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<br />b. <br /> <br />Certificates of deposit issued by state and national <br />banks domiciled in this state that are: <br />a. guaranteed or insured by the Federal Deposit <br />Insurance corporation, or its successor; or <br />Secured by obligations that are described by <br />Subdivision (I) - (4) of this subsection, which are <br />intended to include all direct agency or <br />instrumentality issued mortgage backed securities <br />rated AAA by a nationally recognized rating agency, <br />or by Chapter 726, Acts of the 67th Legislature, <br />Regular Session, 1981 (Article 2529b-1, Vernon's <br />Texas Civil Statutes), and that have a market value <br />of not less than the principal amount of the <br />certificates; and <br /> <br />5. <br /> <br />6. <br /> <br />Fully collateralized direct repurchase agreements having <br />a defined termination date, secured by obligations <br />described by Subdivision (2) of this subsection, pledged <br />with a third party selected or approved by the City of <br />San Marcos, and placed through a primary government <br />securities dealer, as defined by the Federal Reserve, or <br />a bank domiciled in this state. <br /> <br />B. <br /> <br />Criteria for Selection of Financial Intermediaries: <br /> <br />Although the City I s policies for the purchase of investment <br />securities are designed to ensure complete safety, accompanied <br />by appropriate liquidity and competitive yields, the <br />"providers" of such securities must also meet specific <br />financial and operational standards. <br /> <br />The City has no desire to "test" such programs as FDIC or <br />FSLIC insurance, nor does it wish to have to establish its <br />legal right to securities held by financially-insolvent <br />brokers or securities dealers. There are a sufficiently large <br />number of financial institutions and securities dealers which <br />are of impeccable financial standing. As a result, the City <br />does not choose to do business with "marginal" or <br />financially-weak institutions. <br /> <br />Therefore financial intermediaries shall be subject to the <br />following types of selection criteria: <br /> <br />1. <br /> <br />Commercial Banks: <br /> <br />Deposits of City monies in commercial bàhks may only be <br />made with institutions which possess the overall <br />financial strength, capitalization, a~d liquidity to <br />reasonably ensure the safety and avaiIability of such <br />monies. To assess the over all financial strength of <br />potential depositories, the City will utilize third-party <br />rating agencies to perform periodic reviews of various <br />commercial banks, relying upon their reports to determine <br />the appropriateness of the depository. <br /> <br />4 <br />