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	Amend HB 77 (house committee printing) by inserting the 
following sections to the bill, numbered appropriately, and by 
renumbering subsequent sections of the bill accordingly:
	SECTION ____.  Section 404.031(e), Government Code, is 
amended to read as follows:
	(e)  Instead of depositing pledged securities with the 
comptroller, a depository may deposit them with a custodian.  The 
custodian may be (i) the Texas Treasury Safekeeping Trust Company, 
(ii) [or] a state or national bank that has a capital stock and 
permanent surplus of not less than $5 million, is a state 
depository, and has been designated as a custodian by the 
comptroller, or (iii) a financial institution authorized to 
exercise fiduciary powers that has a capital stock and permanent 
surplus of not less than $5 million, has its main office, a branch 
office, or a trust office in this state, and has been designated as 
a custodian by the comptroller.  For purposes of this subsection, 
"financial institution" has the meaning assigned by Section 
201.101(1), Finance Code.  The comptroller may designate those 
custodial applicants that are acceptable and may reject those whose 
management or condition, in the opinion of the comptroller, does 
not warrant the placing of securities pledged by state 
depositories.  The comptroller may adopt and enforce rules 
governing the designation and conduct of custodians with respect to 
the acceptance and holding of securities pledged by state 
depositories that the public interest requires and that are not 
inconsistent with the law governing custodians as set forth in this 
chapter.  The state depository and the custodian of securities 
pledged by that state depository may not be the same bank or be 
owned by the same bank holding company.  The securities shall be 
held in trust by the custodian to secure funds deposited by the 
comptroller in the state depository pledging the securities.  On 
receipt of the securities, the custodian shall immediately, by book 
entry or otherwise, identify on its books and records the pledge of 
the securities and shall promptly issue and deliver to the 
comptroller controlled trust receipts for the securities pledged.  
The security evidenced by the trust receipts is subject to 
inspection by the comptroller at any time.  The depository pledging 
the securities shall pay the charges, if any, of the custodian bank 
for accepting and holding the securities.  The custodian, acting 
alone or through a permitted institution, is for all purposes under 
state law and notwithstanding Chapters 8 and 9, Business & Commerce 
Code, the bailee or agent of the comptroller.  The security interest 
arising out of a pledge of securities to secure deposits of the 
state is created, attaches, and is perfected for all purposes under 
state law from the time the custodian identifies the pledge of the 
securities on its books and records and issues the trust receipts.  
The security interest remains perfected as of that time in the hands 
of all subsequent custodians and permitted institutions.
	SECTION ____.  Section 2257.041(d), Government Code, is 
amended to read as follows:
	(d) A custodian must be approved by the public entity and be:                  
		(1)  a state or national bank that:                                           
			(A)  is designated by the comptroller as a state 
depository;               
			(B)  has its main office or a branch office in this 
state; and             
			(C)  has a capital stock and permanent surplus of 
$5 million or more;      
		(2)  the Texas Treasury Safekeeping Trust Company;                            
		(3)  a Federal Reserve Bank or a branch of a Federal 
Reserve Bank; [or]
		(4)  a federal home loan bank; or                                      
		(5)  a financial institution authorized to exercise 
fiduciary powers that is designated by the comptroller as a 
custodian pursuant to Section 404.031(e).