AB 1206,
as amended, Morrell. Statebegin delete and localend delete 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.begin delete Existing law provides a similar list of securities in connection with the funds of local agencies.end delete
This bill, until January 1, 2019, would revise the reference to letters of credit issued by the Federal Home Loan Bank of San Francisco in thebegin delete provisionsend deletebegin insert
provisionend insert 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(A) Any promissory note on which any payment is more than
2490 days past due,
25(B) Any promissory note secured by a mortgage or deed of trust
26as to which there is a lien prior to the mortgage or deed of trust,
27
or
28(C) Any promissory note secured by a mortgage or deed of trust
29as to which a notice of default has been recorded pursuant to
30Section 2924 of the Civil Code or an action has been commenced
31pursuant to Section 725a of the Code of Civil Procedure.
32(h) Bonds issued by the State of Israel.
33(i) Obligations issued, assumed, or guaranteed by the
34International Bank for Reconstruction and Development, the
35Inter-American Development Bank, the Asian Development Bank,
36the African Development Bank, the International Finance
37Corporation, or the Government Development Bank of Puerto
38Rico.
39(j) Any municipal securities, as defined by Section 3(a)(29) of
40the
Securities Exchange Act of June 6, 1934, (15 U.S.C. 78, as
P4 1amended), which are issued by this state or any local agency
2thereof.
3(k) Letters of credit issued by a federal home loan bank, which
4shall be in the form and shall contain provisions as the Treasurer
5may prescribe, and shall include the following terms:
6(1) The Treasurer shall be the beneficiary of the letter of credit.
7(2) The letter of credit shall be clean and irrevocable, and shall
8provide that the Treasurer may draw upon it up to the total amount
9in the event of the failure of the bank or if the bank refuses to
10permit the withdrawal of funds by the Treasurer or any other
11authorized state officer or employee.
12This
section shall remain in effect only until January 1, 2019,
13and as of that date is repealed, unless a later enacted statute, that
14is enacted before January 1, 2019, deletes or extends that date.
Section 16522 is added to the Government Code, to
16read:
(a) The following securities may be received as security
18for demand and time deposits:
19(1) Bonds, notes, or other obligations of the United States, or
20those for which the faith and credit of the United States are pledged
21for the payment of principal and interest, including the guaranteed
22portions of small business administration loans, so long as those
23loans are obligations for which the faith and credit of the United
24States are pledged for the payment of principal and interest.
25(2) Notes or
bonds or any obligations of a local public agency
26(as defined in the United States Housing Act of 1949) or any
27obligations of a public housing agency (as defined in the United
28States Housing Act of 1937) for which the faith and credit of the
29United States are pledged for the payment of principal and interest.
30(3) Bonds of this state or of any county, city, town, metropolitan
31water district, municipal utility district, municipal water district,
32bridge and highway district, flood control district, school district,
33water district, water conservation district or irrigation district within
34this state, and, in addition, revenue or tax anticipation notes, and
35revenue bonds payable solely out of the revenues from a
36revenue-producing property owned, controlled or operated by this
37state, or
such local agency or district, or by a department, board,
38agency, or authority thereof.
39(4) Registered warrants of this state.
P5 1(5) Bonds, consolidated bonds, collateral trust debentures,
2consolidated debentures, or other obligations issued by the United
3States Postal Service, federal land banks or federal intermediate
4credit banks established under the Federal Farm Loan Act, as
5amended, debentures and consolidated debentures issued by the
6Central Bank for Cooperatives and banks for cooperatives
7established under the Farm Credit Act of 1933, as amended,
8consolidated obligations of the Federal Home Loan Banks
9established under the Federal Home Loan Bank Act, bonds,
10debentures
and other obligations of the Federal National Mortgage
11Association and of the Government National Mortgage Association
12established under the National Housing Act as amended, in the
13bonds of any federal home loan bank established under said act,
14bonds, debentures, and other obligations of the Federal Home Loan
15Mortgage Corporation established under the Emergency Home
16Finance Act of 1970, and in bonds, notes, and other obligations
17issued by the Tennessee Valley Authority under the Tennessee
18Valley Authority Act, as amended.
19(6) Bonds and notes of the California Housing Finance Agency
20issued pursuant to Chapter 7 (commencing with Section 41700)
21of Part 3 of Division 31 of the Health and Safety Code.
