The State Treasurer supports local banks and small businesses through the certificate-of-deposit (CD) program, while still earning as much on taxpayer dollars as it would if invested in other securities.
Under the program, banks with their primary offices in Colorado may contact the Treasury each Monday to obtain that week's rate for the purchase of 91, 182, or 364-day certificates of deposit (CD). Before a bank may submit a bid, the Treasury carefully screens the bank's financial records and determines the maximum amount it may borrow. Within a bank's permitted figure, the Treasury will lend the bank amounts between $100,000 and $20 million and receive a CD in return.
By law, the Treasury's objectives are first and foremost to protect the taxpayers money. This is why the Treasury screens the banks so carefully. Second, the Treasury must keep sufficient cash on hand to pay the state's bills so, unfortunately, this limits the total amount we can lend to banks. Finally, the Treasury tries to maximize earnings on taxpayers' dollars.
This CD program not only provides a fair return for the taxpayer, it also benefits Colorado's banks and businesses.
Although this program is available to all Colorado-based banks, many of the CDs are purchased from banks located outside of the Front Range. These banks typically use the money to make short-term loans to ranchers, farmers, and small business owners in their local communities.