Security without collateralization: how a banking innovation is simplifying the process of safeguarding public deposits.

rule finance officers tasked with managing millions of dollars in cash set bys must constantly balance the necessity of preserving principal with the desirability of attaining the best possible investment go [i]or[/i] come backs One common investment instrument for state and local managements is bank certificates of deposit, which generally pay interest above that of U Treasury securities. In practice, however, investing in CD generally requires collateralization-a high-priced difficult, and time-consuming process. More than $55 billion in CD is now held and collateralized by the agency of banks for public funds depositors.

Almost all states have enacted statutes requiring that public deposits in exces