Bill Text: CA SB1344 | 2009-2010 | Regular Session | Chaptered

California Senate Bill 1344 (Prior Session Legislation)

Bill Title: Local agency investments.

Spectrum: Bipartisan Bill

Status: (Passed) 2010-07-15 - Chaptered by Secretary of State. Chapter 112, Statutes of 2010. [SB1344 Detail]

Download: California-2009-SB1344-Chaptered.html

BILL NUMBER: SB 1344	CHAPTERED
	BILL TEXT

	CHAPTER  112
	FILED WITH SECRETARY OF STATE  JULY 15, 2010
	APPROVED BY GOVERNOR  JULY 15, 2010
	PASSED THE SENATE  MAY 3, 2010
	PASSED THE ASSEMBLY  JUNE 28, 2010
	AMENDED IN SENATE  APRIL 5, 2010

INTRODUCED BY   Senator Kehoe
   (Coauthors: Senators Cogdill, Cox, Price, and Wiggins)

                        FEBRUARY 19, 2010

   An act to amend Sections 53601.8 and 53635.8 of the Government
Code, relating to local agency investments.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1344, Kehoe. Local agency investments.
   Existing law prescribes the instruments in, and criteria by, which
local agencies, as defined, may invest surplus funds. Existing law
authorizes, until January 1, 2012, the investment of up to 30% of
those funds in certificates of deposit at a commercial bank, savings
bank, savings and loan association, or credit union that uses a
private sector entity that assists in the placement of certificates
of deposit under specified conditions.
   This bill would delete the January 1, 2012, sunset date for these
provisions, thereby extending the operation of these provisions
indefinitely.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 53601.8 of the Government Code is amended to
read:
   53601.8.  Notwithstanding Section 53601 or any other provision of
this code, a local agency that has the authority under law to invest
funds, at its discretion, may invest a portion of its surplus funds
in certificates of deposit at a commercial bank, savings bank,
savings and loan association, or credit union that uses a private
sector entity that assists in the placement of certificates of
deposit, provided that the purchases of certificates of deposit
pursuant to this section, Section 53635.8, and subdivision (i) of
Section 53601 do not, in total, exceed 30 percent of the agency's
funds that may be invested for this purpose. The following conditions
shall apply:
   (a) The local agency shall choose a nationally or state chartered
commercial bank, savings bank, savings and loan association, or
credit union in this state to invest the funds, which shall be known
as the "selected" depository institution.
   (b) The selected depository institution may submit the funds to a
private sector entity that assists in the placement of certificates
of deposit with one or more commercial banks, savings banks, savings
and loan associations, or credit unions that are located in the
United States, for the local agency's account.
   (c) The full amount of the principal and the interest that may be
accrued during the maximum term of each certificate of deposit shall
at all times be insured by the Federal Deposit Insurance Corporation
or the National Credit Union Administration.
   (d) The selected depository institution shall serve as a custodian
for each certificate of deposit that is issued with the placement
service for the local agency's account.
   (e) At the same time the local agency's funds are deposited and
the certificates of deposit are issued, the selected depository
institution shall receive an amount of deposits from other commercial
banks, savings banks, savings and loan associations, or credit
unions that, in total, are equal to, or greater than, the full amount
of the principal that the local agency initially deposited through
the selected depository institution for investment.
   (f)  Notwithstanding subdivisions (a) to (e), inclusive, no credit
union may act as a selected depository institution under this
section or Section 53635.8 unless both of the following conditions
are satisfied:
   (1) The credit union offers federal depository insurance through
the National Credit Union Administration.
   (2) The credit union is in possession of written guidance or other
written communication from the National Credit Union Administration
authorizing participation of federally insured credit unions in one
or more certificate of deposit placement services and affirming that
the moneys held by those credit unions while participating in a
deposit placement service will at all times be insured by the federal
government.
   (g) It is the intent of the Legislature that nothing in this
section shall restrict competition among private sector entities that
provide placement services pursuant to this section.
  SEC. 2.  Section 53635.8 of the Government Code is amended to read:

   53635.8.  Notwithstanding Section 53601 or any other provision of
this code, a local agency that has the authority under law to invest
funds, at its discretion, may invest a portion of its surplus funds
in certificates of deposit at a commercial bank, savings bank,
savings and loan association, or credit union that uses a private
sector entity that assists in the placement of certificates of
deposit, provided that the purchases of certificates of deposit
pursuant to this section, Section 53601.8, and subdivision (i) of
Section 53601 do not, in total, exceed 30 percent of the agency's
funds that may be invested for this purpose. The following conditions
shall apply:
   (a) The local agency shall choose a nationally or state-chartered
commercial bank, savings bank, savings and loan association, or
credit union in this state to invest the funds, which shall be known
as the "selected" depository institution.
   (b) The selected depository institution may submit the funds to a
private sector entity that assists in the placement of certificates
of deposit with one or more commercial banks, savings banks, savings
and loan associations, or credit unions that are located in the
United States, for the local agency's account.
   (c) The full amount of the principal and the interest that may be
accrued during the maximum term of each certificate of deposit shall
at all times be insured by the Federal Deposit Insurance Corporation
or the National Credit Union Administration.
   (d) The selected depository institution shall serve as a custodian
for each certificate of deposit that is issued with the placement
service for the local agency's account.
   (e) At the same time the local agency's funds are deposited and
the certificates of deposit are issued, the selected depository
institution shall receive an amount of deposits from other commercial
banks, savings banks, savings and loan associations, or credit
unions that, in total, are equal to, or greater than, the full amount
of the principal that the local agency initially deposited through
the selected depository institution for investment.
   (f) Notwithstanding subdivisions (a) to (e), inclusive, no credit
union may act as a selected depository institution under this section
or Section 53601.8 unless both of the following conditions are
satisfied:
   (1) The credit union offers federal depository insurance through
the National Credit Union Administration.
   (2) The credit union is in possession of written guidance or other
written communication from the National Credit Union Administration
authorizing participation of federally insured credit unions in one
or more certificate of deposit placement services and affirming that
the moneys held by those credit unions while participating in a
deposit placement service will at all times be insured by the federal
government.
   (g) It is the intent of the Legislature that nothing in this
section shall restrict competition among private sector entities that
provide placement services pursuant to this section.