State of Wisconsin Investment Board, Madison, is expanding a program to use its economic strength to bolster bank and thrift institutions in the state. Under the program, which has an $80 million annual allocation goal, SWIB purchases certificates of deposit issued by qualified banks and thrifts, according to a SWIB statement. The program provides deposits to the state's economy ... while providing a competitive rate of returns on funds invested by SWIB, according to the statement.
SWIB expanded the program, which it began in 1987, to purchase floating-rate CDs, as well as fixed-rate CDs ranging in maturity from three months to three years.
The floating rate allows banks to match floating-rate loans with floating-rate deposits, the SWIB statement said.
The CD program is part of the $6.8 billion state investment pool SWIB manages. SWIB oversees a total of $97 billion. The pool functions as the state's cash management fund and includes cash balances from state agencies and the $88 billion Wisconsin Retirement System, Vicki Hearing, information officer, said in an e-mail.
SWIB bought only $24 million in the program last year.
The amount of investments in the program was reduced for two reasons, Ms. Hearing said. Rating changes reduced the number of banks that were eligible for the program, and financial institutions with acceptable ratings had sufficient cash supplies. Many of the eligible financial institutions were not looking for additional cash.
Some 230 financial institutions have participated in the program.