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cial negotiation. All of the background is to say to you that I think the speculation on what you can do in terms of a specific dollar amount is premature. Because of the management of the office in the past, you’re really not gonna know. It seems like the banks have not only tolerated what seems to be inefficency, but they have worked to maintain the status quo, haven’t they? Not necessarily. How about efforts the banks resisted to include savings and loans? You know the savings and loan question keeps coming up in the campaign, and yet I haven’t had any savings and loan people tell me that they’re willing to put the collateral up for state money. The other question that is a ramification of that, of the savings and loans, is if you’re gonna put it in savings and loans, why not in Merrill Lynch, why not Sears and Roebuck. The answer to that is, that anything that you put state money in, as far as I’m concerned, should be regulated by the state. Then when you start talking about whether they’re going to have state regulation, I suspect Sears and Roebuck’s not gonna be so interested. In 1968, in Illinois, Adlai Stevenson III as treasurer instituted something called the linked-deposit program. It was an effort to allocate state funds to banks who were willing to participate in certain publicly approved government programs low-income housing, student loans, things like that. Is it possible that such a program could work for Texas? Money simply cannot buy what it takes years in a down-ballot race like this to build. I think it’s possible that it could work; in fact, we are moving a little bit in that direction in terms of allowing industrial revenue bonds to be used as collateral, only if the industry has an A or a AA rating. What we have done in the past was some banks were allowed to use industrial revenue bonds and some weren’t, and, that leads to the whole question of the activities of the depository board. I think that you can have a system through those health-facility corporations that are being set up now, and the authorization was done by the legislature; those in the long run help the local economy. I think the track record of how well those have functioned is so new that we won’t know for a while, but that certainly is the same kind of thing that you’re talking about. That’s the kind of carrot that can be used to encourage banks to participate in those local programs. Tell me about the depository board. How much influence does the treasurer have among those three people? The depository board I think is an enigma. The treasurer has a great deal of influence, mainly because the depository board does not meet with any regularity or predictability. They seem to meet whenever they get up in the morning and their eggs are cooked right; now I feel good today, let’s have a meeting. Do they meet at the treasurer’s discretion? 1 don’t think the treasurer is the one who makes the decision. He certainly can call them, and I would like to think that in any board like this you’ve got a good enough situation where everybody will meet when they think it’s necessary. I frankly think that the depository board must establish a formula that is an economic formula for the fluctuation of the interest rate in Texas and does not depend on the caprice or the whim of the depository board. A good example of their activity was that they set the interest rate at 11% for a number of months while the going interest rate was 14. Then they met and moved the interest rate to 14% on the day the market dropped to 13, which is crazy both for the banks and for the treasurer’s office. The legislature, during the sunset review of the depository board, I think will address that question. And I think there is uniform agreement that an economic formula is to everybody’s interest. Now the question is, what is the formula going to be based on. Is it going to be based on a 30-day t-bill rate or a 90-day t-bill rate, and I I do not understand why the banks have tolerated the office being run in the fashion that it has. . . . frankly don’t know the answer to that. But I think the legislature will determine it Do you have any theories about why the depository board has been so capricious? I don’t have any idea. Getting back to a question related to the Illinois program, it seems that one of Stevenson’s reasons for instituting this approach was that previous to his linked-deposit program, state funds were used as rewards for political support. Is there evidence of that in this state? If you look at the contribution records to the state treasurer, you don’t really find a great inordinate amount of money from one bank as opposed to another. This has been kind of standard across the board. And here I think you get into a whole question, this business of contributions and special interests. I don’t know the answer to it. We’ve talked a lot about public funding of campaigns. And yet I look at a situation like, I don’t want my tax dollars to be used for Duke Embs to run for governor. I don’t know where you are able to establish the credibility of a candidate. If there were a way to ensure that a candidate has some credibility, and some opportunity and is very serious about a race, then maybe a public funding plan is a good way to do that. I really don’t know. I remember you saying when you announced that you had no compunction about taking contributions from Texas bankers. I assume you still feel the same way. Right. Now I wasn’t the beneficiary of THE TEXAS OBSERVER 5