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CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2015 NOTE 2 DEPOSITS AND INVESTMENTS (CONTINUED) B. Investments The City may also invest idle funds as authorized by Minnesota Statutes as follows, • Direct obligations or obligations guaranteed by the United. States or its agencies. • Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the highest credit rating, are rated in one of the two highest rating categories by a statistical rating agency and all of the 'investments have a finial maturity of 13 months or less. • General obligations rated "A" or better; revenue obligations rated"AA" or better. General obligations of the Minnesota Housing Finance Agency rate "A" or better.. ■ Bankers' acceptances of United States., .banks eligible. for purchase. by the. Federal Reserve System. • Commercial paper issued by United States,t3anks corporationsor their Canadian subsidiaries, of highest qua,ityY, category bay; a least two nationally recognized rating agencies, and maturing ir? 70 days'or loss. ■ Guaranteed investment contracts guaranteed by United States commerciai banks or domestic branches .of foreign banks or United States insurance companies if similar debt otligafians:•of the issuer or the : collateral pledged by the. issuer is in the top;tinr Iating" categories. ■ Repurchase or reverse:'purchase agreement and securities lending agreements financial inst€tutions�gualified as a "depository" by the government entity, with .banks that` are 'rnenibers of the Federal Reserve System with capitalization exceeding $10,000 000; a primary reporting dealer in U.S, government securities to the Federal Reserve Bank of New York, or certain Minnesota securities broker -dealers;:: ■ Any security which is an obligation of a school district with an original maturity not exceeding 13 months and (i) rated in the highest category by a national bond rating service (ii) enrolled in athe cedit enhancement program pursuant to Minnesota Statute §126C,55 Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the event of failure of the. counterparty,. the City will not be able to recover the. value of its investment or collateral securities that are in the possession} of an outside party. The City's investment policy doesn't specifically address custodial credit risk. (22)