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Article: Keeping low-rate muni cash: playing on a tilted field. (local banks competing with other financial institutions for local government cash)
- Article from:
- American Banker
- Article date:
- August 26, 1997
- Author:
CopyrightCOPYRIGHT 1997 SourceMedia, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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As state and local governments and school boards fight to survive loss of federal aid, many are taking a harder look at how they can generate revenue by better investing their short-term funds.
This means that the traditional approach of leaving these funds in local banks and accepting whatever return the banks offer is being replaced by a search for new investment outlets. These once stable community bank customers are now investing deposits in instruments offered by money-center institutions and even in offshore assets.
While many local bankers bemoan the loss of local deposits, we must admit that in some instances the banks don't deserve to keep these ...