SRC-LBB S.B. 626 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 626
78R1980 ATP-DBy: Shapleigh
State Affairs
3/10/2003
As Filed


DIGEST AND PURPOSE 

Currently, public agencies are not required to collect information from
financial institutions before selecting them as depositories of public
funds.  For example, financial institutions are not required to report
information necessary to measure and evaluate the financial institution's
loan to deposit ratio, or the relationship of the institution with the
local community and borrowers. Such information would aid public agencies
in the process of choosing financial institutions as depositories. In
addition, the information  is currently required  by federal regulators in
various federal agencies and asking financial institutions to submit this
information to state agencies does not create a burdensome additional
reporting requirement.   

As proposed, S.B. 626 requires the collection of information regarding
lending practices.  This bill directs public agencies to only consider a
financial institution which submits specific information regarding the
institution's lending history and practices, involvement in the community,
and status as an institution with a "satisfactory record of meeting
community credit needs" under federal regulatory law. 

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 Title 3Z, Finance Code, by adding Chapter 278, as
follows, 

CHAPTER 278.  DEPOSIT OF PUBLIC FUNDS

Sec.  278.001.  DEFINITIONS.  Defines "branch," "county in which the
financial institution does business," "depository of public funds," "home
office," "financial institution," "public agency," and "state agency." 

Sec.  278.002.  RESTRICTION ON SELECTION OF DEPOSITORY OF PUBLIC FUNDS.
Authorizes a public agency, when selecting a depository of public funds,
to consider a financial institution only if the financial institution
submits information required by Section 278.003. 

Sec.  278.003.  REQUIRED INFORMATION.  Requires a financial institution to
submit certain items to the public agency considering the financial
institution for selection as a depository of its public funds. 

SECTION 2.  Requires a public agency that enters into a depository
contract on or after the effective date of this Act to comply with Chapter
278, Finance Code, as added by this Act. 

SECTION 3.  Effective date:  September 1, 2003.