AB 283, as introduced, Dababneh. 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, until January 1, 2017, authorizes, under certain conditions, a local agency to invest up to a certain percentage of its surplus funds in deposits at specified types of financial institutions that use a private sector entity to assist in the placement of deposits, whether those investments are certificates of deposit or in another form. With respect to investments other than a certificate of deposit, existing law limits the percentage of local agency funds that may be invested by any one private sector entity. Existing law, on and after January 1, 2017, limits this authority to invest surplus funds to investments in certificates of deposit.
This bill would eliminate the limitation that would become operative on January 1, 2017, and thus would indefinitely continue the existing authority for a local agency to invest its surplus funds, in certificates of deposit or in another form of investment. This bill would also remove the limit on the percentage of local agency funds that may be invested by any one private sector entity.
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, as
2amended by Section 1 of Chapter 228 of the Statutes of 2013, is
3amended to read:
Notwithstanding Section 53601 or any other provision
5of this code, a local agency that has the authority under law to
6invest funds, at its discretion, may invest a portion of its surplus
7funds in deposits at a commercial bank, savings bank, savings and
8loan association, or credit union that uses a private sector entity
9that assists in the placement of deposits. The following conditions
10shall apply:
11(a) The local agency shall choose a nationally or state chartered
12commercial bank, savings bank, savings and loan association, or
13credit union in this state to invest the funds, which shall be known
14as the “selected” depository institution.
15(b) The selected depository institution may use a private sector
16entity to help place
local agency deposits with one or more
17commercial banks, savings banks, savings and loan associations,
18or credit unions that are located in the United States and are within
19the network used by the private sector entity for this purpose.
20(c) Any private sector entity used by a selected depository
21institution to help place its local agency deposits shall maintain
22policies and procedures requiring both of the following:
23(1) The full amount of each deposit placed pursuant to
24subdivision (b) and the interest that may accrue on each such
25deposit shall at all times be insured by the Federal Deposit
26Insurance Corporation or the National Credit Union Administration.
27(2) Every depository institution where funds are placed shall
28be capitalized at a level that is sufficient, and be otherwise eligible,
29to receive such deposits
pursuant to regulations of the Federal
30Deposit Insurance Corporation or the National Credit Union
31Administration, as applicable.
32(d) The selected depository institution shall serve as a custodian
33for each such deposit.
34(e) On the same date that the local agency’s funds are placed
35pursuant to subdivision (b) by the private sector entity, the selected
36depository institution shall receive an amount of insured deposits
37from other financial institutions that, in total, are equal to, or greater
38than, the full amount of the principal that the local agency initially
P3 1deposited through the selected depository institution pursuant to
2subdivision (b).
3(f) Notwithstanding subdivisions (a) to (e), inclusive, a credit
4union shall not act as a selected depository institution under this
5section or Section 53635.8 unless both of the
following conditions
6are satisfied:
7(1) The credit union offers federal depository insurance through
8the National Credit Union Administration.
9(2) The credit union is in possession of written guidance or other
10written communication from the National Credit Union
11Administration authorizing participation of federally insured credit
12unions in one or more deposit placement services and affirming
13that the moneys held by those credit unions while participating in
14a deposit placement service will at all times be insured by the
15federal government.
16(g) It is the intent of the Legislature that this section shall not
17restrict competition among private sector entities that provide
18placement services pursuant to this section.
19(h) The deposits placed pursuant to this
section and Section
2053635.8 shall not, in total, exceed 30 percent of the agency’s funds
21that may be invested for this purpose.
22(i) Purchases of certificates of deposit pursuant to this section,
23Section 53635.8, and subdivision (i) of Section 53601 shall not,
24in total, exceed 30 percent of the agency’s funds that may be
25invested for this purpose.
26(j) Excluding purchases of certificates of deposit pursuant to
27this section, no more than
10 percent of the agency’s funds that
28may be invested for this purpose may be submitted, pursuant to
29subdivision (b), to any one private sector entity that assists in the
30placement of deposits with one or more commercial banks, savings
31banks, savings and loan associations, or credit unions that are
32located in the United States, for the local agency’s account.
33(k) This section shall remain in effect only until January 1,
2017,
34and as of that date is repealed, unless a later enacted statute, that
35is enacted before January 1, 2017, deletes or extends that date.
