AB 1206, as amended, Morrell. State and local agency funds: security for deposits.
Existing law requires a bank, in order to be eligible to receive demand or time deposits of state funds, to deposit security with the Treasurer and specifies the securities that may be used for this purpose. Existing law includes specified letters of credit issued by the Federal Home Loan Bank of San Francisco within the list of securities appropriate for deposit. Existing law provides a similar list of securities in connection with the funds of local agencies.
This billbegin insert, until January 1, 2019,end insert would revise the reference to letters of credit issued by the Federal Home Loan Bank of San Francisco in the provisions described above to refer instead to a letter of credit issued by a federal home loan bank.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 16522 of the Government Code is
2amended to read:
The following securities may be received as security
4for demand and time deposits:
5(a) Bonds, notes, or other obligations of the United States, or
6those for which the faith and credit of the United States are pledged
7for the payment of principal and interest, including the guaranteed
8portions of small business administration loans, so long as those
9loans are obligations for which the faith and credit of the United
10States are pledged for the payment of principal and interest.
11(b) Notes or bonds or any obligations of a local public agency
12(as defined in the United States Housing Act of 1949) or any
13obligations of a
public housing agency (as defined in the United
14States Housing Act of 1937) for which the faith and credit of the
15United States are pledged for the payment of principal and interest.
16(c) Bonds of this state or of any county, city, town, metropolitan
17water district, municipal utility district, municipal water district,
18bridge and highway district, flood control district, school district,
19water district, water conservation district or irrigation district within
20this state, and, in addition, revenue or tax anticipation notes, and
21revenue bonds payable solely out of the revenues from a
22revenue-producing property owned, controlled or operated by this
23state, or such local agency or district, or by a department, board,
24agency, or authority thereof.
25(d) Registered warrants of this state.
26(e) Bonds, consolidated bonds, collateral trust debentures,
27consolidated debentures, or other obligations issued by the United
28States Postal Service, federal land banks or federal intermediate
29credit banks established under the Federal Farm Loan Act, as
30amended, debentures and consolidated debentures issued by the
31Central Bank for Cooperatives and banks for cooperatives
32established under the Farm Credit Act of 1933, as amended,
33consolidated obligations of the Federal Home Loan Banks
34established under the Federal Home Loan Bank Act, bonds,
35debentures and other obligations of the Federal National Mortgage
36Association and of the Government National Mortgage Association
37established under the National Housing Act as amended, in the
38bonds of any federal home loan bank established under said act,
P3 1bonds, debentures, and other obligations
of the Federal Home Loan
2Mortgage Corporation established under the Emergency Home
3Finance Act of 1970, and in bonds, notes, and other obligations
4issued by the Tennessee Valley Authority under the Tennessee
5Valley Authority Act, as amended.
6(f) Bonds and notes of the California Housing Finance Agency
7issued pursuant to Chapter 7 (commencing with Section 41700)
8of Part 3 of Division 31 of the Health and Safety Code.
9(g) Promissory notes secured by first mortgages and first trust
10deeds upon residential real property located in California, provided
11that:
12(1) Notwithstanding Section 16521, the promissory notes shall
13at all times be in an amount in value at least 50 percent in excess
14of the amount deposited with the bank;
15(2) The Treasurer issues regulations, establishes procedures for
16determining the value of the promissory notes and develops
17standards necessary to protect the security of the deposits so
18collateralized;
19(3) The depository may exercise, enforce, or waive any right or
20power granted to it by promissory note, mortgage, or deed of trust;
21and
22(4) The following may not be used as security for deposits:
23(i)
end delete
24begin insert(A)end insert Any
promissory note on which any payment is more than
2590 days past due,
26(ii)
end delete
27begin insert(B)end insert Any promissory note secured by a mortgage or deed of trust
28as to which there is a lien prior to the mortgage or deed of trust,
29or
30(iii)
end delete
31begin insert(C)end insert Any promissory note secured by a mortgage or deed of trust
32as to
which a notice of default has been recorded pursuant to
33Section 2924 of the Civil Code or an action has been commenced
34pursuant to Section 725a of the Code of Civil Procedure.
35(h) Bonds issued by the State of Israel.
36(i) Obligations issued, assumed, or guaranteed by the
37International Bank for Reconstruction and Development, the
38Inter-American Development Bank, the Asian Development Bank,
39the African Development Bank, the International Finance
P4 1Corporation, or the Government Development Bank of Puerto
2Rico.
