Master FIR (1988)

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F I S C A L I M P A C T R E P O R T

SPONSOR:	Kidd		DATE TYPED:	02/02/01		HB
SHORT TITLE:		Clarify Security For Public Deposits				SB	123
					ANALYST:		Eaton

REVENUE

Estimated Revenue		Subsequent Years Impact	Recurring or Non-Rec	Fund Affected
FY01	FY02	Subsequent Years Impact	Recurring or Non-Rec	Fund Affected
	NFI

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates House Bill 254 - Irwin

SOURCES OF INFORMATION

Financial Institutions Division, Regulation and Licensing Department (RLD)

SUMMARY

Synopsis of Bill

House Bill 254 amends and clarifies the requirement for security of deposits of public money, by allowing the security for public funds to include surety bonds.

Significant Issues

In lieu of using the securities defined in Section 6-10-16 NMSA 1978 as security for public deposits, surety bonds may be utilized as security for those deposits. Types of securities presently allowed for public deposits are:

•Direct obligations of the United States Government, obligations of federal government agencies and instrumentalities;

•Securities of the State of New Mexico, it agencies, instrumentalities, counties, municipalities or other subdivisions

•N.A.S.D. Revenue bonds rated BAA or above

•Letters of credit issued by the Federal Home Loan Bank

Pledged securities are not needed for any deposits covered by the Federal Deposit Insurance Corporation.

PERFORMANCE IMPLICATIONS

No impact on agency performance.

FISCAL IMPLICATIONS

No fiscal impact.

ADMINISTRATIVE IMPLICATIONS

The Financial Institutions Division reviews securities for public funds during each bank, credit union and savings and loan examination. This bill would not affect the financial institution review process.

OTHER SUBSTANTIVE ISSUES

Because this bill has an emergency clause, it would take effect immediately upon signature by the Governor.

POSSIBLE QUESTIONS

Is allowing surety bonds to be used as security involve more risk to any of the parties involved?

JBE/njw