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A BILL TO BE ENTITLED
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AN ACT
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relating to the use of certain letters of credit as related to the |
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deposit and investment of public funds. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2256.009, Government Code, is amended to |
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read as follows: |
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Sec. 2256.009. AUTHORIZED INVESTMENTS: OBLIGATIONS OF, OR |
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GUARANTEED BY GOVERNMENTAL ENTITIES. (a) Except as provided by |
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Subsection (b), the following are authorized investments under this |
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subchapter: |
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(1) obligations[, including letters of credit,] of the |
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United States or its agencies and instrumentalities; |
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(2) direct obligations of this state or its agencies |
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and instrumentalities; |
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(3) collateralized mortgage obligations directly |
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issued by a federal agency or instrumentality of the United States, |
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the underlying security for which is guaranteed by an agency or |
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instrumentality of the United States; |
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(4) other obligations, the principal and interest of |
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which are unconditionally guaranteed or insured by, or backed by |
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the full faith and credit of, this state or the United States or |
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their respective agencies and instrumentalities, including |
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obligations that are fully guaranteed or insured by the Federal |
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Deposit Insurance Corporation or by the explicit full faith and |
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credit of the United States; |
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(5) obligations of states, agencies, counties, |
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cities, and other political subdivisions of any state rated as to |
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investment quality by a nationally recognized investment rating |
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firm not less than A or its equivalent; and |
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(6) bonds issued, assumed, or guaranteed by the State |
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of Israel. |
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(b) The following are not authorized investments under this |
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section: |
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(1) obligations whose payment represents the coupon |
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payments on the outstanding principal balance of the underlying |
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mortgage-backed security collateral and pays no principal; |
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(2) obligations whose payment represents the |
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principal stream of cash flow from the underlying mortgage-backed |
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security collateral and bears no interest; |
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(3) collateralized mortgage obligations that have a |
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stated final maturity date of greater than 10 years; [and] |
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(4) collateralized mortgage obligations the interest |
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rate of which is determined by an index that adjusts opposite to the |
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changes in a market index; and |
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(5) letters of credit that are an obligation of the |
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United States or its agencies or instrumentalities. |
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SECTION 2. Section 2257.002(5), Government Code, is amended |
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to read as follows: |
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(5) "Investment security" means: |
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(A) an obligation, including a letter of credit, |
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that in the opinion of the attorney general of the United States is |
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a general obligation of the United States and backed by its full |
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faith and credit; |
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(B) a general or special obligation issued by a |
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public agency that is payable from taxes, revenues, or a |
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combination of taxes and revenues; or |
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(C) a security in which a public entity may |
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invest under Subchapter A, Chapter 2256. |
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SECTION 3. The change in law made by this Act to Section |
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2256.009, Government Code, applies only to an investment of public |
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funds by a governmental entity made on or after the effective date |
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of this Act. An investment of public funds made by a governmental |
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entity before the effective date of this Act is governed by the law |
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in effect on the date the investment was made, and the former law is |
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continued in effect for that purpose. |
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SECTION 4. This Act takes effect September 1, 2013. |