state banking regulators had the option to allow banks 

 to retain foreclosed property for a longer period, the 

 problem was that the decision rested with the regulators 

 and not with the banks. Mr. Cadby ended his testimony 

 with a suggestion that LC 476 be amended to allow banks 

 to hold foreclosed property for 15 years and that the 

 bill apply retroactively to current foreclosed land. 



Jack Heyneman, Northern Plains Resource Council, 

 expressed the concern that LC 476 would encourage bank 

 speculation in real estate. 



Continuation of State Linked Deposit Program (LC 477 and 

 LC 478) 



Senator Neuman presented LC 477, which would extend 

 authorization for the agricultural loan linked deposit 

 program. Senator Neuman indicated that the bill would 

 make several key revisions to the program, which was 

 initiated during the March 1986 Special Session. These 

 revisions included: 



(1) The term for linked deposit loans would be 

 increased from six months to one year. 



(2) Participating financial institutions would be 

 allowed to write linked deposit loans at an 

 interest rate of 3 percentage points greater 

 than the rate payable to the state, rather 

 than at 2% as provided under the existing law. 



(3) The loan obligation itself could be used to 

 satisfy the financial pledging requirement 

 governing security for state investments. 



102 



