unclaimed property, and published our annual report completely on the Internet.

I am extremely proud of one of our most recent online accomplishments, especially because of the savings it will mean for Louisiana taxpayers. This past April, the Treasury went online to accept competitive bids on $13 million worth of certificates of deposits. This was a first for us in two respects. It was the first time Louisiana has ever bid out its CDs and the first time we’ve done it online over the Internet.

We created a new Web site called BidLouisiana.com where we award CDs to banks with the highest bids. The Internet increases the availability of CDs for banks that may have otherwise been unable to get them. It also increases competition so that we can make the most money possible for the state.

Why does competition mean more money for Louisiana? Look at commercial auction Web sites. I have a friend who decided to auction some old videos online. Her original price was $5 a video, but because she chose to sell to the highest bidder, she created competition and ended up selling them for $20 a piece. When people (or banks in Bid Louisianas case) try to out-bid each other for your product, you get a better price when you make a sale.

Competition is a good thing, whether were talking about old videos or your tax dollars.

Seven Louisiana banks participated in our first online auction, submitting a total of 16 bids. The smallest CD amount a bank could bid on was $100,000, and no bank could bid on more than $5,000,000 in total deposits.

Each bid included the amount of money a bank wanted and the interest rate it was willing to pay. We set the minimum interest rate at 4.13 percent, and as a result of competition, the rate climbed to 4.167 percent. This resulted in over $5,000 in increased earnings for the state.

Competition was the key to making our first online auction of CDs a success, and we will continue to use it as a way to get the most money possible for state deposits. We are planning to conduct online auctions on the third Tuesday in January, April, July and October. For more information, visit the BidLouisiana Web site at www.bidlouisiana.com, or contact Cooper Harrell, Chief Investment Officer of the Louisiana Department of the Treasury at (225) 342-0020.