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The End of Unlimited FDIC Insurance: Where to Invest Short Term Cash?

Unlimited FDIC insurance on non-interest-bearing deposits is set to expire at the end of 2012. If Congress does not extend the unlimited insurance program, the FDIC will only cover each depositor up to $250,000 in deposits. I want to maintain the safety of short term investments and I am not concerned in taking on risk with minimal yield reward. .Will this change how you manage your company's deposits? If so, where are you looking to invest short term cash?


Topic Expert
David OBrien
Title: Treasury Consultant
Company: EE Treasury
(Treasury Consultant, EE Treasury) |

Dear VP:

You do not really provide sufficient information to give a high quality answer. What is the size of your Portfolio? What does your investment policy say? What does your short term forecast say? Are thesee molnies on shore or off?

Generally corporate investments fall into the following categories:
*Government obligations
*Money Market Funds
*Asset Backed CP
*Direct Issurer CP
*Bank Time Deposits

There are advantages and to some extent risks associated with all of these instruments. First order of business would be to cover my questions, then select the investments accordingly.

David L. O'Brien, CTP
Consultant in Treasury

david waltz
Title: Assistant Treasurer
Company: Integrys Energy Group
(Assistant Treasurer, Integrys Energy Group) |

We are able to invest in most of David's listing. In addition, since there is risk in short-term investments as well, we also outsource part of the short-term investing function.

Given that there a people who do this for a living, and can tell you the ins and outs of why one CP issue is 2 basis points higher than another, it seems reasonable to rely on that expertise rather than expect your treasury folks, who have a lot of other day-to-day responsibilities, to become expert credit analysts in their "free time".


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