Analysis of CD Placement Programs

Analysis of CD Placement Programs
December 21, 2009 Posted by: Melina Hadiwono, CFA

To ensure the product is appropriate for their defined risk and liquidity tolerance, we believe investors and their boards should be fully aware prior to investing of the various issues CD programs can present, including liquidity risk, low transparency to bank failure, high penalties for early withdrawal which may cause loss of principal and other factors.

Investment policies should be carefully reviewed to ensure CD placement program compatibility.

Investors should continue to monitor that there is no liquidity need for the CD-invested cash. Transparency into the underlying bank being invested in is essential to ensure that the $250K maximum is not exceeded.

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