HBA-MPM H.B. 2957 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2957
By: King, Phil
Pensions & Investments
6/14/2001
Enrolled



BACKGROUND AND PURPOSE 

State law determines if a federal home loan bank (FHLB) letter of credit
can serve as collateral for a municipal fund depository.  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.  House Bill 2957
clarifies that letters of credit may be used as security for a deposit of
public funds. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 2957 amends the Government Code to provide that letters of
credit by governmental entities constitute an authorized investment for
purposes of providing security for a deposit of public funds.  

EFFECTIVE DATE

September 1, 2001.