Title 39. Public Finance

Subtitle II. Local Finance

Chapter 7. Local Depositories

Part I. General Provisions

39:1221       Security for deposits; kinds

A. Local depositing authorities shall require as security for deposits: 

(1) Bonds or other interest-bearing securities of the United States, or any agency thereof, including but not limited to the Federal National Mortgage Association, or bonds or other interest-bearing obligations guaranteed fully or partially as to principal and interest by the United States, or by any agency thereof; or bonds of any possession of the United States; or unmatured bonds of this state, including both direct and indirect obligations and also, including bonds or other interest-bearing obligations, whether supported by revenue or by the avails of taxes, of the state of Louisiana or of any agency, board, commission, department or division thereof or of any agency, public corporation or authority created by or recognized by the state of Louisiana; or unmatured bonds of any parish, municipality, levee board, road district, school board or school district of this state; or bonds of any parish, municipality, industrial district or industrial board which are secured by a lease executed in accordance with the provisions of R.S. 39:551.1, 551.2, 991, 992, or 1011 et seq. or R.S. 51:1151 et seq., as amended, and partially or fully guaranteed by the Louisiana Board of Commerce and Industry in accordance with the provisions of the Bond Lease Guarantee Act of the 1968 Regular Session of the Legislature.¹ 

(2) Certificates of indebtedness, including paving certificates, of any subdivision of this state referred to in Paragraph (1) of this Subsection. 

(3) Promissory notes either of the authority letting the deposits or of any other authority referred to in Paragraph (1) of this Subsection, which notes must be either unmatured or payable on demand. 

(4) Evidence of participation in such promissory notes issued by any bank, trust company, or recognized bank clearing house association domiciled in this state. 

(5) Notes representing loans to students which are guaranteed by the Board of Regents in accordance with a contract agreement between the lender and the board under the provisions of R.S. 17:3021 et seq. 

(6) Deposit guaranty bonds underwritten and guaranteed by an insurance company, licensed to do business in this state, listed as an approved surety by the United States Department of the Treasury, or private deposit insurance underwritten and issued by an insurer licensed to do business in this state, and approved for these purposes by the Interim Emergency Board, that provide coverage for deposits of depositing authorities in excess of the amounts insured by the Federal Deposit Insurance Corporation or any other governmental agency insuring bank or other financial institution deposits that is organized under the laws of the United States, and the form and content of which are approved in advance by the state treasurer. 

(7) Notwithstanding any other law to the contrary, any obligation, security, or investment that a political subdivision of the state may invest in directly as provided in R.S. 33:2955, except as provided in Subsection B of this Section. 

(8) Letters of credit issued by the Federal Home Loan Bank as authorized by R.S. 6:318 or 748.1. 

(9) Any recognized system or program providing Federal Deposit Insurance Corporation insurance coverage as authorized by R.S. 6:319. 

(10) Bonds, debentures, notes, or other indebtedness issued by a state of the United States of America other than Louisiana or any such state’s political subdivisions provided that the indebtedness has a long-term rating of A3 or higher by Moody’s Investors Service, a long-term rating of A- or higher by Standard & Poor’s or a long-term rating of A- or higher by Fitch Ratings, Inc., or a short-term rating of M1G1 or VM1G1 by Moody’s Investors Service, a short-term rating of A-1 or A-1+ by Standard & Poor’s, or a short-term rating of F1 or F1+ by Fitch Ratings, Inc. 

(11) Bonds, debentures, notes, or other indebtedness issued by domestic United States corporations provided that the indebtedness has a long-term rating of Aa3 or higher by Moody’s Investors Service, a long-term rating of AA- or higher by Standard & Poor’s, or a long-term rating of AA- or higher by Fitch Ratings, Inc. 

B. Notwithstanding any other law to the contrary, there shall be no limitation or restriction on the duration of the bonds, debentures, notes, or other indebtedness used as security for deposits under this Section. 

Amended by Acts 1968, No. 218, § 2; Acts 1968, No. 287, § 1; Acts 2001, No. 752, § 1; Acts 2019, No. 99, § 1; Acts 2020, No. 289, § 1; Acts 2023, No. 81, § 2, eff. July 1, 2023.

Footnotes

¹ See Acts 1968, No. 697 which contained a proposed amendment to the 1921 Louisiana Constitution, an addition to Art. 14, § 14 of a par. (b.4) authorizing the Board of Commerce and Industry to insure portions of lease payments under terms of lease agreements securing and related to certain bonds issued by political subdivisions. Pursuant to the provisions of Act 697, the proposed amendment was submitted to the voters at a general election held in 1968. It failed to pass.