Texas House Bill HB77

Texas 2009 - 81st Regular

• Filed: 11/10/08
• Out of House Committee: 4/8/09
• Voted on by House: 4/23/09
• Out of Senate Committee: 5/15/09
• Report Pass: 5/15/09

Caption

Relating to the collateralization of certain public funds and to custodians with which certain pledged securities may be deposited; providing administrative penalties.

Impact

The implementation of HB 77 aims to ensure that participating institutions back their public deposits with securities valued at at least 102% of the total public funds. This is expected to increase the security and transparency associated with the management of public finances. The bill outlines specific procedures for monitoring and reporting that institutions must adhere to, intending to create a more robust framework for financial oversight in the state.

Summary

House Bill 77 focuses on the collateralization of certain public funds held by financial institutions in Texas. This bill introduces a new subchapter under Chapter 2257 of the Government Code that establishes a pooled collateral program for securing deposits of public funds. The comptroller is tasked with overseeing this program, which allows financial institutions to pledge collateral to secure public deposits in a centralized manner, potentially simplifying compliance for institutions while enhancing the safety of public funds.

Contention

While the bill offers a structured approach to collateralizing public deposits, there may be concerns regarding the administrative penalties imposed for non-compliance with the new regulations. The comptroller has the authority to impose penalties for late reporting or failure to maintain proper collateral levels, which could be viewed as excessive by some advocacy groups. Critics may argue that these financial standards could place a disproportionate burden on smaller institutions, potentially impacting their ability to operate effectively within the new regulatory framework.