ACCEPTABLE COLLATERAL

By: Mark Hoppe, President of the Illinois Bankers Association
        (reported 9/2000)

PA 91-773 states that financial institutions may pledge letters of credit issued by a Federal Home Loan Bank (FHLB) for uninsured public deposits (above the FDIC insurance limit). PA 91-773 amends the Public Funds Investment Act [30 ILCS 235/6] to specifically include FHLB letters of credit among items a public agency may accept as collateral while clarifying that financial institutions are expressly authorized to use those letters of credit.

Please note this act only adds to the list of acceptable instruments for collateral and does not mandate the use of FHLB letters of credit.