SECTION 735:10-1-13. Acceptance of federal agency letters of credit to secure deposits

  OST may accept letters of credit (LOC's) from any Federal Home Loan Bank within the Federal Home Loan Bank System as a collateral instrument to secure State funds on deposit with financial institutions. Each LOC shall be in a form and shall contain such terms as shall be acceptable to the State Treasurer. Such LOC's must be unconditional, standby letters of credit which designate the OST as the irrevocable and unconditional beneficiary of the LOC. The issuing FHLB and the financial institution with State funds on deposit are required to notify OST by certified mail at least 45 days prior to cancellation or the non-renewal of an LOC. To remain qualified as an issuer of an LOC, the obligations of a FHLB must be rated and remain rated in the highest rating category of at least one of the nationally recognized rating agencies acceptable to OST. Within 48 hours of discovery of a downgrade by a rating agency, notice must be given to OST by the issuing FHLB by certified mail. An issuing FHLB may not provide LOC's for any one financial institution with State funds on deposit which exceed twenty percent (20%) of the issuing FHLB's capital and surplus. In the event of a rating downgrade, or in the event the issuing FHLB exceeds the twenty percent (20%) limitation, OST may require the financial institution with State funds on deposit to substitute conforming collateral for the LOC. The financial institutions which use LOC's to secure state deposits shall be solely responsible for the cost of securing an LOC.

[Source: Added at 15 Ok Reg 2479, eff 4-29-98 (emergency); Added at 15 Ok Reg 2865, eff 6-25-98; Amended at 33 Ok Reg 1851, eff 10-1-16]