Texas Administrative Code
Title 31 - NATURAL RESOURCES AND CONSERVATION
Part 10 - TEXAS WATER DEVELOPMENT BOARD
Chapter 375 - CLEAN WATER STATE REVOLVING FUND
Subchapter I - NONPOINT SOURCE POLLUTION LINKED DEPOSITS PROGRAM
Section 375.209 - Collateral for Linked Deposits

Universal Citation: 31 TX Admin Code ยง 375.209

Current through Reg. 49, No. 38; September 20, 2024

(a) Eligible lending institutions shall secure funds that the Board deposits pursuant to a linked deposit agreement in an amount not less than the amount of the deposit under the linked deposit agreement:

(1) increased by the amount of any accrued interest; and

(2) reduced to the extent that the United States or an instrumentality of the United States insures the deposit.

(b) For the purposes of this subchapter, the value of securities shall be the market value obtained from a nationally-recognized, financial information service based upon the previous day's closing market quotations.

(c) If the market value of the securities pledged by the eligible lending institution becomes less than the amount of funds on deposit in the depository by the Board, the executive administrator shall require that additional collateral be pledged immediately, or that the amounts of Board funds on deposit be reduced. If the collateral pledged by an eligible lending institution is in excess of that required by the market value of funds on deposit by the Board, the executive administrator may allow the release of the excess collateral.

(d) Eligible lending institutions shall secure funds that the Board deposits pursuant to a linked deposit agreement using only the following as pledged securities except as further limited by subsection (e) of this section:

(1) obligations, including letters of credit, of the United States or its agencies and instrumentalities;

(2) direct obligations of this state or its agencies and instrumentalities;

(3) other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, this state or the United States or their respective agencies and instrumentalities; and

(4) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent.

(e) The following may not be used to secure funds that the Board deposits pursuant to a linked deposit agreement:

(1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal;

(2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security collateral and bears no interest;

(3) collateralized mortgage obligations that have a stated final maturity date of greater than 10 years; and

(4) collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index.

(f) An eligible lending institution may substitute one group of securities eligible under this section and the linked deposit agreement for another group of securities eligible under this section and the linked deposit agreement.

(g) Within the limits of this section, the executive administrator may limit the selection of eligible investment securities for linked deposits in the linked deposit agreement.

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