Government finance: surplus investments: savings and loan associations or credit unions.

(1) Existing law specifies the types of securities that are eligible for the investment of surplus state funds, which include bonds or interest-bearing notes on obligations that are guaranteed as to principal and interest by a federal agency of the United States. This bill would instead require those bonds or interest-bearing notes to be on obligations that are issued by or fully guaranteed as to principal and interest by a federal agency of the United States or a United States government-sponsored enterprise, as defined by specified federal law. Existing law, with respect to securities that are eligible for the investment of surplus state funds, includes debentures and consolidated debentures issued by the Central Bank for Cooperatives and banks for cooperatives and bonds or debentures of the Federal Home Loan Bank Board, established under specified federal law. This bill would provide that these types of securities also include other obligations issued by the above-described entities. The bill, with respect to securities eligible for the investment of surplus state funds, would also include shares of any money market mutual fund subject to registration by, and under the regulatory authority of, the United States Securities and Exchange Commission, subject to meeting specified conditions. (2) Existing law, for purposes of a savings and loan association or credit union being eligible to receive deposits of state funds, specifies which securities may be received, and includes within that list of eligible securities a letter of credit issued by the Federal Home Loan Bank of San Francisco that includes specified terms. Existing law requires these securities to be in an amount in value of at least 10% in excess of the amount deposited with the savings and loan association or credit union. This bill would instead require a letter of credit issued by the Federal Home Loan Bank of San Francisco to be in an amount in value of at least 100% of the amount deposited with the savings and loan association or credit union. The bill would also make nonsubstantive changes. This bill would incorporate additional changes to Section 16430 of the Government Code proposed by AB 869 to be operative only if this bill and AB 869 are enacted and this bill is enacted last.