SRC-SEW H.B. 2957 77(R) BILL ANALYSIS Senate Research Center H.B. 2957 77R8465 JJT-DBy: King, Phil (Sibley) Finance 5/10/2001 Engrossed DIGEST AND PURPOSE State law determines if a federal home loan bank (FHLB) letter of credit can serve as collateral for a municipal fund depository. Currently, the Public Funds Investment Act provides an indirect reference to FHLB letters of credit by providing that obligations of United States agencies and instrumentalities are authorized investments that may serve as collateral for the deposit of public funds. However, since letters of credit are not specifically mentioned, some municipalities are wary of relying on FHLB letters of credit to serve as collateral for their deposit funds. H.B. 2957 clarifies that letters of credit may be used as security for a deposit of public funds. RULEMAKING AUTHORITY This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 2256.009(a), Government Code, to provide that, except as provided by Subsection (b), obligations, including letters of credit, of the United States or its agencies and instrumentalities are authorized investments under this subchapter. SECTION 2. Effective date: September 1, 2001.