Section 53601.8 of the Government Code, as added
37by Section 2 of Chapter 228 of the Statutes of 2013, is repealed.
Notwithstanding Section 53601 or any other provision
39of this code, a local agency that has the authority under law to
40invest funds may, at its discretion, invest a portion of its surplus
P4 1funds in certificates of deposit at a commercial bank, savings bank,
2savings and loan association, or credit union that uses a private
3sector entity that assists in the placement of certificates of deposit,
4provided that the purchases of certificates of deposit pursuant to
5this section, Section 53635.8, and subdivision (i) of Section 53601
6do not, in total, exceed 30 percent of the agency’s funds that may
7be invested for this purpose. The following conditions shall apply:
8(a) The local agency shall choose a nationally or state-chartered
9commercial bank, savings bank, savings and loan association, or
10credit union in this state to invest the funds, which shall be known
11as the “selected” depository institution.
12(b) The selected depository institution may submit the funds to
13a private sector entity that assists in the placement of certificates
14of deposit with one or more commercial banks, savings banks,
15savings and loan associations, or credit unions that are located in
16the United States for the local agency’s account.
17(c) The full amount of the principal and the interest that may
18
be accrued during the maximum term of each certificate of deposit
19shall at all times be insured by the Federal Deposit Insurance
20Corporation or the National Credit Union Administration.
21(d) The selected depository institution shall serve as a custodian
22for each certificate of deposit that is issued with the placement
23service for the local agency’s account.
24(e) At the same time the local agency’s funds are deposited and
25the certificates of deposit are issued, the selected depository
26institution shall receive an amount of deposits from other
27commercial banks, savings banks, savings and loan associations,
28or credit unions that, in total, are equal to, or
greater than, the full
29
amount of the principal that the local agency initially deposited
30through the selected depository institution for investment.
31(f) Notwithstanding subdivisions (a) to (e), inclusive, no credit
32union may act as a selected depository institution under this section
33or Section 53635.8 unless both of the following conditions are
34satisfied:
35(1) The credit union offers federal depository insurance through
36the National Credit Union Administration.
37(2) The credit union is in possession of written guidance or other
38written communication from the
National Credit Union
39Administration authorizing participation of federally insured credit
40unions in one or more certificate of deposit placement services
P5 1and affirming that the moneys held by those credit unions while
2participating in a deposit placement service will at all times be
3insured by the federal government.
4(g) It is the intent of the Legislature that this section shall not
5restrict competition among private sector entities that provide
6placement services pursuant to this section.
7(h) This section shall become operative on January 1, 2017.
Section 53635.8 of the Government Code, as amended
9by Section 3 of Chapter 228 of the Statutes of 2013, is amended
10to read:
Notwithstanding Section 53601 or any other provision
12of this code, a local agency that has the authority under law to
13invest funds, at its discretion, may invest a portion of its surplus
14funds in deposits at a commercial bank, savings bank, savings and
15loan association, or credit union that uses a private sector entity
16that assists in the placement of deposits. The following conditions
17shall apply:
18(a) The local agency shall choose a nationally or state-chartered
19commercial bank, savings bank, savings and loan association, or
20credit union in this state to invest the funds, which shall be known
21as the “selected” depository institution.
22(b) The selected depository institution may use a private sector
23entity to help place
local agency deposits with one or more
24commercial banks, savings banks, savings and loan associations,
25or credit unions that are located in the United States and are within
26the network used by the private sector entity for this purpose.
27(c) Any private sector entity used by a selected depository
28institution to help place its local agency deposits shall maintain
29policies and procedures requiring both of the following:
30(1) The full amount of each deposit placed pursuant to
31subdivision (b) and the interest that may accrue on each such
32deposit shall at all times be insured by the Federal Deposit
33Insurance Corporation or the National Credit Union Administration.
34(2) Every depository institution where funds are placed shall
35be capitalized at a level that is sufficient, and be otherwise eligible,
36to receive such deposits
pursuant to regulations of the Federal
37Deposit Insurance Corporation or the National Credit Union
38Administration, as applicable.
39(d) The selected depository institution shall serve as a custodian
40for each such deposit.
