75R10909 GCH-F
By Marchant H.B. No. 3334
Substitute the following for H.B. No. 3334:
By Smith C.S.H.B. No. 3334
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to securities eligible to secure a deposit of public
1-3 funds.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 2257.002(5), Government Code, is amended
1-6 to read as follows:
1-7 (5) "Eligible security" means:
1-8 (A) a surety bond;
1-9 (B) an investment security; [or]
1-10 (C) an ownership or beneficial interest in an
1-11 investment security, other than an option contract to purchase or
1-12 sell an investment security;
1-13 (D) a fixed-rate collateralized mortgage
1-14 obligation that has an expected weighted average life of 10 years
1-15 or less and does not constitute a high-risk mortgage security; or
1-16 (E) a floating-rate collateralized mortgage
1-17 obligation that does not constitute a high-risk mortgage security.
1-18 SECTION 2. Subchapter A, Chapter 2257, Government Code, is
1-19 amended by adding Section 2257.0025 to read as follows:
1-20 Sec. 2257.0025. HIGH-RISK MORTGAGE SECURITY. (a) For
1-21 purposes of this chapter, a fixed-rate collateralized mortgage
1-22 obligation is a high-risk mortgage security if the security:
1-23 (1) has an average life sensitivity with a weighted
1-24 average life that:
2-1 (A) extends by more than four years, assuming an
2-2 immediate and sustained parallel shift in the yield curve of plus
2-3 300 basis points; or
2-4 (B) shortens by more than six years, assuming an
2-5 immediate and sustained parallel shift in the yield curve of minus
2-6 300 basis points; and
2-7 (2) is price sensitive; that is, the estimated change
2-8 in the price of the mortgage derivative product is more than 17
2-9 percent, because of an immediate and sustained parallel shift in
2-10 the yield curve of plus or minus 300 basis points.
2-11 (b) For purposes of this chapter, a floating-rate
2-12 collateralized mortgage obligation is a high-risk mortgage security
2-13 if the security:
2-14 (1) bears an interest rate that is equal to the
2-15 contractual cap on the instrument; or
2-16 (2) is price sensitive; that is, the estimated change
2-17 in the price of the mortgage derivative product is more than 17
2-18 percent, because of an immediate and sustained parallel shift in
2-19 the yield curve of plus or minus 300 basis points.
2-20 SECTION 3. This Act takes effect September 1, 1997.
2-21 SECTION 4. 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.