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A BILL TO BE ENTITLED
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AN ACT
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relating to the collateralization of certain public funds; |
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providing administrative penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 2257, Government Code, is amended by |
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adding Subchapter F to read as follows: |
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SUBCHAPTER F. POOLED COLLATERAL TO SECURE |
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DEPOSITS OF PUBLIC FUNDS |
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Sec. 2257.101. DEFINITION. In this subchapter, |
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"participating institution" means a financial institution that |
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holds one or more deposits of public funds and that participates in |
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the pooled collateral program under this subchapter. |
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Sec. 2257.102. POOLED COLLATERAL PROGRAM. (a) As an |
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alternative to collateralization under Subchapter B, the |
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comptroller by rule shall establish a program for centralized |
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pooled collateralization of deposits of public funds and for |
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monitoring collateral maintained by participating institutions. |
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The comptroller may provide for a separate collateral pool for any |
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single participating institution's deposits of public funds and |
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also provide for one or more collateral pools for centralized |
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collateralization of two or more identifiable participating |
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institutions' deposits of public funds. |
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(b) The pooled collateral program must provide for: |
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(1) voluntary participation in the program by a |
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participating institution; |
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(2) uniform procedures for processing all collateral |
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transactions that are subject to an approved security agreement |
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described by Section 2257.103; and |
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(3) the pledging of a participating institution's |
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collateral securities using a single custodial account instead of |
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an account for each depositor of public funds. |
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Sec. 2257.103. PARTICIPATION IN POOLED COLLATERAL PROGRAM. |
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A financial institution may participate in the pooled collateral |
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program only if: |
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(1) the institution has entered into a binding |
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collateral security agreement with a public agency for a deposit of |
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public funds and the agreement permits the institution's |
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participation in the program; and |
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(2) the comptroller has approved: |
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(A) the institution's participation in the |
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program; and |
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(B) the form of the collateral security |
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agreement. |
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Sec. 2257.104. COLLATERAL REQUIRED; CUSTODIAN TRUSTEE. (a) |
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Each participating institution shall secure its deposits of public |
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funds with eligible securities the total value of which equals at |
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least 102 percent of the amount of the deposits of public funds |
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covered by a security agreement described by Section 2257.103 and |
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deposited with the participating institution, reduced to the extent |
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that the United States or an instrumentality of the United States |
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insures the deposits. For purposes of determining whether |
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collateral is sufficient to secure a deposit of public funds, |
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Section 2257.022(b) does not apply to a deposit of public funds held |
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by the participating institution and collateralized under this |
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subchapter. |
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(b) A participating institution shall provide for the |
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collateral securities to be held by a custodian trustee, on behalf |
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of the participating institution, in trust for the benefit of the |
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pooled collateral program. A custodian trustee must qualify as a |
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custodian under Section 2257.041. |
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(c) The comptroller by rule shall regulate a custodian |
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trustee under the pooled collateral program in the manner provided |
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by Subchapter C to the extent practicable. The rules must ensure |
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that a custodian trustee depository does not own, is not owned by, |
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and is independent of the financial institution or institutions for |
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which it holds the securities in trust, except that the rules must |
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allow a banker's bank, as defined by Section 34.105, Finance Code, |
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and a federal home loan bank to be a custodian trustee. |
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Sec. 2257.105. MONITORING COLLATERAL. Each participating |
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institution shall file the following reports with the comptroller, |
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as prescribed by rules of the comptroller: |
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(1) a daily report of the aggregate amount of deposits |
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of public agencies participating in the pooled collateral program |
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that are held by the institution; |
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(2) a weekly summary report of the total value of |
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securities held by a custodian trustee on behalf of the |
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participating institution; |
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(3) a monthly report listing the collateral securities |
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held by a custodian trustee on behalf of the participating |
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institution together with the value of the securities; and |
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(4) as applicable, a participating institution's call |
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report or annual report that includes the participating |
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institution's financial statements. |
