SENATE BILL REPORT

SB 5295

BYSenator Moore

Revising the criteria for public depositaries.

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):February 2, 1989; February 23, 1989

Senate Staff:Beverly J. Tweddle (786-7403)

AS OF FEBRUARY 22, 1989

BACKGROUND:

A letter of credit is an instrument issued by a financial institution sometimes as a method to guarantee payment.  These instruments are used primarily with trade transactions to coordinate payment for and delivery of goods simultaneously.  Letters of credit must contain exact information on the time of delivery, method of delivery, point of delivery, and product being delivered.  A situation could arise, for example, where the time of delivery might change by 30 minutes.  If this happens the letter of credit will need to be modified by the financial institution who may charge a fee of $50 to $75.

SUMMARY:

A financial institution identified as a public depository may not charge a fee greater than $25 for an amendment to a letter of credit.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested