SECTION 735:20-1-10. Acceptance of federal agency letters of credit to secure deposits

  Public entities may accept letters of credit (LOC's) from any Federal Home Loan Bank ("FHLB") within the Federal Home Loan Bank System as a collateral instrument to secure public entity funds on deposit with financial institutions. Each LOC shall be in a form and shall contain such terms as shall be acceptable to OST and the public entity. Such LOC's must be unconditional, standby letters of credit which designate the public entity as the irrevocable and unconditional beneficiary of the LOC. To remain qualified as an issuer of an LOC, the obligations of the issuing FHLB must be rated and remain rated in the highest rating category of at least one of the nationally recognized rating agencies acceptable to the public entity. The issuing FHLB may not provide LOC's for any one financial institution with public entity funds on deposit which exceed twenty percent (20%) of the issuing FHLB's capital and surplus. The financial institutions which use LOC's to secure public entity deposits shall be solely responsible for the cost of securing an LOC.

[Source: Added at 16 Ok Reg 1275, eff 5-13-99; Amended at 18 Ok Reg 2857, eff 7-1-01; Amended at 33 Ok Reg 1851, eff 10-1-16]