22(7) Promissory notes secured by first mortgages and first trust
23deeds upon residential real property located in California, provided
24that:
25(A) Notwithstanding Section 16521, the promissory notes shall
26at all times be in an amount in value at least 50 percent in excess
27of the amount deposited with the bank;
28(B) The Treasurer issues regulations, establishes procedures for
29determining the value of the promissory notes and develops
30standards necessary to protect the security of the deposits so
31collateralized;
32(C) The depository may exercise, enforce, or waive any right
33or power granted to it by promissory note, mortgage, or deed of
34trust; and
35(D) The following may not be used as security for deposits:
36(i) Any promissory note on which any payment is more than 90
37days past due,
38(ii) Any promissory note secured by a mortgage or deed of trust
39as to which there is a lien prior to the mortgage or deed of trust,
40or
P6 1(iii) Any
promissory note secured by a mortgage or deed of trust
2as to which a notice of default has been recorded pursuant to
3Section 2924 of the Civil Code or an action has been commenced
4pursuant to Section 725a of the Code of Civil Procedure.
5(8) Bonds issued by the State of Israel.
6(9) Obligations issued, assumed, or guaranteed by the
7International Bank for Reconstruction and Development, the
8Inter-American Development Bank, the Asian Development Bank,
9the African Development Bank, the International Finance
10Corporation, or the Government Development Bank of Puerto
11Rico.
12(10) Any municipal securities, as defined by Section 3(a)(29)
13of the Securities Exchange Act of June 6, 1934, (15 U.S.C. 78, as
14amended), which are issued by this state or any local agency
15thereof.
16(11) Letters of credit issued by the Federal Home Loan Bank
17of San Francisco, which shall be in the form and shall contain
18provisions as the Treasurer may prescribe, and shall include the
19following terms:
20(A) The Treasurer shall be the beneficiary of the letter of credit.
21(B) The letter of credit shall be clean and irrevocable, and shall
22provide
that the Treasurer may draw upon it up to the total amount
23in the event of the failure of the bank or if the bank refuses to
24permit the withdrawal of funds by the Treasurer or any other
25authorized state officer or employee.
26(b) This section shall be operative January 1, 2019.
Section 53651 of the
Government Code is amended
28to read:
Eligible securities are any of the following:
30(a) United States Treasury notes, bonds, bills or certificates of
31indebtedness, or obligations for which the faith and credit of the
32United States are pledged for the payment of principal and interest,
33including the guaranteed portions of small business administration
34loans, so long as the loans are obligations for which the faith and
35credit of the United States are pledged for the payment of principal
36and interest.
37(b) Notes or bonds or any obligations of a local public agency
38(as defined in the United States Housing Act of 1949) or any
39obligations of a public
housing agency (as defined in the United
P7 1States Housing Act of 1937) for which the faith and credit of the
2United States are pledged for the payment of principal and interest.
3(c) Bonds of this state or of any local agency or district of the
4State of California having the power, without limit as to rate or
5amount, to levy taxes or assessments to pay the principal and
6interest of the bonds upon all property within its boundaries subject
7to taxation or assessment by the local agency or district, and in
8addition, limited obligation bonds pursuant to Article 4
9(commencing with Section 50665) of Chapter 3 of Division 1,
10senior obligation bonds pursuant to Article 5 (commencing with
11Section 53387) of Chapter 2.7, and revenue bonds and other
12obligations payable solely out of the revenues from a
13revenue-producing property owned, controlled or
operated by the
14state, local agency or district or by a department, board, agency
15or authority thereof.
16(d) Bonds of any public housing agency (as defined in the United
17States Housing Act of 1937, as amended) as are secured by a pledge
18of annual contributions under an annual contribution contract
19between the public housing agency and the Public Housing
20Administration if such contract shall contain the covenant by the
21Public Housing Administration which is authorized by subsection
22(b) of Section 22 of the United States Housing Act of 1937, as
23amended, and if the maximum sum and the maximum period
24specified in the contract pursuant to that subsection 22(b) shall not
25be less than the annual amount and the period for payment which
26are requisite to provide for the payment when due of all
27installments of principal and interest on the
obligations.
28(e) Registered warrants of this state.
29(f) Bonds, consolidated bonds, collateral trust debentures,
30consolidated debentures, or other obligations issued by the United
31States Postal Service, federal land banks or federal intermediate
32credit banks established under the Federal Farm Loan Act, as
33amended, debentures and consolidated debentures issued by the
34Central Bank for Cooperatives and banks for cooperatives
35established under the Farm Credit Act of 1933, as amended,
36consolidated obligations of the federal home loan banks established
37under the Federal Home Loan Bank Act, bonds, debentures and
38other obligations of the Federal National Mortgage Association
39or of the Government National Mortgage Association established
40under the National Housing Act, as amended, bonds
of any federal
P8 1home loan bank established under that act, bonds, debentures and
2other obligations of the Federal Home Loan Mortgage Corporation
3established under the Emergency Home Finance Act of 1970, and
4obligations of the Tennessee Valley Authority.