3(j) Any municipal securities, as defined by Section 3(a)(29) of
4the Securities Exchange Act of June 6, 1934, (15 U.S.C. 78, as
5amended), which are issued by this state or any local agency
6thereof.
7(k) Letters of credit issued by
a federal home loan bank, which
8shall be in the form and shall contain provisions as the Treasurer
9may prescribe, and shall include the following terms:
10(1) The Treasurer shall be the beneficiary of the letter of credit.
11(2) The letter of credit shall be clean and irrevocable, and shall
12provide that the Treasurer may draw upon it up to the total amount
13in the event of the failure of the bank or if the bank refuses to
14permit the withdrawal of funds by the Treasurer or any other
15authorized state officer or employee.
16This section shall remain in effect only until January 1, 2019,
17and as of that date is repealed, unless a later enacted statute, that
18is enacted before
January 1, 2019, deletes or extends that date.
begin insertSection 16522 is added to the
end insertbegin insertGovernment Codeend insertbegin insert, to
20read:end insert
(a) The following securities may be received as security
22for demand and time deposits:
23(1) Bonds, notes, or other obligations of the United States, or
24those for which the faith and credit of the United States are pledged
25for the payment of principal and interest, including the guaranteed
26portions of small business administration loans, so long as those
27loans are obligations for which the faith and credit of the United
28States are pledged for the payment of principal and interest.
29(2) Notes or bonds or any obligations of a local public agency
30(as defined
in the United States Housing Act of 1949) or any
31obligations of a public housing agency (as defined in the United
32States Housing Act of 1937) for which the faith and credit of the
33United States are pledged for the payment of principal and interest.
34(3) Bonds of this state or of any county, city, town, metropolitan
35water district, municipal utility district, municipal water district,
36bridge and highway district, flood control district, school district,
37water district, water conservation district or irrigation district
38within this state, and, in addition, revenue or tax anticipation notes,
39and revenue bonds payable solely out of the revenues from a
40revenue-producing property owned, controlled or operated by this
P5 1state, or such local agency or district, or by a department, board,
2agency, or authority thereof.
3(4) Registered warrants of this state.
4(5) Bonds, consolidated bonds, collateral trust debentures,
5consolidated debentures, or other obligations issued by the United
6States Postal Service, federal land banks or federal intermediate
7credit banks established under the Federal Farm Loan Act, as
8amended, debentures and consolidated debentures issued by the
9Central Bank for Cooperatives and banks for cooperatives
10established under the Farm Credit Act of 1933, as amended,
11consolidated obligations of the Federal Home Loan Banks
12established under the Federal Home Loan Bank Act, bonds,
13debentures and other obligations of the Federal National Mortgage
14Association and of the Government National Mortgage Association
15established under the National Housing Act as amended, in the
16bonds of any federal home loan bank established under
said act,
17bonds, debentures, and other obligations of the Federal Home
18Loan Mortgage Corporation established under the Emergency
19Home Finance Act of 1970, and in bonds, notes, and other
20obligations issued by the Tennessee Valley Authority under the
21Tennessee Valley Authority Act, as amended.
22(6) Bonds and notes of the California Housing Finance Agency
23issued pursuant to Chapter 7 (commencing with Section 41700)
24of Part 3 of Division 31 of the Health and Safety Code.
25(7) Promissory notes secured by first mortgages and first trust
26deeds upon residential real property located in California,
27provided that:
28(A) Notwithstanding
Section 16521, the promissory notes shall
29 at all times be in an amount in value at least 50 percent in excess
30of the amount deposited with the bank;
31(B) The Treasurer issues regulations, establishes procedures
32for determining the value of the promissory notes and develops
33standards necessary to protect the security of the deposits so
34collateralized;
35(C) The depository may exercise, enforce, or waive any right
36or power granted to it by promissory note, mortgage, or deed of
37trust; and
38(D) The following may not be used as security for deposits:
39(i) Any promissory note on which any payment is more than 90
40days past due,
P6 1(ii) Any promissory note secured by a mortgage or deed of trust
2as to which there is a lien prior to the mortgage or deed of trust,
3or
4(iii) Any promissory note secured by a mortgage or deed of trust
5as to which a notice of default has been recorded pursuant to
6Section 2924 of the Civil Code or an action has been commenced
7pursuant to Section 725a of the Code of Civil Procedure.
