1-1 By: Averitt (Senate Sponsor - Lindsay) H.B. No. 1810
1-2 (In the Senate - Received from the House April 19, 1999;
1-3 April 20, 1999, read first time and referred to Committee on
1-4 Finance; May 12, 1999, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 10, Nays 0; May 12, 1999,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 1810 By: Lindsay
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the deposit and investment of funds by the comptroller
1-11 of public accounts.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Section 404.0212(d), Government Code, is amended
1-14 to read as follows:
1-15 (d) The comptroller may not select as a depository a
1-16 regulated financial institution for which the entire institution
1-17 [that] has been assigned a rating below "outstanding record of
1-18 meeting community credit needs" or "satisfactory record of meeting
1-19 community credit needs" under 12 U.S.C. Section 2906. However, the
1-20 comptroller shall establish criteria to determine whether a
1-21 financial institution doing business in this state and other states
1-22 has a satisfactory record of meeting community credit needs in this
1-23 state.
1-24 SECTION 2. Section 404.022, Government Code, is amended to
1-25 read as follows:
1-26 Sec. 404.022. APPLICATIONS. (a) The comptroller, not later
1-27 than the first business day [on the second Tuesday] in June of each
1-28 odd-numbered year, shall mail to each eligible institution a letter
1-29 stating the conditions with which applicants for designation as a
1-30 state depository must comply. The comptroller shall keep on file
1-31 in the comptroller's office and make available for inspection by
1-32 any person a list of institutions to which letters have been sent.
1-33 (b) The application for designation as a state depository
1-34 must include a statement:
1-35 (1) of the amount of the applicant's paid capital
1-36 stock and permanent surplus, if any[, or if the applicant is a
1-37 private bank, the amount of net proprietorship];
1-38 (2) of the maximum amount of state time deposits
1-39 [funds] the applicant will accept;
1-40 (3) of the applicant's condition according to the most
1-41 recent financial statement on the date the application is
1-42 submitted; and
1-43 (4) that the books and accounts of the institution, if
1-44 it is designated as a state depository, will be open at all times
1-45 for inspection by the comptroller or a representative of the
1-46 comptroller.
1-47 (c) An application shall be mailed to the comptroller at
1-48 Austin and must be received before noon on [of] the first business
1-49 day of August of the year in which the letter is sent. An
1-50 application received after that time may be considered at the
1-51 option of the comptroller. The comptroller may [shall] charge a
1-52 processing fee of $25 for each application and shall deposit the
1-53 fees to the credit of the general revenue fund.
1-54 (d) On receipt of an application under this section, the
1-55 comptroller shall endorse on the application the date of its
1-56 receipt. The comptroller shall prepare a list of the names of the
1-57 applicants and the amount for which each has applied.
1-58 (e) The comptroller may approve those applicants that are
1-59 acceptable and may reject those whose management or condition, in
1-60 the opinion of the comptroller, does not warrant the placing of
1-61 state funds in their possession. [An application for state funds
1-62 may not be granted if the applicant's liabilities for borrowed
1-63 money are in excess of its capital stock, but the comptroller may
1-64 in its discretion waive this provision.]
2-1 (f) [The comptroller may designate an applicant as a state
2-2 depository if the applicant has complied with all of the conditions
2-3 set by the comptroller.] The designation as a state depository is
2-4 effective for a period of not more than two years.
2-5 (g) As soon as practicable after the comptroller has made
2-6 its designations, the comptroller shall inform [all] applicants
2-7 whether they have been designated as state depositories.
2-8 (h) [If more depositories are required at any time, the
2-9 comptroller may send to all eligible institutions notice that
2-10 further applications for designation as a state depository for the
2-11 unexpired term will be accepted.]
2-12 [(i)] The comptroller may execute a simplified version of a
2-13 depository agreement with an eligible institution desiring to hold
2-14 $98,000 or less in state deposits that are fully insured by the
2-15 Federal Deposit Insurance Corporation or the National Credit Union
2-16 Share Insurance Fund.
2-17 SECTION 3. Section 404.023, Government Code, is amended to
2-18 read as follows:
2-19 Sec. 404.023. DESIGNATION. The comptroller shall designate
2-20 one or more state depository banks that have main offices or
2-21 branches in centrally located cities in this state to be used for
2-22 clearing checks and other obligations due the state.
2-23 SECTION 4. Section 404.024, Government Code, is amended by
2-24 amending Subsection (g) and adding Subsections (j) and (k) to read
2-25 as follows:
2-26 (g) To the extent practicable, the comptroller shall give
2-27 first consideration to [Texas] banks that maintain main offices or
2-28 branch offices in this state when investing in direct security
2-29 repurchase agreements.
2-30 (j) If the comptroller is required by law to invest funds
2-31 other than as provided by this section, and if other law does not
2-32 establish a conflicting standard governing that investment, the
2-33 comptroller shall invest those funds under the restrictions and
2-34 procedures for making the investments that persons of ordinary
2-35 prudence, discretion, and intelligence, exercising the judgment and
2-36 care under the prevailing circumstances, would follow in the
2-37 management of their own affairs, not in regard to speculation but
2-38 in regard to the permanent disposition of their funds, considering
2-39 the probable income as well as the probable safety of their
2-40 capital.
2-41 (k) The comptroller may contract with private professional
2-42 investment managers to assist the comptroller in investing funds
2-43 under the care, custody, and control of the comptroller.
2-44 SECTION 5. Sections 404.031(a) and (f), Government Code, are
2-45 amended to read as follows:
2-46 (a) The comptroller may deposit state funds with a
2-47 depository only if the depository has pledged with the comptroller
2-48 eligible investment securities acceptable to the comptroller in an
2-49 amount not less than the amount of deposits to be secured. The
2-50 comptroller shall determine the market value of securities pledged
2-51 to secure state funds for the purpose of determining the adequacy
2-52 of the amount of collateral. The comptroller's valuation of the
2-53 securities is final and not subject to review.
2-54 (f) Instead of depositing pledged securities with the
2-55 comptroller, a state depository may deposit pledged securities with
2-56 a federal reserve bank or a federal home loan bank [the Federal
2-57 Reserve Bank of Dallas or the Federal Home Loan Bank of Dallas].
2-58 The securities shall be held by the bank to secure funds deposited
2-59 by the comptroller in the state depository pledging the securities.
2-60 When the pledged securities are deposited, the bank may apply book
2-61 entry to the securities. The records of the bank shall at all
2-62 times reflect the name of the state depository depositing the
2-63 pledged securities, and the bank shall issue an advice of
2-64 transaction to the comptroller and the state depository pledging
2-65 the securities.
2-66 SECTION 6. This Act takes effect September 1, 1999.
2-67 SECTION 7. The importance of this legislation and the
2-68 crowded condition of the calendars in both houses create an
2-69 emergency and an imperative public necessity that the
3-1 constitutional rule requiring bills to be read on three several
3-2 days in each house be suspended, and this rule is hereby suspended.
3-3 * * * * *