5(g) Notes, tax anticipation warrants or other evidence of
6indebtedness issued pursuant to Article 7 (commencing with
7Section 53820), Article 7.5 (commencing with Section 53840) or
8Article 7.6 (commencing with Section 53850) of this Chapter 4.
9(h) State of California notes.
10(i) Bonds, notes, certificates of indebtedness, warrants or other
11obligations issued by: (1) any state of the United States (except
12this state), or the Commonwealth of Puerto Rico, or any local
13agency
thereof having the power to levy taxes, without limit as to
14rate or amount, to pay the principal and interest of such obligations,
15or (2) any state of the United States (except this state), or the
16Commonwealth of Puerto Rico, or a department, board, agency
17or authority thereof except bonds which provide for or are issued
18pursuant to a law which may contemplate a subsequent legislative
19appropriation as an assurance of the continued operation and
20solvency of the department, board, agency or authority but which
21does not constitute a valid and binding obligation for which the
22full faith and credit of such state or the Commonwealth of Puerto
23Rico are pledged, which are payable solely out of the revenues
24from a revenue-producing source owned, controlled or operated
25thereby; provided the obligations issued by an entity described in
26(1), above, are rated in one of the three highest grades, and such
27obligations
issued by an entity described in (2), above, are rated
28in one of the two highest grades by a nationally recognized
29investment service organization that has been engaged regularly
30in rating state and municipal issues for a period of not less than
31five years.
32(j) Obligations issued, assumed or guaranteed by the
33International Bank for Reconstruction and Development,
34Inter-American Development Bank, the Government Development
35Bank of Puerto Rico, the Asian Development Bank, the
36International Finance Corporation, or the African Development
37Bank.
38(k) Participation certificates of the Export-Import Bank of the
39United States.
P9 1(l) Bonds and notes of the California Housing Finance Agency
2issued pursuant to
Chapter 7 (commencing with Section 51350)
3of Part 3 of Division 31 of the Health and Safety Code.
4(m) Promissory notes secured by first mortgages and first trust
5deeds which comply with Section 53651.2.
6(n) Any bonds, notes, warrants, or other evidences of
7indebtedness of a nonprofit corporation issued to finance the
8construction of a school building or school buildings pursuant to
9a lease or agreement with a school district entered into in
10compliance with the provisions of Section 39315 or 81345 of the
11Education Code, and also any bonds, notes, warrants or other
12evidences of indebtedness issued to refinance those bonds, notes,
13warrants, or other evidences of indebtedness as specified in Section
1439317 of the Education Code.
15(o) Any municipal securities, as defined by Section 3(a)(29) of
16the Securities Exchange Act of June 6, 1934, (15 U.S.C. Sec. 78,
17as amended), which are issued by this state or any local agency
18thereof.
19(p) With the consent of the treasurer, letters of credit issued by
20
a federal home loan bank that comply with Section 53651.6.
21This section shall remain in effect only until January 1, 2019,
22and as of that date is repealed, unless a later enacted statute, that
23is enacted before January 1, 2019, deletes or extends that date.
Section 53651 is added to the
Government Code, to
25read:
(a) Eligible securities are any of the following:
27(1) United States Treasury notes, bonds, bills or certificates of
28indebtedness, or obligations for which the faith and credit of the
29United States are pledged for the payment of principal and interest,
30including the guaranteed portions of small business administration
31loans, so long as the loans are obligations for which the faith and
32credit of the United States are pledged for the payment of principal
33and interest.
34(2) Notes or bonds or any obligations of a local public agency
35(as defined in the
United States Housing Act of 1949) or any
36obligations of a public housing agency (as defined in the United
37States Housing Act of 1937) for which the faith and credit of the
38United States are pledged for the payment of principal and interest.
39(3) Bonds of this state or of any local agency or district of the
40State of California having the power, without limit as to rate or
P10 1amount, to levy taxes or assessments to pay the principal and
2interest of the bonds upon all property within its boundaries subject
3to taxation or assessment by the local agency or district, and in
4addition, limited obligation bonds pursuant to Article 4
5(commencing with Section 50665) of Chapter 3 of Division 1,
6senior obligation bonds pursuant to Article 5 (commencing with
7Section 53387) of Chapter 2.7, and revenue bonds and other
8obligations payable solely out of the revenues from a
9revenue-producing property
owned, controlled or operated by the
10state, local agency or district or by a department, board, agency
11or authority thereof.
