The city’s Finance Department will begin to invest up to $50 million in local banks in the coming weeks through Certificates of Deposits (CDs) and other FDIC-insured deposits with an effort to distribute money to a range of local banks while ensuring the deposits are fully protected by FDIC insurance.
As a result, the $50 million in deposits with local banks will improve upon yields on current investment opportunities, while providing capital to local banks.
Local banks include Arizona chartered banks and banks with a physical presence in Maricopa County.
The finance department primarily invests in U.S. government and U.S. government-backed securities. As a result of the instability and uncertainty in global markets, investors have been fleeing to the safety of U.S. Treasury securities, pushing interest rates to historic lows, with two-year U.S. treasury notes currently yielding only 0.25 – 0.30 percent. Many local banks currently provide much higher rates on FDIC-insured CDs, making this a better investment for the city while providing funds for the local community.
The finance department will be accepting applications from local banks that have an interest in providing CDs and other FDIC-insured products to the city. Local banks can contact the city’s finance department at (602) 262-7166 for more information or to submit an application.
