88-5

February 22, 1988
Dear Mr. ________:
This is in response to your letter of February 10, 1988 asking whether guarantees by the California Export Finance Program would qualify as a secured transaction.
Our analysis of the transaction indicates that the proposed loan would not be a secured obligation as the security you describe in your letter does not qualify as eligible collateral for secured lending purposes. Additionally, since the guarantee program is not backed by the full faith and credit of the State of California the proposed loan would not be exempt from the provisions of the lending limits.
Your letter references a possible ruling several years ago that the guarantee portion of the program would be considered a secured transaction. We cannot find any record of this ruling and in any event, if such a ruling was given it is our current opinion that the ruling would have been in error. This is due to the absence of tangible property securing the transaction as required by Financial Code Section 1223.
If you have any further questions, please contact me.
Sincerely,
HOWARD GOULD
Superintendent of Banks
By:
JOHN R. PAULUS
Deputy Superintendent
(415) 557-8686
JRP:m