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The Finance Director and the investment committee shall not knowingly engage in any • <br /> personal business activities which could impair their ability to make impartial investment <br /> decisions. <br /> Bonding of the Finance Director shall be required.The City Manager will establish specific <br /> bonding levels. <br /> 4. AUTHORIZED INVESTMENTS <br /> Investment instruments authorized and permitted by this policy are as follows: <br /> A. Obligations of the Untied States or its agencies under a repurchase agreement if the <br /> margin agreement under the repurchase agreement is 101 percent and with any of <br /> the following institutions. <br /> 1) a bank qualified as depository of public funds, <br /> 2) any national or state bank in the United States which is a member of the <br /> Federal Reserve System and whose combined capital and surplus equals or <br /> exceeds $10,000,000, <br /> 3) a primary reporting dealer in the United States government securities to the <br /> Federal Reserve Bank of New York, <br /> 4) a securities broker-dealer having its principal executive office in Minnesota, <br /> licensed pursuant to Chapter 80A, or an affiliate of it, regulated by the • <br /> Securities and Exchange commission and maintaining a combined capital and <br /> surplus of$40,000,000 or more, exclusive of subordinated debt. <br /> B. Governmental bonds, notes, bills, mortgages and other securities, which are direct <br /> obligations or are guaranteed or insured issues of the United States, its agencies, its <br /> instrumentalities, or organizations created by an act of Congress, excluding <br /> mortgage-backed securities defined as "high risk" (as defined below) or in <br /> certificates of deposit secured by letters of credit issued by federal Home Loan <br /> Banks. <br /> High risk mortgage-backed securities are as follows: <br /> 1) interest-only or principal-only mortgage-backed securities, <br /> 2) any mortgage derivative security that: <br /> a) has an expected average life greater than ten years, <br /> b) has an expected average life that: <br /> i) will extend by more than four years as the result of an <br /> immediate and sustained parallel shift in the yield curve of <br /> plus 300 basis points: or <br /> ii) will shorten by more than six years as the result of an <br /> immediate and sustained parallel shift in the yield curve of <br /> minus 300 basis points: or <br /> 41111 <br />