By:  Sibley                                            S.B. No. 551
                                 A BILL TO BE ENTITLED
                                        AN ACT
    1-1  relating to excluding certain sums related to asset-backed
    1-2  securities from the definition of interest.
    1-3        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-4        SECTION 1.  Subtitle 1, Title 79, Revised Statutes (Article
    1-5  5069-1.01 et seq., Vernon's Texas Civil Statutes), is amended by
    1-6  adding Article 1.13 to read as follows:
    1-7        Art. 1.13.  CERTAIN SUMS EXCLUDED FROM DEFINITION OF INTEREST
    1-8  WITH RESPECT TO ASSET-BACKED SECURITIES.  (a)  In this article:
    1-9              (1)  "Asset-backed securities" means debt obligations
   1-10  or certificates of beneficial ownership that are:
   1-11                    (A)  part of a single issue or single series of
   1-12  securities aggregating $1,000,000 or more issuable in one or more
   1-13  classes;
   1-14                    (B)  secured by a pledge of or represent an
   1-15  undivided ownership interest in one or more financial assets,
   1-16  either fixed or revolving, that by their terms convert into cash
   1-17  within a finite time period plus any rights or other assets
   1-18  designed to assure the servicing or timely distribution of proceeds
   1-19  to security holders; and
   1-20                    (C)  issued by a pass-through entity for a
   1-21  business, commercial, agricultural, investment, or similar purpose.
   1-22              (2)  "Pass-through entity" means a corporation, limited
   1-23  liability company, association, general partnership, registered
   1-24  limited liability partnership, limited partnership or business,
    2-1  grantor or common-law trust under state law, or segregated pool of
    2-2  assets under federal tax law that, on the date of original issuance
    2-3  of asset-backed securities, does not have significant assets other
    2-4  than:
    2-5                    (A)  assets pledged to or held for the benefit of
    2-6  holders of the asset-backed securities; or
    2-7                    (B)  assets pledged to or held for the benefit of
    2-8  holders of other asset-backed securities issued on an earlier date.
    2-9        (b)  Notwithstanding Article 1.01 of this subtitle, for
   2-10  purposes of this title the term "interest" excludes any sums paid
   2-11  or passed through, obligated to be paid or to be passed through, or
   2-12  not paid as a result of a discounted sale price to the holders of
   2-13  asset-backed securities by a pass-through entity, in connection
   2-14  with the original issuance or otherwise, regardless of the
   2-15  denomination of the sums under the terms of the asset-backed
   2-16  securities.  Sums excluded from the definition of interest by this
   2-17  article are not subject to Article 1.04 of this subtitle.
   2-18        (c)  This article does not affect or otherwise apply to
   2-19  conventional interest, as defined by Article 1.01 of this subtitle,
   2-20  paid, charged, or received on the ultimate assets pledged to or
   2-21  held for the benefit of the holders of asset-backed securities.
   2-22        SECTION 2.  The importance of this legislation and the
   2-23  crowded condition of the calendars in both houses create an
   2-24  emergency and an imperative public necessity that the
   2-25  constitutional rule requiring bills to be read on three several
   2-26  days in each house be suspended, and this rule is hereby suspended,
   2-27  and that this Act take effect and be in force from and after its
    3-1  passage, and it is so enacted.