By: Duncan S.B. No. 1618 Line and page numbers may not match official copy. Bill not drafted by TLC or Senate E&E. A BILL TO BE ENTITLED AN ACT 1-1 relating to Public Fund Collateral. 1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-3 SECTION 1. Amend the Public Funds Collateral Act as follows: 1-4 Add a new paragraph (D) to Sec. 2257.002(5) Government Code 1-5 as follows: 1-6 D. A collateralized mortgage obligation that has an expected 1-7 weighted average life of ten years or less and which does not 1-8 constitute a "high risk mortgage security." A "high risk mortgage 1-9 security" is one which has an average life sensitivity with a 1-10 weighted average life that extends by more than four years, 1-11 assuming an immediate and sustained parallel shift in the yield 1-12 curve of plus 300 basis points, or shortens by more than six years, 1-13 assuming an immediate and sustained parallel shift in the yield 1-14 curve of minus 300 basis points, and which is price sensitive, that 1-15 is, the estimated change in the price of the mortgage derivative 1-16 product is more than 17 percent, due to an immediate and sustained 1-17 parallel shift in the yield curve of plus or minus 300 basis 1-18 points. 1-19 SECTION 2. This Act takes effect September 1, 1997. 1-20 SECTION 3. The importance of this legislation and the 1-21 crowded condition of the calendars in both houses create an 2-1 emergency and an imperative public necessity that the 2-2 constitutional rule requiring bills to be read on three several 2-3 days in each house be suspended, and this rule is hereby suspended.