By:  Sibley                                            S.B. No. 551
       73R4535 LJD-F
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to excluding certain sums related to asset-backed
    1-3  securities from the definition of interest.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Subtitle 1, Title 79, Revised Statutes (Article
    1-6  5069-1.01 et seq., Vernon's Texas Civil Statutes), is amended by
    1-7  adding Article 1.13 to read as follows:
    1-8        Art. 1.13.  CERTAIN SUMS EXCLUDED FROM DEFINITION OF INTEREST
    1-9  WITH RESPECT TO ASSET-BACKED SECURITIES.  (a)  In this article:
   1-10              (1)  "Asset-backed securities" means debt obligations
   1-11  or certificates of beneficial ownership that are:
   1-12                    (A)  part of a single issue or single series of
   1-13  securities aggregating $1,000,000 or more issuable in one or more
   1-14  classes;
   1-15                    (B)  secured by a pledge of or represent an
   1-16  undivided ownership interest in a pool of assets, including loans,
   1-17  leases, insurance premiums, and credit card or other types of
   1-18  receivables; and
   1-19                    (C)  issued by a pass-through entity for a
   1-20  business, commercial, agricultural, investment, or similar purpose.
   1-21              (2)  "Pass-through entity" means a corporation, limited
   1-22  liability company, association, general partnership, registered
   1-23  limited liability partnership, limited partnership or business,
   1-24  grantor or common-law trust under state law, or segregated pool of
    2-1  assets under federal tax law that, on the date of original issuance
    2-2  of asset-backed securities, does not have significant assets other
    2-3  than:
    2-4                    (A)  assets pledged to or held for the benefit of
    2-5  holders of the asset-backed securities; or
    2-6                    (B)  assets pledged to or held for the benefit of
    2-7  holders of other asset-backed securities issued on an earlier date.
    2-8        (b)  Notwithstanding Article 1.01 of this subtitle, for
    2-9  purposes of this title the term "interest" excludes any sums paid
   2-10  or passed through, obligated to be paid or to be passed through, or
   2-11  not paid as a result of a discounted sale price to the holders of
   2-12  asset-backed securities by a pass-through entity, in connection
   2-13  with the original issuance or otherwise, regardless of the
   2-14  denomination of the sums under the terms of the asset-backed
   2-15  securities.  Sums excluded from the definition of interest by this
   2-16  article are not subject to Article 1.04 of this subtitle.
   2-17        (c)  This article does not affect or otherwise apply to
   2-18  conventional interest, as defined by Article 1.01 of this subtitle,
   2-19  paid, charged, or received on the assets pledged to or held for the
   2-20  benefit of the holders of asset-backed securities.
   2-21        SECTION 2.  The importance of this legislation and the
   2-22  crowded condition of the calendars in both houses create an
   2-23  emergency and an imperative public necessity that the
   2-24  constitutional rule requiring bills to be read on three several
   2-25  days in each house be suspended, and this rule is hereby suspended,
   2-26  and that this Act take effect and be in force from and after its
   2-27  passage, and it is so enacted.