AB 279, as amended, Dickinson. Financial affairs.
Existing law prescribes the instruments in and criteria by which a local agency, as defined, may invest and deposit its funds, including its surplus funds. Existing law authorizes a local agency to invest in specified certificates of deposit.
This bill would, until January 1,begin delete 2019,end deletebegin insert 2017,end insert remove the term “certificates of deposit” and instead authorize a local agency to invest in deposits, as specifiedbegin insert, and limit the amount of its funds that an agency may place with any one private sector entity that assists in the placement of deposits with one or more commercial banks,
savings banks, savings and loan associations, or credit unions that are located in the United Statesend insert.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 53601.8 of the Government Code is
2amended to read:
Notwithstanding Section 53601 or any other provision
4of this code, a local agency that has the authority under law to
5invest funds, at its discretion, may invest a portion of its surplus
6funds in deposits at a commercial bank, savings bank, savings and
7loan association, or credit union that uses a private sector entity
8that assists in the placement of deposits. The
following conditions
9shall apply:
10(a) The local agency shall choose a nationally or state chartered
11commercial bank, savings bank, savings and loan association, or
12credit union in this state to invest the funds, which shall be known
13as the “selected” depository institution.
14(b) The selected depository institution may submit the funds to
15a private sector entity that assists in the placement of deposits with
16one or more commercial banks, savings banks, savings and loan
17associations, or credit unions that are located in the United States,
18for the local agency’s account.
19(c) The full amount of the deposit placed pursuant to
subdivision
20(b) by the private sector entity and the interest that may be accrued
21for each such deposit shall at all times be insured by the Federal
22Deposit Insurance Corporation or the National Credit Union
23Administration.
24(d) The selected depository institution shall serve as a custodian
25for each such deposit.
26(e) On the same date that the local agency’s funds are placed
27pursuant to subdivision (b) by the private sector entity, the selected
28depository institution shall receive an amount of insured deposits
29from other financial institutions that, in total, are equal to, or greater
30than, the full amount of the principal that the local agency initially
31deposited through the selected depository institution pursuant to
32subdivision (b).
33(f) Notwithstanding subdivisions (a) to (e), inclusive, a credit
34union shall not act as a selected depository institution under this
35section or Section 53635.8 unless both of the following conditions
36are satisfied:
37(1) The credit union offers federal depository insurance through
38the National Credit Union Administration.
P3 1(2) The credit union is in possession of written guidance or other
2written communication from the National Credit Union
3Administration authorizing participation of federally insured credit
4unions in one or more deposit placement services and affirming
5that the moneys held by those credit unions while participating in
6a deposit placement service will at all times be insured by the
7federal
government.
8(g) It is the intent of the Legislature that this section shall not
9restrict competition among private sector entities that provide
10placement services pursuant to this section.
11(h) The deposits placed pursuant to this section and Section
1253635.8 shall not, in total, exceed 30 percent of the agency’s funds
13that may be invested for this purpose.
14(i) Purchases of certificates of deposit pursuant to this section,
15Section 53635.8, and subdivision (i) of Section 53601 shall not,
16in total, exceed 30 percent of the agency’s funds that may be
17invested for this purpose.
18(j) Excluding purchases
of certificates of deposit pursuant to
19this section, no more than 10 percent of the agency’s funds that
20may be invested for this purpose may be submitted, pursuant to
21subdivision (b), to any one private sector entity that assists in the
22placement of deposits with one or more commercial banks, savings
23banks, savings and loan associations, or credit unions that are
24located in the United States, for the local agency’s account.
25(j)
end delete
26begin insert(k)end insert This section shall remain in effect only until January 1,begin delete 2019,end delete
27begin insert
2017,end insert and as of that date is repealed, unless a later enacted statute,
28that is enacted before January 1,begin delete 2019,end deletebegin insert
2017,end insert deletes or extends
29that date.