8(8) Bonds issued by the State of Israel.
9(9) Obligations issued, assumed, or guaranteed by the
10International Bank for Reconstruction and Development, the
11Inter-American Development Bank, the Asian Development Bank,
12the African Development Bank, the International Finance
13Corporation, or the Government Development Bank of Puerto
14Rico.
15(10) Any municipal securities, as defined by Section 3(a)(29)
16of the Securities Exchange Act of June 6, 1934, (15 U.S.C. 78, as
17amended), which are issued by this state or any local agency
18thereof.
19(11) Letters of credit issued by the Federal Home Loan Bank
20of San Francisco, which shall be in the form and shall contain
21provisions as the Treasurer may prescribe, and shall include the
22following terms:
23(A) The Treasurer shall be the beneficiary of the letter of credit.
24(B) The letter of credit shall be clean and irrevocable, and shall
25provide that the Treasurer may draw upon it up to the total amount
26in the event of the failure of the bank or if the bank refuses to
27permit the withdrawal of funds by the Treasurer or any other
28authorized state officer or employee.
29(b) This section shall be operative January 1, 2019.
Section 53651 of the
Government Code is amended
32to read:
Eligible securities are any of the following:
34(a) United States Treasury notes, bonds, bills or certificates of
35indebtedness, or obligations for which the faith and credit of the
36United States are pledged for the payment of principal and interest,
37including the guaranteed portions of small business administration
38loans, so long as the loans are obligations for which the faith and
39credit of the United States are pledged for the payment of principal
40and interest.
P7 1(b) Notes or bonds or any obligations of a local public agency
2(as defined in the United States Housing Act of 1949) or any
3obligations of a public
housing agency (as defined in the United
4States Housing Act of 1937) for which the faith and credit of the
5United States are pledged for the payment of principal and interest.
6(c) Bonds of this state or of any local agency or district of the
7State of California having the power, without limit as to rate or
8amount, to levy taxes or assessments to pay the principal and
9interest of the bonds upon all property within its boundaries subject
10to taxation or assessment by the local agency or district, and in
11addition, limited obligation bonds pursuant to Article 4
12(commencing with Section 50665) of Chapter 3 of Division 1,
13senior obligation bonds pursuant to Article 5 (commencing with
14Section 53387) of Chapter 2.7, and revenue bonds and other
15obligations payable solely out of the revenues from a
16revenue-producing property owned, controlled or
operated by the
17state, local agency or district or by a department, board, agency
18or authority thereof.
19(d) Bonds of any public housing agency (as defined in the United
20States Housing Act of 1937, as amended) as are secured by a pledge
21of annual contributions under an annual contribution contract
22between the public housing agency and the Public Housing
23Administration if such contract shall contain the covenant by the
24Public Housing Administration which is authorized by subsection
25(b) of Section 22 of the United States Housing Act of 1937, as
26amended, and if the maximum sum and the maximum period
27specified in the contract pursuant to that subsection 22(b) shall not
28be less than the annual amount and the period for payment which
29are requisite to provide for the payment when due of all
30installments of principal and interest on the
obligations.
31(e) Registered warrants of this state.
32(f) Bonds, consolidated bonds, collateral trust debentures,
33consolidated debentures, or other obligations issued by the United
34States Postal Service, federal land banks or federal intermediate
35credit banks established under the Federal Farm Loan Act, as
36amended, debentures and consolidated debentures issued by the
37Central Bank for Cooperatives and banks for cooperatives
38established under the Farm Credit Act of 1933, as amended,
39consolidated obligations of the federal home loan banks established
40under the Federal Home Loan Bank Act, bonds, debentures and
P8 1other obligations of the Federal National Mortgage Association
2or of the Government National Mortgage Association established
3under the National Housing Act, as amended, bonds
of any federal
4home loan bank established under that act, bonds, debentures and
5other obligations of the Federal Home Loan Mortgage Corporation
6established under the Emergency Home Finance Act of 1970, and
7obligations of the Tennessee Valley Authority.
8(g) Notes, tax anticipation warrants or other evidence of
9indebtedness issued pursuant to Article 7 (commencing with
10Section 53820), Article 7.5 (commencing with Section 53840) or
11Article 7.6 (commencing with Section 53850) of this Chapter 4.
