¶ … Investment Practices and Strategies in the U.S. Treasury Treasury Tax & Loan (TT&L) notes

This program was established in 1978 to provide Treasury with an effective tax collection mechanism designed to assist in balancing the Treasury General Account (TGA). Through this program the Treasury collaborates with over 9000 commercial financial organizations whose mandate is tax payment collection. Almost ten percent of these institutions also hold funds and pay interest to Treasury. The program is divided into three sections collectors, retainers, and investors. The collectors, which make the majority receive payments from customers and remit the funds to Treasury's account. Retainers unlike the collectors retain specific amount subject to interest and the funds can be called by the Treasury. The investors, collect, retain and...

It also helps Treasury achieve the target balance in the Treasury General Account. However, the program has some drawbacks, and one major one is that it subjects treasury to concentrating risks (State of Washington Office of Financial Management, 2010). It also possesses challenges with capacity, for example, in 2006 a third of Treasury operating funds were invested in this program's deposits with a proximately 8 billion daily average.
Term Investment Option (TIO) offering

This program was initiated in 2003 and unlike the TT&L, offers the Treasury a higher rate of return.…