BILL ANALYSIS �
AB 2298
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Date of Hearing: April, 7, 2014
ASSEMBLY COMMITTEE ON BANKING AND FINANCE
Roger Dickinson, Chair
AB 2298 (Rodriguez) - As Introduced: February 21, 2014
SUBJECT : Local agency funds.
SUMMARY : Allows state chartered financial institutions that
maintain local agency deposits to submit their Local Agency
Deposit Weekly Reports via email or facsimile.
EXISTING LAW , pursuant to Government Code, Section 53663, provides
that financial institutions that hold local agency deposits must
report on the status of those deposits on a weekly basis. These
reports must be hand delivered, or sent via United States Postal
Service mail.
Government Code Sections 16340, 16429.1, 53601, 53601.6, 53601.8,
53635, 53635.2, 53638,
and 53684 specify permissible types of investments that local
agencies may invest in.
FISCAL EFFECT : Unknown
COMMENTS :
California law allows local agencies to invest surplus funds into
various specified investment vehicles. For example, up to 30% of
local agency funds can be invested in certificates of deposit at
financial institutions. California regulated state banks and
credit unions are required to report weekly on the status of those
investments to the Department of Business Oversight. AB 2298
would simply allow the weekly reports to be provided
electronically via email or facsimile.
Local Agency Investments.
While not addressed specifically in AB 2298, it may be worthy to
note some background information regarding the permissible
investments allowed under the Government code for local agencies.
To be eligible to receive local agency money, a financial
institution must receive an overall rating of not less than
"satisfactory" from the appropriate federal supervisory agency for
AB 2298
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meeting the criteria specified in Section 2906 of Title 12 of the
U.S. Code (Community Reinvestment Act of 1977). The Community
Re-investment Act of 1977 requires financial institutions to
demonstrate their commitment to meeting the credit needs of local
communities in which they are chartered to do business.
The following table demonstrates the allowable local agency
investments under the Government code:
------------------------------------------------------------
|Investment Type |Maximum |Maximum % of |Minimum |
| |Maturity |Portfolio |quality |
| | | |requirement |
|-------------------+---------+--------------+---------------|
|Local Agency Bonds |5 years |None |None |
|-------------------+---------+--------------+---------------|
|U.S. Treasury |5 Years |None |None |
|Obligations | | | |
|-------------------+---------+--------------+---------------|
|State Obligations |5 years |None |None |
|-------------------+---------+--------------+---------------|
|Ca Local Agency |5 years |None |None |
|Obligations | | | |
|-------------------+---------+--------------+---------------|
|U.S. Agency |5 years |None |None |
|Obligations | | | |
|-------------------+---------+--------------+---------------|
|U.S. Agency |5 years |None |None |
|Obligations | | | |
|-------------------+---------+--------------+---------------|
|Banker's |180 days |40% |None |
|Acceptances | | | |
|-------------------+---------+--------------+---------------|
|Commercial paper |270 days |25% of |A-1 |
| | |agencies | |
| | |total or 40% | |
| | |depending on | |
| | |agency | |
|-------------------+---------+--------------+---------------|
|Certificates of |5 Years |30% |None |
|Deposit | | | |
|-------------------+---------+--------------+---------------|
|CD Placement |5 years |30% |None |
|service | | | |
|-------------------+---------+--------------+---------------|
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|Repurchase |92 days |20% of base |None |
|agreements and | |value of | |
|Securities Lending | |portfolio. | |
|Agreements | | | |
|-------------------+---------+--------------+---------------|
|Medium-Term Notes |5 Years |30% |A Rating |
|-------------------+---------+--------------+---------------|
|Mutual Funds and |N/A |20% |Multiple |
|Money Market | | |requirements |
|Mutual Funds | | |based on |
| | | |several |
| | | |factors. |
|-------------------+---------+--------------+---------------|
|Collateralized |5 years |None |None |
|Bank Deposits | | | |
|-------------------+---------+--------------+---------------|
|Mortgage Pass |5 years |20% |AA rating |
|through Securities | | | |
|-------------------+---------+--------------+---------------|
|Bank/Time Deposits |5 years |None |None |
|-------------------+---------+--------------+---------------|
|County Pooled |N/A |None |None |
|Investment Funds | | | |
|-------------------+---------+--------------+---------------|
|Joint Powers |N/A |None |Multiple |
|Authority Pool | | | |
|-------------------+---------+--------------+---------------|
|Local Agency |N/A |None |None |
|Investment Fund | | | |
|(LAIF) | | | |
|-------------------+---------+--------------+---------------|
|Voluntary | | | |
|Investment Program | | | |
|Fund. | | | |
------------------------------------------------------------
REGISTERED SUPPORT / OPPOSITION :
Support
California Credit Union League (Sponsor)
California Bankers Association (CBA)
California Independent Bankers (CIB)
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Opposition
None on file.
Analysis Prepared by : Mark Farouk / B. & F. / (916) 319-3081