Our third and final means of allocation is the Specific Opportunity Program. Unlike the Community Services Program, it looks to the future instead of to the past. Its purpose is to provide additional deposits to those banks willing to undertake specific community-oriented projects of their own choosing in consequence of such awards. It affords a clear "linkage" between State time deposits and specific community projects. In 1968 this Program was termed "Housing", in that it sought to link State deposits to the construction financing of public housing under Sec. 221 (d)(3) of the National Housing Act. While successful in this field, we believe that banks should be allowed greater flexibility of choice for 1969, in selecting areas of linkage in cooperation with this office. Accordingly, we have set aside both Regular Funds and State Authority Funds for deposit in banks making specific linkage proposals to this office. Terms and interest rates will be flexible, so that all Illinois banks may participate. Each of the above programs is described in greater detail later in this report. A section is devoted to each, providing full information as to how and when any and all Illinois banks can make application under each program. A year ago, on establishing this new Program, we noted that the people's money should be used for the people's benefit. So long as the State has an earmarked fund structure that prevents efficient and timely allocation and expenditure of funds, it will have large fund balances. We believe such balances, properly used, can be a constructive tool of fiscal progress within Illinois. Our Program has as its primary goal for 1969, the creation of an active, working partnership with Illinois banks, to assure that State fund balances become a dynamic resource. Whatever success our Program has achieved in the past can be attributed in good part to bank cooperation, advice and criticism. For this we are deeply grateful. The response and acceptance by the Illinois banking community of a deposit system which is known, consistent and rewarding, is a tribute to their sense of responsibility and regard for progress. As was true last year, this report is a policy outline and not a blueprint. With further experience and study, our guidelines and procedures may be modified. Essentially, however, this report will indicate when and how any bank in the State can enter into a creative partnership with my office, to convert idle funds into active funds, for the public benefit. SPRINGFIELD, ILLINOIS Z *Outstanding Deposits; future authority deposits will follow allocation priority established in this report. It is unlikely that substantial time deposits of Special State Authority funds will be made under the Basic Deposit Program in 1969. THE BASIC DEPOSIT PROGRAM Fund Allocation: $250,000,000 Regular State Funds: $100,000,000 The Basic Deposit Program acknowledges the right of all communities to share in the use of public funds, so long as they can demonstrate a need for deposits. Time deposits will be awarded under this program to any and all banks in the State that apply and meet the outlined criteria. Awards of funds under this program to major Chicago banks, however, will be limited to State Authority funds not awarded under the linked-deposit, Specific Opportunity Program, and only at competitive market rates. Banks may, if they choose, supplement their Basic Deposit by qualifying for additional funds under the Community Services and Specific Opportunity Sections of our Program. DEPOSIT CRITERIA 1) Conformity with applicable laws, regulations and 2) Proper fund utilization: bank loan/deposit ratios *Outstanding deposits; no significant additional deposits of 41-658 070-25 DEPOSIT TERMS 1) 2) 3) 4) 1) 2) 3) A. Regular State Funds Most awards to be effective October 1, 1969, for a Basic Deposit awards will be made to newly chartered banks any time during the year, in most instances will be $50,000, and will mature on the following October 1. Interest rate minimums will be established at the time applications are solicited; it is unlikely funds will be awarded at rates below the established minimum. Banks applying at rates above the established minimum will be awarded proportionately larger deposits. B. State Authority Deposits Awards will be made throughout the year when such funds become available for investment, and for varying maturities. [See Method of Allocation] All deposits will be at the highest available interest rates, subject to Regulation Q, Federal Reserve System. A list will be maintained of banks interested in bidding for such funds. All banks wishing to be placed on this list should notify the Treasurer's Office. METHOD OF ALLOCATION A. Regular State Funds Awards will be made through a process of mathematic proration between the funds available for deposit, and the relationship of a bank's total loans to the total outstanding loans of all qualified banks applying for State funds. An interest incentive feature is included to assure that banks applying at rates above the established minimum receive proportionately large deposits. |