12(h) State of California notes.
13(i) Bonds, notes, certificates of indebtedness, warrants or other
14obligations issued by: (1) any state of the United States (except
15this state), or the Commonwealth of Puerto Rico, or any local
16agency
thereof having the power to levy taxes, without limit as to
17rate or amount, to pay the principal and interest of such obligations,
18or (2) any state of the United States (except this state), or the
19Commonwealth of Puerto Rico, or a department, board, agency
20or authority thereof except bonds which provide for or are issued
21pursuant to a law which may contemplate a subsequent legislative
22appropriation as an assurance of the continued operation and
23solvency of the department, board, agency or authority but which
24does not constitute a valid and binding obligation for which the
25full faith and credit of such state or the Commonwealth of Puerto
26Rico are pledged, which are payable solely out of the revenues
27from a revenue-producing source owned, controlled or operated
28thereby; provided the obligations issued by an entity described in
29(1), above, are rated in one of the three highest grades, and such
30obligations
issued by an entity described in (2), above, are rated
31in one of the two highest grades by a nationally recognized
32investment service organization that has been engaged regularly
33in rating state and municipal issues for a period of not less than
34five years.
35(j) Obligations issued, assumed or guaranteed by the
36International Bank for Reconstruction and Development,
37Inter-American Development Bank, the Government Development
38Bank of Puerto Rico, the Asian Development Bank, the
39International Finance Corporation, or the African Development
40Bank.
P9 1(k) Participation certificates of the Export-Import Bank of the
2United States.
3(l) Bonds and notes of the California Housing Finance Agency
4issued pursuant to
Chapter 7 (commencing with Section 51350)
5of Part 3 of Division 31 of the Health and Safety Code.
6(m) Promissory notes secured by first mortgages and first trust
7deeds which comply with Section 53651.2.
8(n) Any bonds, notes, warrants, or other evidences of
9indebtedness of a nonprofit corporation issued to finance the
10construction of a school building or school buildings pursuant to
11a lease or agreement with a school district entered into in
12compliance with the provisions of Section 39315 or 81345 of the
13Education Code, and also any bonds, notes, warrants or other
14evidences of indebtedness issued to refinance those bonds, notes,
15warrants, or other evidences of indebtedness as specified in Section
1639317 of the Education Code.
17(o) Any municipal securities, as defined by Section 3(a)(29) of
18the Securities Exchange Act of June 6, 1934, (15 U.S.C. Sec. 78,
19as amended), which are issued by this state or any local agency
20thereof.
21(p) With the consent of the treasurer, letters of credit issued by
22
a federal home loan bank that comply with Section 53651.6.
23This section shall remain in effect only until January 1, 2019,
24and as of that date is repealed, unless a later enacted statute, that
25is enacted before January 1, 2019, deletes or extends that date.
begin insertSection 53651 is added to the
end insertbegin insertGovernment Codeend insertbegin insert, to
27read:end insert
(a) Eligible securities are any of the following:
29(1) United States Treasury notes, bonds, bills or certificates of
30indebtedness, or obligations for which the faith and credit of the
31United States are pledged for the payment of principal and interest,
32including the guaranteed portions of small business administration
33loans, so long as the loans are obligations for which the faith and
34credit of the United States are pledged for the payment of principal
35and interest.
36(2) Notes or bonds or any obligations of a local public agency
37(as defined in the
United States Housing Act of 1949) or any
38obligations of a public housing agency (as defined in the United
39States Housing Act of 1937) for which the faith and credit of the
40United States are pledged for the payment of principal and interest.
P10 1(3) Bonds of this state or of any local agency or district of the
2State of California having the power, without limit as to rate or
3amount, to levy taxes or assessments to pay the principal and
4interest of the bonds upon all property within its boundaries subject
5to taxation or assessment by the local agency or district, and in
6addition, limited obligation bonds pursuant to Article 4
7(commencing with Section 50665) of Chapter 3 of Division 1,
8senior obligation bonds pursuant to Article 5 (commencing with
9Section 53387) of Chapter 2.7, and revenue bonds and other
10obligations payable solely out of the revenues from a
11revenue-producing property
owned, controlled or operated by the
12state, local agency or district or by a department, board, agency
13or authority thereof.
