HBA-MPM H.B. 2957 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2957 By: King, Phil Pensions & Investments 4/5/2001 Introduced BACKGROUND AND PURPOSE State law determines if a federal home loan bank (FHLB) letter of credit can serve as collateral for a municipal fund depository. Currently, the Public Funds Investment Act provides an indirect reference to FHLB letters of credit by providing that obligations of United States agencies and instrumentalities are authorized investments that may serve as collateral for the deposit of public funds. However, since letters of credit are not specifically mentioned, some municipalities are wary of relying on FHLB letters of credit to serve as collateral for their deposit funds. House Bill 2957 clarifies that letters of credit may be used as security for a deposit of public funds. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 2957 amends the Government Code to provide that letters of credit by governmental entities constitute an authorized investment for purposes of providing security for a deposit of public funds. EFFECTIVE DATE September 1, 2001.