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Sec. 2257.106. ANNUAL ASSESSMENT. (a) Once each state |
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fiscal year, the comptroller shall impose against each |
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participating institution an assessment in an amount sufficient to |
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pay the costs of administering this subchapter. The assessment |
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must be imposed pro rata according to the aggregate average weekly |
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deposit amounts during that state fiscal year of each institution's |
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deposits of public funds collateralized under this subchapter. |
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(b) The comptroller shall provide to each participating |
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institution a notice of the amount of the assessment against the |
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institution. |
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(c) A participating institution shall remit to the |
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comptroller the amount assessed against it under this section not |
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later than the 45th day after the date the institution receives the |
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notice under Subsection (b). |
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(d) Money remitted to the comptroller under this section may |
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be appropriated only for the purposes of administering this |
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subchapter. |
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Sec. 2257.107. PENALTY FOR REPORTING VIOLATION. (a) The |
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comptroller may impose an administrative penalty against a |
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participating institution that does not file a report required by |
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Section 2257.105. |
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(b) The penalty must be in an amount equal to $100 for each |
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day that elapses after the date the report is due until the date the |
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report is filed. |
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Sec. 2257.108. PENALTY FOR COLLATERAL VIOLATION. (a) The |
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comptroller may impose an administrative penalty against a |
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participating institution that does not maintain collateral in an |
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amount and in the manner required by Section 2257.104 and rules of |
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the comptroller. |
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(b) The penalty must be in an amount equal to $100 for each |
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day the participating institution fails to maintain the collateral |
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as required. |
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Sec. 2257.109. PENALTY FOR FAILURE TO PAY ASSESSMENT. (a) |
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The comptroller may impose an administrative penalty against a |
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participating institution that does not pay an assessment against |
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it in the time provided by Section 2257.106(c). |
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(b) The penalty must be in an amount equal to $100 for each |
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day that elapses after the date the assessment is due until the date |
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the assessment is paid. |
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Sec. 2257.110. PENALTIES NOT EXCLUSIVE. The penalties |
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provided by Sections 2257.107-2257.109 are in addition to those |
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provided by Subchapter D or other law. |
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Sec. 2257.111. PENALTY PROCEEDING CONTESTED CASE. A |
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proceeding to impose a penalty under Sections 2257.107-2257.109 is |
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a contested case under Chapter 2001. |
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Sec. 2257.112. SUIT TO COLLECT PENALTY. The attorney |
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general may sue to collect a penalty imposed under Sections |
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2257.107-2257.109. |
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Sec. 2257.113. ENFORCEMENT STAYED PENDING REVIEW. |
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Enforcement of a penalty imposed under Sections 2257.107-2257.109 |
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may be stayed during the time the order is under judicial review if |
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the participating institution pays the penalty to the clerk of the |
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court or files a supersedeas bond with the court in the amount of |
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the penalty. A participating institution that cannot afford to pay |
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the penalty or file the bond may stay the enforcement by filing an |
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affidavit in the manner required by the Texas Rules of Civil |
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Procedure for a party who cannot afford to file security for costs, |
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subject to the right of the comptroller to contest the affidavit as |
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provided by those rules. |
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Sec. 2257.114. USE OF COLLECTED PENALTIES. Money collected |
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as penalties under this subchapter may be appropriated only for the |
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purposes of administering this subchapter. |
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SECTION 2. Section 2257.002(4), Government Code, is amended |
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to read as follows: |
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(4) "Eligible security" means: |
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(A) a surety bond; |
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(B) an investment security; |
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(C) an ownership or beneficial interest in an |
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investment security, other than an option contract to purchase or |
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sell an investment security; |
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(D) a fixed-rate collateralized mortgage |
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obligation that has an expected weighted average life of 10 years or |
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less and does not constitute a high-risk mortgage security; [or] |
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(E) a floating-rate collateralized mortgage |
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obligation that does not constitute a high-risk mortgage security; |
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or |
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(F) a letter of credit issued by a federal home |
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loan bank. |
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SECTION 3. The comptroller of public accounts shall adopt |
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rules as necessary to implement Subchapter F, Chapter 2257, |
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Government Code, as added by this Act, so that the pooled collateral |
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program established under that subchapter may begin operating not |
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later than the first business day of April 2008. |
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SECTION 4. This Act takes effect September 1, 2007. |