Section 53601.8 is added to the Government Code, to
31read:
Notwithstanding Section 53601 or any other provision
33of this code, a local agency that has the authority under law to
34invest funds may, at its discretion, invest a portion of its surplus
35funds in certificates of deposit at a commercial bank, savings bank,
36savings and loan association, or credit union that uses a private
37sector entity that assists in the placement of certificates of deposit,
38provided that the purchases of certificates of deposit pursuant to
39this section, Section 53635.8, and subdivision (i) of Section 53601
P4 1do not, in total, exceed 30 percent of the agency’s funds that may
2be invested for this purpose. The following conditions shall apply:
3(a) The local agency shall choose a nationally or state-chartered
4commercial bank, savings bank, savings and loan association, or
5credit union in this state to invest the funds, which shall be known
6as the “selected” depository institution.
7(b) The selected depository institution may submit the funds to
8a private sector entity that assists in the placement of certificates
9of deposit with one or more commercial banks, savings banks,
10savings and loan associations, or credit unions that are located in
11the United States for the local agency’s account.
12(c) The full amount of the principal and the interest that may
13
be accrued during the maximum term of each certificate of deposit
14shall at all times be insured by the Federal Deposit Insurance
15Corporation or the National Credit Union Administration.
16(d) The selected depository institution shall serve as a custodian
17for each certificate of deposit that is issued with the placement
18service for the local agency’s account.
19(e) At the same time the local agency’s funds are deposited and
20the certificates of deposit are issued, the selected depository
21institution shall receive an amount of deposits from other
22commercial banks, savings banks, savings and loan associations,
23or credit unions that, in total, are equal to, or greater than, the full
24
amount of the principal that the local agency initially deposited
25through the selected depository institution for investment.
26(f) Notwithstanding subdivisions (a) to (e), inclusive, no credit
27union may act as a selected depository institution under this section
28or Section 53635.8 unless both of the following conditions are
29satisfied:
30(1) The credit union offers federal depository insurance through
31the National Credit Union Administration.
32(2) The credit union is in possession of written guidance or other
33written communication from the National Credit
Union
34Administration authorizing participation of federally insured credit
35unions in one or more certificate of deposit placement services
36and affirming that the moneys held by those credit unions while
37participating in a deposit placement service will at all times be
38insured by the federal government.
P5 1(g) It is the intent of the Legislature that this section shall not
2restrict competition among private sector entities that provide
3placement services pursuant to this section.
4(h) This section shall become operative on January 1,begin delete 2019.end delete
5begin insert
2017.end insert
Section 53635.8 of the Government Code is amended
7to read:
Notwithstanding Section 53601 or any other provision
9of this code, a local agency that has the authority under law to
10invest funds, at its discretion, may invest a portion of its surplus
11funds in deposits at a commercial bank, savings bank, savings and
12loan association, or credit union that uses a private sector entity
13that assists in the placement of deposits. The
following conditions
14shall apply:
15(a) The local agency shall choose a nationally or state-chartered
16commercial bank, savings bank, savings and loan association, or
17credit union in this state to invest the funds, which shall be known
18as the “selected” depository institution.
19(b) The selected depository institution may submit the funds to
20a private sector entity that assists in the placement of deposits with
21one or more commercial banks, savings banks, savings and loan
22associations, or credit unions that are located in the United States,
23for the local agency’s account.
24(c) The full amount of the deposit placed pursuant to
subdivision
25(b) by the private sector entity and the interest that may be accrued
26for each such deposit shall at all times be insured by the Federal
27Deposit Insurance Corporation or the National Credit Union
28Administration.
29(d) The selected depository institution shall serve as a custodian
30for each such deposit.
31(e) On the same date that the local agency’s funds are placed
32pursuant to subdivision (b) by the private sector entity, the selected
33depository institution shall receive an amount of insured deposits
34from other financial institutions that, in total, are equal to, or greater
35than, the full amount of the principal that the local agency initially
36deposited through the selected depository institution for investment
37pursuant to subdivision (b).
38(f) Notwithstanding subdivisions (a) to (e), inclusive, a credit
39union shall not act as a selected depository institution under this
P6 1section or Section 53601.8 unless both of the following conditions
2are satisfied:
3(1) The credit union offers federal depository insurance through
4the National Credit Union Administration.
