Lawmakers hear briefing on linked deposit loan programs; experts urge modernization and outreach

Lawmakers on the Committee on Financial Institutions and Pensions heard an informational briefing March 6 on Kansas’ linked deposit loan programs and heard recommendations from bankers, the Missouri treasurer’s office and state treasury staff to modernize and better promote the programs.

Why it matters: Linked deposit programs use state idle funds invested by the treasury to provide below-market financing for eligible borrowers (for example, small businesses, farmers, multifamily housing and local government projects). Witnesses told the committee that Kansas’ programs have been underused and recommended structural changes and additional outreach to drive higher utilization and measurable local economic benefits.

Alex Orell, senior vice president for government relations at the Kansas Bankers Association, urged modernization and said the current Kansas programs are fragmented and operate in silos. He noted the authorization level for Kansas linked deposit programs is just under $200 million and said loan limits and short terms have limited take-up. Orell said several Kansas programs have low loan limits (for example, $250,000 in the Ag Production and economic recovery programs) and short allowable note terms (the housing program permits 5-year notes, which Orell said is not…