PRINTER'S NO. 4023
No. 2800 Session of 2000
INTRODUCED BY BOYES AND TRELLO, OCTOBER 3, 2000
REFERRED TO COMMITTEE ON FINANCE, OCTOBER 3, 2000
AN ACT
1 Amending the act of August 6, 1971 (P.L.281, No.72), entitled
2 "An act standardizing the procedures for pledges of assets to
3 secure deposits of public funds with banking institutions
4 pursuant to other laws; establishing a standard rule for the
5 types, amounts and valuations of assets eligible to be used
6 as collateral for deposits of public funds; permitting assets
7 to be pledged against deposits on a pooled basis; and
8 authorizing the appointment of custodians to act as pledgees
9 of assets," further providing for amounts required to be
10 pledged and for eligible assets and valuation.
11 The General Assembly of the Commonwealth of Pennsylvania
12 hereby enacts as follows:
13 Section 1. Section 4 of the act of August 6, 1971 (P.L.281,
14 No.72), entitled "An act standardizing the procedures for
15 pledges of assets to secure deposits of public funds with
16 banking institutions pursuant to other laws; establishing a
17 standard rule for the types, amounts and valuations of assets
18 eligible to be used as collateral for deposits of public funds;
19 permitting assets to be pledged against deposits on a pooled
20 basis; and authorizing the appointment of custodians to act as
21 pledgees of assets," is amended to read:
1 Section 4. Amounts Required to be Pledged; Eligible Assets
2 and Valuation.--Unless the public body shall have instructed the
3 depository in writing that the assets securing its deposits may
4 not be pooled the amount of assets required to secure public
5 deposits, the types of assets which may be used as security and
6 the valuation as collateral of assets pledged shall be either:
7 (1) the same as those applicable to United States Treasury
8 tax and loan accounts under the provisions of United States
9 Treasury Circular No. 92 as in effect on the effective date of
10 this act, except that the valuation of obligations of the
11 Commonwealth and public bodies of the Commonwealth shall be at
12 the face value thereof[.]; or
13 (2) an irrevocable letter of credit issued by a Federal Home
14 Loan Bank in an amount equal to or greater than the total amount
15 of public deposits being secured provided that the Federal Home
16 Loan Bank issuing the irrevocable letter of credit maintains a
17 rating of at least the second highest rating level from one
18 nationally recognized rating agency. If the line of credit to
19 the United States Treasury as set forth in the Federal Home Loan
20 Bank Act (47 Stat. 733; 12 U.S.C. § 1431(i)) is revoked by
21 Congress, then irrevocable letters of credit issued by a Federal
22 Home Loan Bank shall continue to be eligible to secure public
23 deposits only if the Federal Home Loan Bank issuing the
24 irrevocable letter of credit has the highest rating level from
25 one nationally recognized rating agency.
26 Section 2. This act shall take effect in 60 days.
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