Bill Text: GA HB886 | 2011-2012 | Regular Session | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Banking and finance; credit exposure as a counterparty in derivative transactions; limit certain obligations
Spectrum: Moderate Partisan Bill (Republican 6-1)
Status: (Passed) 2012-07-01 - Effective Date [HB886 Detail]
Download: Georgia-2011-HB886-Introduced.html
Bill Title: Banking and finance; credit exposure as a counterparty in derivative transactions; limit certain obligations
Spectrum: Moderate Partisan Bill (Republican 6-1)
Status: (Passed) 2012-07-01 - Effective Date [HB886 Detail]
Download: Georgia-2011-HB886-Introduced.html
12 LC
39 0057
House
Bill 886
By:
Representatives Williamson of the
111th,
Smyre of the
132nd,
Carson of the
43rd,
Battles of the
15th,
Williams of the
113th,
and others
A
BILL TO BE ENTITLED
AN ACT
AN ACT
To
amend Code Section 7-1-285 of the Official Code of Georgia Annotated, relating
to limits on obligations of one person or corporation, so as to limit certain
obligations related to credit exposure as a counterparty in derivative
transactions; to provide for definitions; to provide for related matters; to
repeal conflicting laws; and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
Code
Section 7-1-285 of the Official Code of Georgia Annotated, relating to limits on
obligations of one person or corporation, is amended by revising subsections (a)
and (b) and adding a new subsection to read as follows:
"(a)
As used in
this Code section, the term:
(1)
'Credit exposure as a counterparty in derivative transactions' means an amount
that the bank reasonably determines pursuant to a methodology acceptable to the
department under the terms of the derivative or otherwise would be its loss if a
counterparty were to default on the date of determination, taking into account
any netting and collateral arrangements and any guarantees or other credit
enhancements; provided, however, that the bank may elect to determine credit
exposure on the basis of such other method of determining credit exposure as may
be permitted by the department and the bank's primary federal
regulator.
(2)
'Derivative transaction' includes any transaction that is an agreement,
contract, note, option, swap, or warrant that is based, in whole or in part, on
the value of, any interest in, or any quantitative measure or the occurrence of
any event relating to, one or more commodities, securities, currencies, interest
or other rates, indices, or other assets.
(3)
'Person or corporation' includes, but is not limited to, an individual,
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, or unincorporated organization. The term 'person or
corporation' shall not include the affiliates of a bank or a clearing
organization registered or exempt from registration with the Commodity Futures
Trading Commission, the Securities and Exchange Commission, any other federal
agency, or any successor agencies.
(a.1)
A bank shall not at any time:
(1)
Make loans to any one person or corporation;
or
(2)
Have obligations owing to it from any one person or corporation as a result of
purchasing or discounting evidences of indebtedness or agreements for the
payment of
money;
or
(3)
Have credit exposure as a counterparty in derivative transactions with any one
person or corporation,
where
the aggregate of
said
such
loans
and,
obligations,
and credit exposure together exceeds 15
percent of the statutory capital base of the bank unless each loan, discount,
or
purchase, or
derivative transaction in excess of
said
such
15 percent limit is approved in advance by the board of directors or a committee
authorized to act for it.
(b)
Except as provided in subsection (c) of this Code section, a bank shall not
directly or indirectly make
loans, have
obligations, or have credit exposure as a counterparty in derivative
transactions to any one person or
corporation which in aggregate exceed 15 percent of the statutory capital base
of the bank unless the entire amount of such
loans,
obligations, and credit exposure in derivative
transactions is secured by good collateral
or other ample security and does not exceed 25 percent of the statutory capital
base. Except as otherwise indicated in subsection (c) of this Code section, the
purchase or discount of agreements for the payment of money or evidences of
indebtedness shall be regarded as indirect loans to the person or corporation
receiving the proceeds of such transactions. In estimating the legal lending
limit for any
individual
one
person or
corporation, loans to related
corporations, partnerships, and other entities shall be combined subject to
regulations established by the department."
SECTION
2.
All
laws and parts of laws in conflict with this Act are repealed.