By: Price H.B. No. 1793
73R5743 LJD-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the custodians of securities pledged to secure state
1-3 funds.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Sections 404.031(f) and (g), Government Code, are
1-6 amended to read as follows:
1-7 (f) Instead of depositing pledged securities with the
1-8 treasurer, a state depository may deposit pledged securities with
1-9 the Federal Reserve Bank of Dallas or the Federal Home Loan Bank of
1-10 Dallas. The securities shall be held by the bank to secure funds
1-11 deposited by the treasurer in the state depository pledging the
1-12 securities. When the pledged securities are deposited, the bank
1-13 <Federal Reserve Bank of Dallas> may apply book entry to the
1-14 securities. The records of the bank <Federal Reserve Bank of
1-15 Dallas> shall at all times reflect the name of the state depository
1-16 depositing the pledged securities, and the bank shall issue an
1-17 advice of transaction to the treasurer and the state depository
1-18 pledging the securities.
1-19 (g) In this section, "permitted institution" means a Federal
1-20 Reserve Bank, a Federal Home Loan Bank, a "clearing corporation" as
1-21 defined by Section 8.102(c), Business & Commerce Code, the Texas
1-22 Treasury Safekeeping Trust Company, a state depository, and any
1-23 state or nationally chartered bank or trust company that is
1-24 controlled by a bank holding company that controls a state
2-1 depository. Neither the state depository that pledges the
2-2 securities nor any bank that is controlled by a bank holding
2-3 company that controls that state depository may be the permitted
2-4 institution with respect to the particular securities pledged by
2-5 that state depository. A custodian holding in trust securities of
2-6 a state depository under Subsection (e) may deposit the pledged
2-7 securities with a permitted institution if the permitted
2-8 institution is the third party to the transaction. The securities
2-9 shall be held by the permitted institution to secure funds
2-10 deposited by the treasurer in the state depository pledging the
2-11 securities. On receipt of the securities, the permitted
2-12 institution shall immediately issue to the custodian an advice of
2-13 transaction or other document evidencing the deposit of the
2-14 securities. When the pledged securities held by a custodian are
2-15 deposited, the permitted institution may apply book entry
2-16 procedures to the securities. The records of the permitted
2-17 institution shall at all times reflect the name of the custodian
2-18 depositing the pledged securities. The custodian shall immediately
2-19 issue and deliver to the treasurer controlled trust receipts for
2-20 the pledged securities. The trust receipts shall indicate that the
2-21 custodian has deposited with the permitted institution the pledged
2-22 securities held in trust for the state depository pledging the
2-23 securities. A legal action or proceeding brought by or against the
2-24 state, arising out of or in connection with the duties of the state
2-25 depository, the custodian, or other permitted institution under
2-26 this subchapter must be brought and maintained in state district
2-27 court in Travis County. In this section, "control" and "bank
3-1 holding company" have the meanings assigned by Article 2, Chapter
3-2 I, The Texas Banking Code (Article 342-102, Vernon's Texas Civil
3-3 Statutes).
3-4 SECTION 2. The importance of this legislation and the
3-5 crowded condition of the calendars in both houses create an
3-6 emergency and an imperative public necessity that the
3-7 constitutional rule requiring bills to be read on three several
3-8 days in each house be suspended, and this rule is hereby suspended,
3-9 and that this Act take effect and be in force from and after its
3-10 passage, and it is so enacted.