AB 39 — Revises provisions relating to governmental financial administration. (BDR 31-477)

*Assembly A.B.Bill No.

3939–Committee ASSEMBLYon BILLGovernment NOAffairs .CHAPTER..........

39–COMMITTEE ON GOVERNMENT A FFAIRS (O NB EHALF OF THE STATE T REASURER ) PREFILED N OVEMBER 16, 2018 ____________ Referred to Committee on Government Affairs SUMMARY—Revises provisions relating to governmental financial administration.

(BDR 31-477) FISCAL NOTE:

Effect on Local Government:

May have Fiscal Impact.

Effect on the State:

Yes.

~ EXPLANATION – Matter in bolded italics is new;

matter between brackets [omitted material] is material to be omitted.

Under existing law, all money under the control of the State Treasurer that belongs to the State of Nevada is required to be deposited in any state or national banks, any insured credit unions, any insured savings and loan associations or any 356.010)insured Sectionsavings 1 of this bill limits the types of state or national banks in whichNevada, stateand moneywith iscertain requiredapproval, tooutside beNevada. deposited to insured state or national banks.

(NRS 356.010) Section 31 of this bill makeslimits athe conformingtypes change.of state or national banks in which state money is required to be deposited to insured state or national banks.

ExistingSection 3 of tExisting law requires that money deposited by the State Treasurer or a county treasurer which is not within the limits of insurance provided by an instrumentality of the United States be secured by collateral composed of certain types of securities.

(NRS 356.020, 356.133) As an alternative method, a depository is authorized under existing law to arrange for a third-party depository to hold certain securities as collateral for the uninsured balancescollateral ofpool specifiedpursuant publicto entitiesregulations onadopted behalfby of the depositoryState forTreasurer. the benefit of a - *AB39* – 2 – 356.300-356.390;

(NRSnefit of a 356.300-356.390;

Sections 2, 4 and 5 of this bill also include certain registered broker-dealers as entities that are autSectionsauthorized 6-8to ofhold thissecurities billas clarifysuch the depositories to which the collateral poolon programbehalf establishedof bydepositories. the State Treasurer apply.

(NRSSections 356.350-356.370)6-8 Asof partthis bill clarify the depositories to which the collateral pool of the collateral pool program, depositories are required to submit certain periodic reports to the State Treasurer.

(1) changes the contents of the monthly report that such a depository is required to submit to the (2)State requiresTreasurer a depository to direct a third-partylist depositoryof thataccounts holdsat certain and securities in trust for the depository to submit directly to the State Treasurer the monthly report that ishold currentlypublic requiredmoney; to be submitted by the depository under existing law which lists those securities held in trust for the depository by the third- party depository.

THEand PEOPLE(2) OFrequires THEa STATEdepository OFto NEVADA,direct REPRESENTEDa INthird-party SENATEdepository ANDthat ASSEMBLY,holds DOcertain ENACTsecurities ASin FOLLOWS:trust for the depository to submit directly to the State Treasurer the monthly report that is currently required to be submitted by the depository under party depository.h lists those securities held in trust for the depository by the third- - 80th Session (2019) – 2 – EXPLANATION – Matter in bolded italics is new;

Sectionmatter 1.between brackets [omitted material] is material to be omitted.

THE SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:D IN Section 1.

(a) Arrange for the redeposit of any money under the control of the State Treasurer that exceeds the limits of insurance provided by an instrumentality of the United States or pursuant to NRS 678.750 into one or more insured deposit accounts in one or more insured state or national banks, credit unions, insured savings and loan associations or insured savings banks;

The depository banks, credit unions, savings and loan associations or savings banks may, if authorized by a contract negotiated with the State Treasurer, receive compensation for - *AB39* – 3 – handling, collecting and paying all checks, drafts and other exchange.

(a) United States treasury notes, bills, bonds or obligations as to which the full faith and credit of the United States are pledged for the payment of principal and interest, including the guaranteed portions of Small Business Administration loans if the full faith and - 80th Session (2019) – 3 – credit of the United States is pledged for the payment of the principal and interest;

(e) Mortgage-backed pass-through securities guaranteed by the Federal National Mortgage Association, the Federal Home Loan MortgageAssociation;poration Corporation or the Government National Mortgage Association;(f) Collateralized mortgage obligations or real estate mortgage investment conduits that are rated “AAA,” “Aaa” or its equivalent by a nationally recognized rating service;

(f) Collateralized mortgage obligations or real estate mortgage investment conduits that are rated “AAA,” “Aaa” or its equivalent by (g) Instruments in which the State is permitted by NRS 355.140 to invest;

The fair market value of the deposit of securities as collateral by each depository bank, credit union, savings and loan association or savings bank must be at least the amount required pursuant to NRS 356.300 to 356.390, inclusive.

The fair marketmarketed value of any collateral consisting of promissory notes with first - *AB39* – 4 – mortgages or first deeds of trust shall be deemed to be 75 percent of the unpaid principal of the notes.

- 80th Session (2019) – 4 – Sec.

356.133not 1.within the limits of insurance provided by an instrumentality of the United States must be secured by collateral composed of the following types of securities:

All(a) moneyUnited depositedStates bytreasury anotes, countybills, treasurerbonds thator isobligations notas withinto which the limitsfull faith and credit of insurancethe providedUnited byStates anare instrumentalitypledged for the payment of principal and interest, including the Unitedguaranteed Statesportions mustof beSmall securedBusiness byAdministration collateralloans composedif the full faith and credit of the followingUnited typesStates is pledged for the payment of securities:the principal and interest;

(a) United States treasury notes, bills, bonds or obligations as to which the full faith and credit of the United States are pledged for portions of Small Business Administration loans if the full faith and credit of the United States is pledged for the payment of the principal and interest;

or (f) Irrevocable letters of credit from any Federal Home Loan BankBan2.witCollateral withdeposited by the Statedepository Treasurerbank, namedcredit asunion, savings and loan association or savings bank must be pledged with the beneficiary.county treasurer or with a trust company, a broker-dealer registered under 15 U.S.C.

2.§ 78o(b)(1), a Federal Home Loan Bank [,] or any insured bank, insured credit union, insured savings and loan association or insured savings bank, other than the depository bank, credit union, savings and loan association or savings bank, which will accept the securities in trust for the purposes of this section.

Collateral deposited by the depository bank, credit union, savings and loan association or savings bank must be pledged with the county treasurer or with a trust company, a broker-dealer registered under 15 U.S.C.

§ 78o(b)(1), a Federal Home Loan Bank - *AB39* – 5 – [,] or any insured bank, insured credit union, insured savings and loan association or insured savings bank, other than the depository bank, credit union, savings and loan association or savings bank, which will accept the securities in trust for the purposes of this section.

- 80th Session (2019) – 5 – 4.

The county treasurer or the board of county commissioners may, from time to time, require the deposit of additional securities as collateral if, in their judgment, the additional securities arearees necessary to secure the county treasurer’s deposit.

§ 78o(b)(1) or trust department of a state, national or federal reserve district bank which is authorized to hold acceptable securities on behalf of a depository for the Statebenefit Treasurerof undera NRScollateral 356.390.ursuantpool pursuant to regulations adopted by Sec.the State Treasurer under NRS 356.390.

Sec.