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.