SRC-TJG H.B. 1109 78(R)    BILL ANALYSIS


Senate Research CenterH.B. 1109
78R4443 JJT-DBy: King (Williams)
                     Administration
                    5-8-2003
Engrossed

DIGEST AND PURPOSE 

Currently, financial institutions are required to pledge collateral in the
form of acceptable investment securities to ensure public deposits.  State
funds are not comparable to local government funds with regard to
collateral requirements.  Utilizing letters of credit issued by an agency
or instrumentality of the federal government will assure the public
depositing entity of the safety of its funds and give the financial
institution additional flexibility in managing its balance sheet.  H.B.
1109 provides that a letter of credit is eligible as collateral to be
pledged with the comptroller to secure state deposits. 

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 Sections 404.0221(b) and (d), Government Code, as
follows: 

(b)  Includes letters of credit in the list of collateral eligible to be
pledged with the comptroller to secure state deposits. 

(d)  Provides that eligible collateral includes only a security with
fixed, stated rates or a letter of credit described by Subsection (b)(2)
for a stated amount. 

SECTION 2.  Effective date:  September 1, 2003.