12(4) Bonds of any public housing agency (as defined in the United
13States Housing Act of 1937, as amended) as are secured by a pledge
14of annual contributions under an annual contribution contract
15between the public housing agency and the Public Housing
16Administration if such contract shall contain the covenant by the
17Public Housing Administration which is authorized by subsection
18(b) of Section 22 of the United States Housing Act of 1937, as
19amended, and if the maximum sum and the maximum period
20specified in the contract pursuant to that subsection 22(b) shall not
21be less than the annual amount and the period for payment which
22are requisite to provide for the payment when due of all
23installments of principal and interest on the obligations.
24(5) Registered warrants of this state.
25(6) Bonds, consolidated bonds, collateral trust debentures,
26consolidated debentures, or other obligations issued by the United
27States Postal Service, federal land banks or federal intermediate
28credit banks established under the Federal Farm Loan Act, as
29amended, debentures and consolidated debentures issued by the
30Central Bank for Cooperatives and banks for cooperatives
31established under the Farm Credit Act of 1933, as amended,
32consolidated obligations of the federal home loan banks established
33under the Federal Home Loan Bank Act, bonds, debentures and
34other obligations of the Federal National Mortgage Association
35or of the Government National Mortgage Association established
36under the National Housing Act, as amended, bonds of any federal
37home loan bank established under that
act, bonds, debentures and
38other obligations of the Federal Home Loan Mortgage Corporation
39established under the Emergency Home Finance Act of 1970, and
40obligations of the Tennessee Valley Authority.
P11 1(7) Notes, tax anticipation warrants or other evidence of
2indebtedness issued pursuant to Article 7 (commencing with
3Section 53820), Article 7.5 (commencing with Section 53840) or
4Article 7.6 (commencing with Section 53850) of this Chapter 4.
5(8) State of California notes.
6(9) Bonds, notes, certificates of indebtedness, warrants or other
7obligations issued by: (A) any state of the United States (except
8this state), or the
Commonwealth of Puerto Rico, or any local
9agency thereof having the power to levy taxes, without limit as to
10rate or amount, to pay the principal and interest of such obligations,
11or (B) any state of the United States (except this state), or the
12Commonwealth of Puerto Rico, or a department, board, agency
13or authority thereof except bonds which provide for or are issued
14pursuant to a law which may contemplate a subsequent legislative
15appropriation as an assurance of the continued operation and
16solvency of the department, board, agency or authority but which
17does not constitute a valid and binding obligation for which the
18full faith and credit of such state or the Commonwealth of Puerto
19Rico are pledged, which are payable solely out of the revenues
20from a revenue-producing source owned, controlled or operated
21thereby; provided the obligations issued by an entity described in
22(A), above, are rated in one of the three highest grades, and such
23obligations issued by an entity described in (B), above, are rated
24in
one of the two highest grades by a nationally recognized
25investment service organization that has been engaged regularly
26in rating state and municipal issues for a period of not less than
27five years.
28(10) Obligations issued, assumed or guaranteed by the
29International Bank for Reconstruction and Development,
30Inter-American Development Bank, the Government Development
31Bank of Puerto Rico, the Asian Development Bank, the
32International Finance Corporation, or the African Development
33Bank.
34(11) Participation certificates of the Export-Import Bank of the
35United States.
36(12) Bonds and notes of the California Housing Finance Agency
37
issued pursuant to Chapter 7 (commencing with Section 51350)
38of Part 3 of Division 31 of the Health and Safety Code.
39(13) Promissory notes secured by first mortgages and first trust
40deeds which comply with Section 53651.2.
P12 1(14) Any bonds, notes, warrants, or other evidences of
2indebtedness of a nonprofit corporation issued to finance the
3construction of a school building or school buildings pursuant to
4a lease or agreement with a school district entered into in
5compliance with the provisions of Section 39315 or 81345 of the
6Education Code, and also any bonds, notes, warrants or other
7evidences of indebtedness issued to refinance those bonds, notes,
8warrants, or other evidences of indebtedness as specified in Section
939317 of the Education Code.
10(15) Any municipal securities, as defined by Section 3(a)(29)
11of the Securities Exchange Act of June 6, 1934, (15 U.S.C. Sec.
1278, as amended), which are issued by this state or any local agency
13thereof.
14(16) With the consent of the treasurer, letters of credit issued
15by the Federal Home Loan Bank of San Francisco which comply
16with Section 53651.6.
17(b) This section shall be operative January 1, 2019.
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