HOUSE BILL No. 4601


     April 9, 1997, Introduced by Reps. Walberg, Kukuk, Kaza, Gernaat, Rhead, Richner and Jaye and referred to the Committee on Commerce.


        A bill to amend 1855 PA 105, entitled

   "An act act to regulate the disposition of the surplus funds in
   the state treasury; to provide for the deposit of surplus funds
   in certain financial institutions; to lend surplus funds pursuant
   to loan agreements secured by certain commercial, agricultural,
   or industrial real and personal property; to authorize the loan
   of surplus funds to certain municipalities; to authorize the par-
   ticipation in certain loan programs; to authorize an appropria-
   tion; and to prescribe the duties of certain state agencies,"

   by amending sections 3 and 7 (MCL 21.143 and 21.147), section 3

   as amended by 1990 PA 8 and section 7 as amended by 1994 PA 44;

   and to repeal acts and parts of acts.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1         Sec. 3.  (1) A financial institution shall not be  made  a

 2    depository of surplus funds  belonging to  OF the state unless

 3    the financial institution complies with this act.  and the prin-

 4     cipal office of the financial institution is located in this

 5     state.  The state treasurer shall require of a financial



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 1    institution, before it is made a depository of surplus funds

 2     belonging to  OF the state, good and ample security  , to be  AS

 3    approved by the state treasurer and the attorney general for the

 4    safekeeping and reimbursement of the surplus funds  if called

 5     for,  and the payment of the rate of return as the state treasur-

 6    er, in the treasurer's discretion, considers best for the inter-

 7    est of the state.

 8         (2) The state treasurer  also  may invest surplus funds

 9     belonging to  OF the state in the bonds, notes, and other evi-

10    dences of indebtedness of the United States government and its

11    agencies,  and  in prime commercial paper, AND may ALSO use sur-

12    plus funds  as defined in section 2 in the manner provided in

13     section 2, may use surplus funds as defined in section 2a in the

14     manner provided in section 2a, may use surplus funds  in the

15    manner provided in  section 2b  SECTIONS 2, 2A, AND 2B, and may

16    use each fiscal year not more than that amount of the surplus

17    funds necessary to make loans to municipalities  pursuant to 

18    UNDER section 1.

19         (3)  (2)  All earnings from loans made under section 1 in

20    excess of the average rate of interest earned on other surplus

21    funds during the same period shall be credited to the general

22    fund of the state.  Any loss of principal or interest sustained

23    from loans made under section 1 shall reduce the earnings of the

24    general fund on an amortized basis over the remaining term of the

25    loan.

26         (4)  (3)  The investment of surplus state funds in bonds,

27    notes, and other evidences of indebtedness of the United States



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 1    government and its agencies as provided in subsection (1) may

 2    include securities of, or other interests in, a no-load open-end

 3    or closed-end management type investment company or investment

 4    trust registered under the investment company act of 1940, 15

 5    U.S.C. 80a-1 to 80a-64, if both of the following are true:

 6         (a) The portfolio of the investment company or investment

 7    trust is limited to United States government obligations and

 8    repurchase agreements fully collateralized by United States gov-

 9    ernment obligations.

10         (b) The investment company or investment trust takes deliv-

11    ery of the collateral for any repurchase agreement either

12    directly or through an authorized custodian.

13         Sec. 7.  As used in this act:

14         (a) "Commissioner" means the commissioner of the financial

15    institutions bureau of the department of commerce.

16         (b) "Deposit" includes the purchase of, or investment in,

17    shares of credit unions.

18         (c) "Financial institution" means a  state or nationally

19     chartered bank, a state or federally chartered savings and loan

20     association, a state or federally chartered savings bank, or a

21     state or federally chartered credit union  STATE OR NATIONALLY

22    CHARTERED BANK, SAVINGS AND LOAN ASSOCIATION, SAVINGS BANK, OR

23    CREDIT UNION WHOSE DEPOSITS ARE INSURED BY AN AGENCY OF THE

24    UNITED STATES GOVERNMENT AND WHICH MAINTAINS A PRINCIPAL OFFICE

25    OR BRANCH OFFICE LOCATED IN MICHIGAN UNDER THE AUTHORITY OF THE

26    LAWS OF MICHIGAN OR OF THE UNITED STATES.





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 1         Enacting section 1.  Section 5 of 1855 PA 105, MCL 21.145,

 2    is repealed.




















































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