Competition Was Key to Saving Thousands of Dollars for the State

BATON ROUGE, LA – For the first time in the state’s history, the Louisiana Department of the Treasury went online to accept competitive bids on $13 million worth of certificates of deposits, resulting in increased earnings for the state, according to State Treasurer John Kennedy.

This is a first for us in two respects. Its the first time Louisiana has ever bid out its CDs and the first time we’ve ever done it online over the Internet, said Treasurer Kennedy. We used technology to open up state government and to increase competition among banks for CDs. Competition is good for the state, and it helps us get a better rate of return on your tax dollars.

The Treasury awarded CDs to banks with the highest bids by conducting an auction on BidLouisiana.com, a new Web site built and administered by the Grant Street Group, parent of MuniAuction, Inc. Seven Louisiana banks participated in the 30-minute auction, submitting a total of 16 bids.

BidLouisianabenefits the state and Louisiana banks, said Treasurer Kennedy. Banks can place bids in a matter of seconds and continue to bid on CDs right up to the end of the auction. The use of the Internet also increases the availability of CDs for banks that may have otherwise been unable to get them.

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 banks bid consisted of the amount of money they wanted and the interest rate they would pay, with the minimum interest rate being 4.13 percent. As a result of competitive bidding, the average rate on the selected CDs was 4.167 percent, which resulted in over $5,000 in increased earnings over the market rate for six months.

By law, the Department of the Treasury may place for competitive bidding up to 20% of state funds determined available for CD investment, and will continue 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 at (225) 342-0020.

Contact:
Sarah Mulhearn, Communication Director
(225) 342-0012