5(2) The credit union is in possession of written guidance or other
6written communication from the National Credit Union
7Administration authorizing participation of federally insured credit
8unions in one or more deposit placement services and affirming
9that the moneys held by those credit unions while participating in
10a deposit placement service will at all times be insured by the
11federal
government.
12(g) It is the intent of the Legislature that this section shall not
13restrict competition among private sector entities that provide
14placement services pursuant to this section.
15(h) The deposits placed pursuant to this section and Section
1653601.8 shall not, in total, exceed 30 percent of the agency’s funds
17that may be invested for this purpose.
18(i) Purchases of certificates of deposit pursuant to this section,
19Section 53601.8, and subdivision (i) of Section 53601 shall not,
20in total, exceed 30 percent of the agency’s funds that may be
21invested for this purpose.
22(j) Excluding purchases
of certificates of deposit pursuant to
23this section, no more than 10 percent of the agency’s funds that
24may be invested for this purpose may be submitted, pursuant to
25subdivision (b), to any one private sector entity that assists in the
26placement of deposits with one or more commercial banks, savings
27banks, savings and loan associations, or credit unions that are
28located in the United States, for the local agency’s account.
29(j)
end delete
30begin insert(k)end insert This section shall remain in effect only until January 1,begin delete 2019,end delete
31begin insert
2017,end insert and as of that date is repealed, unless a later enacted statute,
32that is enacted before January 1,begin delete 2019,end deletebegin insert
2017,end insert deletes or extends
33that date.
Section 53635.8 is added to the Government Code, to
35read:
Notwithstanding Section 53601 or any other provision
37of this code, a local agency that has the authority under law to
38invest funds, at its discretion, may invest a portion of its surplus
39funds in certificates of deposit at a commercial bank, savings bank,
40savings and loan association, or credit union that uses a private
P7 1sector entity that assists in the placement of certificates of deposit,
2provided that the purchases of certificates of deposit pursuant to
3this section, Section 53601.8, and subdivision (i) of Section 53601
4do not, in total, exceed 30 percent of the agency’s funds that may
5be invested for this purpose. The following conditions shall apply:
6(a) The local agency shall choose a nationally or state-chartered
7commercial bank, savings bank, savings and loan association, or
8credit union in this state to invest the funds, which shall be known
9as the “selected” depository institution.
10(b) The selected depository institution may submit the funds to
11a private sector entity that assists in the placement of certificates
12of deposit with one or more commercial banks, savings banks,
13savings and loan associations, or credit unions that are located in
14the United States, for the local agency’s account.
15(c) The full amount of the principal and the interest that
may
16be accrued during the maximum term of each certificate of deposit
17shall at all times be insured by the Federal Deposit Insurance
18Corporation or the National Credit Union Administration.
19(d) The selected depository institution shall serve as a custodian
20for each certificate of deposit that is issued with the placement
21service for the local agency’s account.
22(e) At the same time the local agency’s funds are deposited and
23the certificates of deposit are issued, the selected depository
24institution shall receive an amount of deposits from other
25commercial banks, savings banks, savings and loan associations,
26or credit unions that, in total, are equal to, or greater than,
the full
27amount of the principal that the local agency initially deposited
28through the selected depository institution for investment.
29(f) Notwithstanding subdivisions (a) to (e), inclusive, a credit
30union shall not act as a selected depository institution under this
31section or Section 53601.8 unless both of the following conditions
32are satisfied:
33(1) The credit union offers federal depository insurance through
34the National Credit Union Administration.
35(2) The credit union is in possession of written guidance or other
36written communication from
the National Credit Union
37Administration authorizing participation of federally insured credit
38unions in one or more certificate of deposit placement services
39and affirming that the moneys held by those credit unions while
P8 1participating in a deposit placement service will at all times be
2insured by the federal government.
3(g) It is the intent of the Legislature that this section shall not
4restrict competition among private sector entities that provide
5placement services pursuant to this section.
6(h) This section shall become operative on January 1,begin delete 2019.end delete
7begin insert
2017.end insert
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96