14(4) Bonds of any public housing agency (as defined in the United
15States Housing Act of 1937, as amended) as are secured by a
16pledge of annual contributions under an annual contribution
17contract between the public housing agency and the Public
18Housing Administration if such contract shall contain the covenant
19by the Public Housing Administration which is authorized by
20subsection (b) of Section 22 of the United States Housing Act of
211937, as amended, and if the maximum sum and the maximum
22period specified in the contract pursuant to that subsection 22(b)
23shall not be less than the annual amount and the period for
24payment which are requisite to provide for the payment when due
25of all installments of principal and interest on the obligations.
26(5) Registered warrants of this state.
27(6) Bonds, consolidated bonds, collateral trust debentures,
28consolidated debentures, or other obligations issued by the United
29States Postal Service, federal land banks or federal intermediate
30credit banks established under the Federal Farm Loan Act, as
31amended, debentures and consolidated debentures issued by the
32Central Bank for Cooperatives and banks for cooperatives
33established under the Farm Credit Act of 1933, as amended,
34consolidated obligations of the federal home loan banks established
35under the Federal Home Loan Bank Act, bonds, debentures and
36other obligations of the Federal National Mortgage Association
37or of the Government National Mortgage Association established
38under the National Housing Act, as amended, bonds of any federal
39home loan bank established under that
act, bonds, debentures and
40other obligations of the Federal Home Loan Mortgage Corporation
P11 1established under the Emergency Home Finance Act of 1970, and
2obligations of the Tennessee Valley Authority.
3(7) Notes, tax anticipation warrants or other evidence of
4indebtedness issued pursuant to Article 7 (commencing with Section
553820), Article 7.5 (commencing with Section 53840) or Article
67.6 (commencing with Section 53850) of this Chapter 4.
7(8) State of California notes.
8(9) Bonds, notes, certificates of indebtedness, warrants or other
9obligations issued by: (A) any state of the United States (except
10this state), or the
Commonwealth of Puerto Rico, or any local
11agency thereof having the power to levy taxes, without limit as to
12rate or amount, to pay the principal and interest of such
13obligations, or (B) any state of the United States (except this state),
14or the Commonwealth of Puerto Rico, or a department, board,
15agency or authority thereof except bonds which provide for or are
16issued pursuant to a law which may contemplate a subsequent
17legislative appropriation as an assurance of the continued
18operation and solvency of the department, board, agency or
19authority but which does not constitute a valid and binding
20obligation for which the full faith and credit of such state or the
21Commonwealth of Puerto Rico are pledged, which are payable
22solely out of the revenues from a revenue-producing source owned,
23controlled or operated thereby; provided the obligations issued
24by an entity described in (A), above, are rated in one of the three
25highest grades, and such obligations issued by an entity described
26in (B), above, are rated in
one of the two highest grades by a
27nationally recognized investment service organization that has
28been engaged regularly in rating state and municipal issues for a
29period of not less than five years.
30(10) Obligations issued, assumed or guaranteed by the
31International Bank for Reconstruction and Development,
32Inter-American Development Bank, the Government Development
33Bank of Puerto Rico, the Asian Development Bank, the
34International Finance Corporation, or the African Development
35Bank.
36(11) Participation certificates of the Export-Import Bank of the
37United States.
38(12) Bonds and notes of the California Housing Finance Agency
39
issued pursuant to Chapter 7 (commencing with Section 51350)
40of Part 3 of Division 31 of the Health and Safety Code.
P12 1(13) Promissory notes secured by first mortgages and first trust
2deeds which comply with Section 53651.2.
3(14) Any bonds, notes, warrants, or other evidences of
4indebtedness of a nonprofit corporation issued to finance the
5construction of a school building or school buildings pursuant to
6a lease or agreement with a school district entered into in
7compliance with the provisions of Section 39315 or 81345 of the
8Education Code, and also any bonds, notes, warrants or other
9evidences of indebtedness issued to refinance those bonds, notes,
10warrants, or other evidences of indebtedness as specified in Section
1139317 of the Education Code.
12(15) Any municipal securities, as defined by Section 3(a)(29)
13of the Securities Exchange Act of June 6, 1934, (15 U.S.C. Sec.
1478, as amended), which are issued by this state or any local agency
15thereof.
16(16) With the consent of the treasurer, letters of credit issued
17by the Federal Home Loan Bank of San Francisco which comply
18with Section 53651.6.
19(b) This section shall be operative January 1, 2019.
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