Bill not drafted by TLC or Senate E&E.
Line and page numbers may not match official copy.
By: Armbrister S.B. No. 701
A BILL TO BE ENTITLED
AN ACT
1-1 relating to certain investment, securities, and other fiduciary
1-2 responsibilities of the comptroller.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 404.024(b), (f), (g), (h), and (i),
1-5 Government Code, is amended to read as follows:
1-6 (b) State funds not deposited in state depositories shall be
1-7 invested by the comptroller [treasurer] in:
1-8 (1) direct security repurchase agreements;
1-9 (2) reverse security repurchase agreements;
1-10 (3) direct obligations of or obligations the principal
1-11 and interest of which are guaranteed by the United States;
1-12 (4) direct obligations of or obligations guaranteed by
1-13 agencies or instrumentalities of the United States government;
1-14 (5) bankers' acceptances that:
1-15 (A) are eligible for purchase by the Federal
1-16 Reserve System;
1-17 (B) do not exceed 270 days to maturity; and
1-18 (C) are issued by a bank that has received the
1-19 highest short-term credit rating by a nationally recognized
1-20 investment rating firm;
1-21 (6) commercial paper that:
1-22 (A) does not exceed 270 days to maturity; and
1-23 (B) except as provided by Subsection (j), has
2-1 received the highest short-term credit rating by a nationally
2-2 recognized investment rating firm;
2-3 (7) contracts written by the treasury in which the
2-4 treasury grants the purchaser the right to purchase securities in
2-5 the treasury's marketable securities portfolio at a specified price
2-6 over a specified period and for which the treasury is paid a fee
2-7 and specifically prohibits naked-option or uncovered option
2-8 trading;
2-9 (8) direct obligations of or obligations guaranteed by
2-10 the Inter-American Development Bank, the International Bank for
2-11 Reconstruction and Development (the World Bank), the African
2-12 Development Bank, the Asian Development Bank, and the International
2-13 Finance Corporation that have received the highest credit rating by
2-14 a nationally recognized investment rating firm; and
2-15 (9) bonds issued, assumed, or guaranteed by the State
2-16 of Israel;
2-17 (10) obligations of a state or an agency, county,
2-18 city, or other political subdivision of a state: and
2-19 (11) mutual funds secured by obligations that are
2-20 described by Subdivisions (1) through (6).
2-21 (12) foreign currency for the sole purpose of
2-22 facilitating investments by state agencies that have the authority
2-23 to invest in foreign securities.
2-24 (f) The comptroller [treasurer] by rule may define
2-25 derivative investments other than those described by Subsection
3-1 (e). The treasury may not purchase investments defined by rule
3-2 adopted under this subsection in an amount that at the time of
3-3 purchase will cause the aggregate value of the investments to
3-4 exceed five percent of the treasury's total investments.
3-5 (g) To the extent practicable, the comptroller [State
3-6 Treasurer] shall give first consideration to Texas banks when
3-7 investing in direct security repurchase agreements.
3-8 (h) The comptroller [treasurer] may not use state funds to
3-9 invest in or purchase obligations of a private corporation or other
3-10 private business entity doing business in Northern Ireland unless
3-11 the corporation or other entity:
3-12 (1) adheres to fair employment practices; and
3-13 (2) does not discriminate on the basis of race, color,
3-14 religion, sex, national origin, or disability.
3-15 (i) Notwithstanding Subsection (b)(6)(B), the comptroller
3-16 [treasurer] may purchase commercial paper with a rating lower than
3-17 the rating required by that paragraph to provide liquidity for
3-18 commercial paper issued by the treasurer or an agency of the state.
3-19 SECTION 2. Subchapter G, Section 404.103(b), Government
3-20 Code, is amended to read as follows:
3-21 (b) The trust [Trust] company may enter into contracts and
3-22 trust agreements or other fiduciary instruments with the treasurer,
3-23 the Federal Reserve system, the Depository Trust Company, and other
3-24 third parties. The trust company shall be liable under those
3-25 contracts in accordance with the terms contained in the contracts.
4-1 Notwithstanding any other statute to the contrary, to the extent
4-2 permitted by the Texas Constitution and the contracts, trust
4-3 agreements, or other fiduciary instruments between the trust
4-4 company, [and] the Federal Reserve System, and the Depository Trust
4-5 Company, the trust company's obligations shall be guaranteed by the
4-6 state, and the state expressly waives all defenses of governmental
4-7 immunity by and on behalf of the trust company, the treasurer, and
4-8 the state and expressly consents to sue and be sued in federal
4-9 court or in any court of competent jurisdiction. However, this
4-10 provision does not alter or affect the immunity accorded to state
4-11 officials and employees under state law. The trust company may
4-12 enter into contracts with the treasurer and the Federal Reserve
4-13 System to provide any services that the Federal Reserve System
4-14 makes available, including:
4-15 (1) safekeeping book-entry United States Treasury and
4-16 agency securities owned by the state and its agencies;
4-17 (2) using the federal reserve wire transfer system to
4-18 transfer money and book-entry securities and to settle securities
4-19 transactions involving book-entry United States Treasury and agency
4-20 securities owned by the state and its agencies;
4-21 (3) collecting, through the Federal Reserve System,
4-22 checks deposited with the treasury;
4-23 (4) receiving payments from and making payments to the
4-24 federal government on behalf of the state and its agencies;
4-25 (5) originating automated clearinghouse transactions
5-1 or other electronic transfers to make payments on behalf of the
5-2 state and its agencies, collecting revenues due the state and its
5-3 agencies, and transferring money between state depositories;
5-4 (6) paying warrants drawn on the treasury and
5-5 presented through the Federal Reserve System for payment; and
5-6 (7) safekeeping collateral pledged to secure deposits
5-7 of public funds.
5-8 SECTION 3. Article 5.76-2, Section 2.07(b), Insurance Code,
5-9 is amended to read as follows:
5-10 (b) The facility shall invest its funds only in investments
5-11 authorized by law for the investment of state funds as provided in
5-12 Chapter 404, Government Code. The governing committee shall
5-13 develop an investment policy and submit the policy to the board
5-14 [state treasurer] for review and approval.
5-15 SECTION 4. Article 5.76-3, Section 13(d), Insurance Code, is
5-16 amended to read as follows:
5-17 (d) Money in the fund shall be invested, subject to a policy
5-18 developed by the board and approved by the State Board of Insurance
5-19 [state treasurer], in the types of investments authorized by law
5-20 for an insurer authorized to write workers' compensation insurance
5-21 coverage in this state.
5-22 SECTION 5. This Act takes effect September 1, 1997.
5-23 SECTION 6. The importance of this legislation and the
5-24 crowded condition of the calendars in both houses create an
5-25 emergency and an imperative public necessity that the
6-1 constitutional rule requiring bills to be read on three several
6-2 days in each house be suspended, and this rule is hereby suspended.