SRC-LBB S.B. 996 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 996
78R4443 JJT-DBy: Williams
Business & Commerce
3/21/2003
As Filed


DIGEST AND PURPOSE 

Currently, financial institutions are required to pledge collateral in the
form of acceptable investment securities.  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.  As proposed, S.B. 996 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.