1-1 By: Leedom S.B. No. 529
1-2 (In the Senate - Filed March 1, 1993; March 2, 1993, read
1-3 first time and referred to Committee on Finance; March 24, 1993,
1-4 reported favorably by the following vote: Yeas 12, Nays 0;
1-5 March 24, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Montford x
1-9 Turner x
1-10 Armbrister x
1-11 Barrientos x
1-12 Bivins x
1-13 Ellis x
1-14 Haley x
1-15 Moncrief x
1-16 Parker x
1-17 Ratliff x
1-18 Sims x
1-19 Truan x
1-20 Zaffirini x
1-21 A BILL TO BE ENTITLED
1-22 AN ACT
1-23 relating to the investment of public funds in collateralized
1-24 mortgage obligations.
1-25 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-26 SECTION 1. Subsection (a), Section 2, Public Funds
1-27 Investment Act of 1987 (Article 842a-2, Vernon's Texas Civil
1-28 Statutes), as amended by Chapters 39, 628, 693, and 750, Acts of
1-29 the 71st Legislature, Regular Session, 1989, is amended to read as
1-30 follows:
1-31 (a) An incorporated city or town, a county, a public school
1-32 district, a district or authority created under Article III,
1-33 Section 52(b)(1) or (2), or Article XVI, Section 59, of the Texas
1-34 Constitution, an institution of higher education as defined by
1-35 Section 61.003 of the Education Code, a hospital district, a fresh
1-36 water supply district, or any nonprofit corporation or public funds
1-37 investment pool created under The Interlocal Cooperation Act
1-38 (Article 4413(32c), Vernon's Texas Civil Statutes) acting on behalf
1-39 of any of those entities, or a navigation district organized under
1-40 Article III, Section 52, or Article XVI, Section 59, of the Texas
1-41 Constitution may, in accordance with this Act, purchase, sell, and
1-42 invest its funds and funds under its control in the following:
1-43 (1) obligations of the United States or its agencies
1-44 and instrumentalities;
1-45 (2) direct obligations of the State of Texas or its
1-46 agencies;
1-47 (3) other obligations, the principal of and interest
1-48 on which are unconditionally guaranteed or insured by the State of
1-49 Texas or the United States or its agencies and instrumentalities;
1-50 (4) obligations of states, agencies, counties, cities,
1-51 and other political subdivisions of any state having been rated as
1-52 to investment quality by a nationally recognized investment rating
1-53 firm and having received a rating of not less than A or its
1-54 equivalent;
1-55 (5) certificates of deposit issued by state and
1-56 national banks domiciled in this state that are:
1-57 (A) guaranteed or insured by the Federal Deposit
1-58 Insurance Corporation, or its successor; or
1-59 (B) secured by obligations that are described by
1-60 Subdivisions (1)-(4) of this subsection, which are intended to
1-61 include all direct federal agency or instrumentality issued
1-62 mortgage backed securities that have a market value of not less
1-63 than the principal amount of the certificates or in any other
1-64 manner and amount provided by law for deposits of the investing
1-65 entities;
1-66 (6) certificates of deposit issued by savings and loan
1-67 associations domiciled in this state that are:
1-68 (A) guaranteed or insured by the Federal Savings
2-1 and Loan Insurance Corporation, or its successor; or
2-2 (B) secured by obligations that are described by
2-3 Subdivisions (1)-(4) of this subsection, which are intended to
2-4 include all direct federal agency or instrumentality issued
2-5 mortgage backed securities that have a market value of not less
2-6 than the principal amount of the certificates or in any other
2-7 manner and amount provided by law for deposits of the investing
2-8 entities;
2-9 (7) prime domestic bankers' acceptances;
2-10 (8) commercial paper with a stated maturity of 270
2-11 days or less from the date of its issuance that either:
2-12 (A) is rated not less than A-1, P-1, or the
2-13 equivalent by at least two nationally recognized credit rating
2-14 agencies; or
2-15 (B) is rated at least A-1, P-1, or the
2-16 equivalent by at least one nationally recognized credit rating
2-17 agency and is fully secured by an irrevocable letter of credit
2-18 issued by a bank organized and existing under the laws of the
2-19 United States or any state thereof; <and>
2-20 (9) fully collateralized repurchase agreements having
2-21 a defined termination date, secured by obligations described by
2-22 Subdivision (1) of this subsection, pledged with a third party
2-23 selected or approved by the political entity, and placed through a
2-24 primary government securities dealer, as defined by the Federal
2-25 Reserve, or a bank domiciled in this state; and
2-26 (10) collateralized mortgage obligations directly
2-27 issued by a federal agency or instrumentality of the United States,
2-28 the underlying security for which is guaranteed by an agency or
2-29 instrumentality of the United States.
2-30 SECTION 2. Section 2256.006, Government Code, as added by
2-31 Section 1, S.B. No. 248, Acts of the 73rd Legislature, Regular
2-32 Session, 1993, is amended to read as follows:
2-33 Sec. 2256.006. AUTHORIZED INVESTMENTS: OBLIGATIONS OF, OR
2-34 GUARANTEED BY, GOVERNMENTAL ENTITIES. The following are authorized
2-35 investments under this subchapter:
2-36 (1) obligations of the United States or its
2-37 instrumentalities;
2-38 (2) direct obligations of this state or its agencies;
2-39 (3) collateralized mortgage obligations directly
2-40 issued by a federal agency or instrumentality of the United States,
2-41 the underlying security for which is guaranteed by an agency or
2-42 instrumentality of the United States;
2-43 (4) other obligations, the principal and interest of
2-44 which are unconditionally guaranteed or insured by this state or
2-45 the United States or its instrumentalities; and
2-46 (5) <(4)> obligations of states, agencies, counties,
2-47 cities, and other political subdivisions of any state rated as to
2-48 investment quality by a nationally recognized investment rating
2-49 firm not less than A or its equivalent.
2-50 SECTION 3. (a) Except as provided by Subsections (b) and
2-51 (c) of this section, this Act takes effect September 1, 1993.
2-52 (b) If S.B. No. 248, Acts of the 73rd Legislature, Regular
2-53 Session, 1993, finally passes and is approved by the governor,
2-54 Section 1 of this Act has no effect.
2-55 (c) If S.B. No. 248, Acts of the 73rd Legislature, Regular
2-56 Session, 1993, does not finally pass or is not approved by the
2-57 governor, Section 2 of this Act has no effect.
2-58 SECTION 4. The importance of this legislation and the
2-59 crowded condition of the calendars in both houses create an
2-60 emergency and an imperative public necessity that the
2-61 constitutional rule requiring bills to be read on three several
2-62 days in each house be suspended, and this rule is hereby suspended.
2-63 * * * * *
2-64 Austin,
2-65 Texas
2-66 March 24, 1993
2-67 Hon. Bob Bullock
2-68 President of the Senate
2-69 Sir:
2-70 We, your Committee on Finance to which was referred S.B. No. 529,
3-1 have had the same under consideration, and I am instructed to
3-2 report it back to the Senate with the recommendation that it do
3-3 pass and be printed.
3-4 Montford,
3-5 Chairman
3-6 * * * * *
3-7 WITNESSES
3-8 FOR AGAINST ON
3-9 ___________________________________________________________________
3-10 Name: Bill Melton, Dallas County Treasurer x
3-11 Representing: Dallas County
3-12 City: Dallas
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3-14 Name: John Matthews x
3-15 Representing: Rauscher Pierce - Dallas Co.
3-16 City: Dallas
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