84(R) - 2015
House Investments & Financial Services
House Investments & Financial Services
Investment & Financial Services
Relating to the establishment and administration of a state bullion depository; authorizing fees.
A fiscal note dated March 23, 2015 indicates that depending upon the number of depository transactions and the amount of fees that could be assessed to depository agents, there could be an indeterminate fiscal impact to the state.
It adds that based on the specific requirements of the bill, implementation of the provisions would require
significant research and analysis. It would entail a substantial undertaking of establishing a
precious metal bullion depository that would hold metals in the form of either bullion or specie for
institutions and individuals alike in the state. The bill would require an assessment of how to
acquire a secure vault. The bill's fiscal impacts associated with depository activity, including but
not limited to fees,charges,and penalties,cannot be determined at this time.
House Bill 483 would amend the Government Code in order to create a state bullion depository.
The Texas bullion depository would be a state agency in the office of the comptroller, would be administered by an administrator appointed by the comptroller with the advice and consent of the governor, the lieutenant governor, and the senate.
The depository could hold certain bullion and specie either acquired by the state and political subdivision of the state, as well as deposits from private entities. It would use depository agents to conduct retail transactions. House Bill 483 would amend the Finance Code in order to regulate the licensing of depository agents. The licensing would require a fee.
Deposits would not be subject to legislative appropriation. The comptroller could establish fees, charges, and penalties for the services provided by the depository. Proceeds from these would have to be deposited in General Revenue.
Vote Recommendation Notes
An amendment was introduced and adopted on the House floor that would waive the depository's sovereign immunity from suit by a depositor for denial of deposit liability. The depository’s liability for a denial of deposit liability would be limited to the amount on deposit for which liability was denied. Such a suit would have to be brought in a district court of Travis County.
The amendment would remove the provision requesting requirements from a depository agent in addition to licensing requirements. I would also amend Section 151.302 (a) of the Finance Code to allow a depository agent to engage in the business of money transmission in connection with, and to the extent necessary for, the performance of depository agent activities. The same changes would be made to Section 151.502 regarding the business of currency exchange.
A committee substitute introduced in Senate committee would remove the provision requiring a depository agent used by the depository under this bill to have a minimum of five years of depository operational experience or ownership. It would also remove the requirement from an applicant for a depository agent license to have and maintain the capitalization, minimum net worth, and other applicable financial requirements established by rules of the commission.
Those changes do not affect our position. We continue to remain neutral.
The second chamber sponsor is Senator Brandon Creighton.
First chamber recommendation:
According to the statement of purpose for House Bill 483, demand for the storage of precious metals is high and includes public institutions, private businesses, and individual investors alike, but there are concerns that precious metals owned by the state are currently stored in other states.
While we can understand that the state of Texas would prefer to store precious metals owned by the state inside the state, there is no reason for a government agency to play the role of bullion depository for private individuals or entities that can already find this kind of services provided by private institutions.
Because of these conflicting interests between safely storing owned by the state of Texas, and hence Texan taxpayers, and the possible distortions on the private market of precious metal storage that the creation of a state agency competing with private entities could create, we will remain neutral on House Bill 483.