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| SPONSOR: | Kidd | DATE TYPED: | 01/31/00 | HB | |||
| SHORT TITLE: | Letters of Credit as Security | SB | 87 | ||||
| ANALYST: | Eaton | ||||||
| Recurring
or Non-Rec |
Fund
Affected | ||||
| FY00 | FY01 | FY00 | FY01 | ||
| NFI | |||||
(Parenthesis ( ) Indicate Expenditure Decreases)
SOURCES OF INFORMATION
Regulation and Licensing Department (RLD)
SUMMARY
Synopsis of Bill
This bill would add letters of credit issued by Federal Home Loan Bank to the list of instruments used to provide security for deposits for public money. The bill also deletes language referencing the federal savings and loan insurance corporation which no longer exists.
Significant Issues
New Mexico is a "legal list" state, meaning that a specific security or asset class must be separately identified in the statutes in order to be considered a legal investment. Deregulation in the financial sectors has blurred the distinctions between banks and investment firms and has resulted in the explosive growth in the number of investment instruments available to consumers and institutions.
The rate of change in the markets and the financial sector lends support to the argument of abandoning the "legal list" and replacing it with a more flexible alternative that allows fiduciaries of public money to adapt more quickly to changes in the financial markets.
JE/njw