§41-14-35. Security for deposits or accounts.

(a) All public deposits, as defined in Chapter 14A, of the state shall be secured to the extent and in the manner provided in Chapter 14A by any combination of the following securities and instruments, which may be issued and held in either definitive or book-entry form: Direct obligations of the State of Alabama or any other state of the United States; obligations of the United States government or that are fully guaranteed as to payment of principal and interest by the United States; obligations issued or guaranteed by any agency or instrumentality of the United States, including, without limitation, the Government National Mortgage Association or any successor thereto, any Federal Farm Credit Bank or any successor thereto, the Federal Housing Finance Board or any successor thereto, the Federal Home Loan Bank System or any successor thereto, or any Federal Home Loan Bank or any successor thereto; debt obligations, including, without limitation, participation certificates of the Federal Home Loan Mortgage Corporation or any successor thereto or of the Federal National Mortgage Corporation or any successor thereto; subject to the approval of the State Treasurer and compliance with all related requirements, conditions, and procedures established by the State Treasurer or the Board of Directors of the SAFE Program established under Chapter 14A, irrevocable, unconditional letters of credit issued by any Federal Home Loan Bank on behalf of a qualified public depository and naming the State Treasurer as beneficiary; any direct obligations of any agency, political subdivision, or instrumentality of the State of Alabama, including, without limitation, any direct obligation of any county or municipality, which carries the full faith and credit of the issuing entity; general obligations of any county, municipality, agency, political subdivision, or instrumentality of any of the various other states of the United States, which have a rating of "A2" or better by Moody's Investors Service (or any successor to that firm) or of "A" or better by Standard & Poor's (or any successor to that firm) or Fitch Ratings (or any successor to that firm); any revenue obligation issued by the State of Alabama or any agency, political subdivision, instrumentality, county, municipality, or district thereof, or by any authority, board, or public corporation of the State of Alabama or any such agency, political subdivision, instrumentality, county, municipality, or district, payable from designated taxes or from revenues or other limited or special sources of funds derived from any public facility or project which either (1) has a current rating of "A2" or better by Moody's Investors Service (or any successor to that firm) or of "A" or better by Standard & Poor's (or any successor to that firm) or Fitch Ratings (or any successor to that firm), or (2) has an average annual debt service coverage of at least two times; and mortgage-backed securities, collateralized mortgage obligations, and asset-backed securities (excluding, however, mortgage-backed securities, collateralized mortgage obligations, and asset-backed securities constituting inverse floaters, interest-only strips, principal-only strips, or similar leveraged derivative instruments), issued by any public entity or organization, quasi-public entity or organization, or private entity or organization, provided that, except in the case of mortgage-backed securities, collateralized mortgage obligations, and asset-backed securities issued by an agency or instrumentality of the United States or any federally chartered or sponsored quasi-public entity or organization (including the Federal National Mortgage Corporation or the Federal Home Loan Mortgage Corporation), such securities or obligations shall have a current rating of "Aaa" by Moody's Investors Service (or any successor to that firm) or of "AAA" by Standard & Poor's (or any successor to that firm) or Fitch Ratings (or any successor to that firm). All securities and other collateral shall be held in accordance with the requirements of Chapter 14A of this title, provided, however, any provisions of Chapter 14A notwithstanding, any Federal Home Loan Bank letters of credit accepted by the State Treasurer as collateral shall be held by the State Treasurer rather than a third-party custodian and may be drawn by the State Treasurer when necessary to satisfy losses to public depositors under Chapter 14A.

(b) No security shall be required for the amount of any deposit or account to the extent said deposit or account is insured by the Federal Deposit Insurance Corporation or any successor federal insurance corporation or agency.

(c) In accordance with subdivision (9) Section 41-14A-2, the types of securities and instruments that are eligible under or pursuant to this section to secure state money deposited in state depositories shall be eligible collateral for purposes of Chapter 14A and all qualified public depositories holding public deposits of any covered public entities or covered public officials, as such terms are defined in Chapter 14A, shall be required to pledge collateral, to the extent and in the manner specified in Chapter 14A, that complies with the requirements of this section. Notwithstanding the foregoing, the State Treasurer is authorized to disapprove any security or instrument offered or pledged as collateral under this section or under any provisions of Chapter 14A, including, without limitation, in any circumstance in which the State Treasurer determines that the security or instrument is not sufficiently marketable.

(Acts 1967, No. 3, p. 336, §6; Acts 1990, No. 90-638, p. 1172, §2; Act 2000-748, p. 1669, §2; Act 2003-305, p. 723, §1.)