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.