P6 1(e) On the same date that the local agency’s funds are placed
2pursuant to subdivision (b) by the private sector entity, the selected
3depository institution shall receive an amount of insured deposits
4from other financial institutions that, in total, are equal to, or greater
5than, the full amount of the principal that the local agency initially
6deposited through the selected depository institution for investment
7pursuant to subdivision (b).
8(f) Notwithstanding subdivisions (a) to (e), inclusive, a credit
9union shall not act as a selected depository institution under this
10section or Section 53601.8
unless both of the following conditions
11are satisfied:
12(1) The credit union offers federal depository insurance through
13the National Credit Union Administration.
14(2) The credit union is in possession of written guidance or other
15written communication from the National Credit Union
16Administration authorizing participation of federally insured credit
17unions in one or more deposit placement services and affirming
18that the moneys held by those credit unions while participating in
19a deposit placement service will at all times be insured by the
20federal government.
21(g) It is the intent of the Legislature that this section shall not
22restrict competition among private sector entities that provide
23placement services pursuant to this section.
24(h) The deposits
placed pursuant to this section and Section
2553601.8 shall not, in total, exceed 30 percent of the agency’s funds
26that may be invested for this purpose.
27(i) Purchases of certificates of deposit pursuant to this section,
28Section 53601.8, and subdivision (i) of Section 53601 shall not,
29in total, exceed 30 percent of the agency’s funds that may be
30invested for this purpose.
31(j) Excluding purchases of certificates of deposit pursuant
to
32this section, no more than 10 percent of the agency’s funds that
33may be invested for this purpose may be submitted, pursuant to
34subdivision (b), to any one private sector entity that assists in the
35placement of deposits with one or more commercial banks, savings
36banks, savings and loan associations, or credit unions that are
37located in the United States, for the local agency’s account.
38(k) This section shall remain in effect only until January 1, 2017,
39and as of that date is repealed, unless a later enacted statute, that
40is enacted before January 1, 2017, deletes or extends that date.
Section 53635.8 of the Government Code, as added
2by Section 4 of Chapter 228 of the Statutes of 2013, is repealed.
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 certificates of deposit at a commercial bank, savings bank,
7savings and loan association, or credit union that uses a private
8sector entity that assists in the placement of certificates of deposit,
9provided that the purchases of certificates of deposit pursuant to
10this section, Section 53601.8, and subdivision (i) of Section 53601
11do not, in total, exceed 30 percent of the agency’s funds that may
12be invested for this purpose. The following conditions shall apply:
13(a) The local agency shall choose a nationally or state-chartered
14commercial bank, savings bank, savings and loan association, or
15credit union in this state to invest the funds, which shall be known
16as the “selected” depository institution.
17(b) The selected depository institution may submit the funds to
18a private sector entity that assists in the placement of certificates
19of deposit with one or more commercial banks, savings banks,
20savings and loan associations, or credit unions that are located in
21the United States, for the local agency’s account.
22(c) The full amount of the principal and the interest that may
23be
accrued during the maximum term of each certificate of deposit
24shall at all times be insured by the Federal Deposit Insurance
25Corporation or the National Credit Union Administration.
26(d) The selected depository institution shall serve as a custodian
27for each certificate of deposit that is issued with the placement
28service for the local agency’s account.
29(e) At the same time the local agency’s funds are deposited and
30the certificates of deposit are issued, the selected depository
31institution shall receive an amount of deposits from other
32commercial banks, savings banks, savings and loan associations,
33or credit unions that, in total, are equal to, or greater than, the full
34amount
of the principal that the local agency initially deposited
35through the selected depository institution for investment.
36(f) Notwithstanding subdivisions (a) to (e), inclusive, a credit
37union shall not act as a selected depository institution under this
38section or Section 53601.8 unless both of the following conditions
39are satisfied:
P8 1(1) The credit union offers federal depository insurance through
2the National Credit Union Administration.
3(2) The credit union is in possession of written guidance or other
4written communication from the National Credit
Union
5Administration authorizing participation of federally insured credit
6unions in one or more certificate of deposit placement services
7and affirming that the moneys held by those credit unions while
8participating in a deposit placement service will at all times be
9insured by the federal government.
10(g) It is the intent of the Legislature that this section shall not
11restrict competition among private sector entities that provide
12placement services pursuant to this section.
13(h) This section shall become operative on January 1, 2017.
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