Bill Text: FL H0989 | 2010 | Regular Session | Introduced

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Bill Title: Public Depositories

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2010-04-30 - Died in Committee on Governmental Affairs Policy (EDCA) [H0989 Detail]

Download: Florida-2010-H0989-Introduced.html

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HB 989

1	A bill to be entitled
2	An act relating to public depositories; amending s.
3	280.02, F.S.; providing additional definitions; amending
4	s. 280.04, F.S.; revising collateral requirements for
5	public deposits; amending s. 280.07, F.S.; providing
6	criteria and procedures for a qualified public depository
7	to become an electing public depository; providing for
8	termination of an election to become an electing public
9	depository; providing authority and duties of the Chief
10	Financial Officer; amending s. 280.08, F.S.; providing for
11	application to participating public depositories of
12	procedures for payment of loss to public depositors;
13	providing an effective date.
14
15	Be It Enacted by the Legislature of the State of Florida:
16
17	Section 1. Section 280.02, Florida Statutes, is amended to
18	read:
19	280.02 Definitions.-As used in this chapter, the term:
20	(1) "Affiliate" means an entity that is related through a
21	parent corporation's controlling interest. The term also
22	includes any financial institution holding company or any
23	subsidiary or service corporation of such holding company.
24	(2) "Alternative participation agreement" means an
25	agreement of restrictions that a qualified public depository
26	completes as an alternative to immediately withdrawing from the
27	public deposits program due to financial condition.
28	(3) "Average daily balance" means the average daily
29	balance of public deposits held during the reported month. The
30	average daily balance must be determined by totaling, by
31	account, the daily balances held by the depositor and then
32	dividing the total by the number of calendar days in the month.
33	Deposit insurance is then deducted from each account balance and
34	the resulting amounts are totaled to obtain the average daily
35	balance.
36	(4) "Average monthly balance" means the average monthly
37	balance of public deposits held, before deducting deposit
38	insurance, by the depository during any 12 calendar months. The
39	average monthly balance of the previous 12 calendar months must
40	be determined by adding the average daily balance before
41	deducting deposit insurance for the reported month and the
42	average daily balances before deducting deposit insurance for
43	the 11 months preceding that month and dividing the total by 12.
44	(5) "Book-entry form" means that securities are not
45	represented by a paper certificate but represented by an account
46	entry on the records of a depository trust clearing system or,
47	in the case of United States Government securities, a Federal
48	Reserve Bank.
49	(6) "Capital account" means total equity capital, as
50	defined on the balance-sheet portion of the Consolidated Reports
51	of Condition and Income (call report) or the Thrift Financial
52	Report, less intangible assets, as submitted to the regulatory
53	banking authority.
54	(7) "Collateral-pledging level," for qualified public
55	depositories, means the percentage of collateral required to be
56	pledged as provided in s. 280.04 by a financial institution.
57	(8) "Current month" means the month immediately following
58	the month for which the monthly report is due from qualified
59	public depositories.
60	(9) "Custodian" means the Chief Financial Officer or any
61	bank, savings association, or trust company that:
62	(a) Is organized and existing under the laws of this
63	state, any other state, or the United States;
64	(b) Has executed all forms required under this chapter or
65	any rule adopted hereunder;
66	(c) Agrees to be subject to the jurisdiction of the courts
67	of this state, or of courts of the United States which are
68	located within this state, for the purpose of any litigation
69	arising out of this chapter; and
70	(d) Has been approved by the Chief Financial Officer to
71	act as a custodian.
72	(10) "Default or insolvency" includes, without limitation,
73	the failure or refusal of a qualified public depository to pay
74	any check or warrant drawn upon sufficient and collected funds
75	by any public depositor or to return any deposit on demand or at
76	maturity together with interest as agreed; the issuance of an
77	order by any supervisory authority restraining such depository
78	from making payments of deposit liabilities; or the appointment
79	of a receiver for such depository.
80	(11) "Effective date of notice of withdrawal or order of
81	discontinuance" pursuant to s. 280.11(3) means that date which
82	is set out as such in any notice of withdrawal or order of
83	discontinuance from the Chief Financial Officer.
84	(12) "Electing public depository" means a qualified public
85	depository that has made the election under s. 280.07(2) and is
86	in compliance with the collateral requirements of s. 280.04.
87	(13)(12) "Eligible collateral" means securities, Federal
88	Home Loan Bank letters of credit, and cash, as designated in s.
89	280.13.
90	(14)(13) "Financial institution" means, including, but not
91	limited to, an association, bank, brokerage firm, credit union,
92	industrial savings bank, savings and loan association, trust
93	company, or other type of financial institution organized under
94	the laws of this state or any other state of the United States
95	and doing business in this state or any other state, in the
96	general nature of the business conducted by banks and savings
97	associations.
98	(15)(14) "Governmental unit" means the state or any
99	county, school district, community college district, special
100	district, metropolitan government, or municipality, including
101	any agency, board, bureau, commission, and institution of any of
102	such entities, or any court.
103	(16)(15) "Loss to public depositors" means loss of all
104	principal and all interest or other earnings on the principal
105	accrued or accruing as of the date the qualified public
106	depository was declared in default or insolvent.
107	(17)(16) "Market value" means the value of collateral
108	calculated pursuant to s. 280.04.
109	(18)(17) "Operating subsidiary" means the qualified public
110	depository's 100-percent owned corporation that has ownership of
111	pledged collateral. The operating subsidiary may have no powers
112	beyond those that its parent qualified public depository may
113	itself exercise. The use of an operating subsidiary is at the
114	discretion of the qualified public depository and must meet the
115	Chief Financial Officer's requirements.
116	(19)(18) "Oversight board" means the qualified public
117	depository oversight board created in s. 280.071 for the purpose
118	of safeguarding the integrity of the public deposits program and
119	preventing the realization of loss assessments through
120	standards, policies, and recommendations for actions to the
121	Chief Financial Officer.
122	(20) "Participating public depository" means a qualified
123	public depository that is not an electing public depository on
124	the date the Chief Financial Officer determines the qualified
125	public depository to be in default or insolvent.
126	(21)(19) "Pledged collateral" means securities or cash
127	held separately and distinctly by an eligible custodian for the
128	benefit of the Chief Financial Officer to be used as security
129	for Florida public deposits. This includes maturity and call
130	proceeds.
131	(22)(20) "Pledgor" means the qualified public depository
132	and, if one is used, operating subsidiary.
133	(23)(21) "Pool figure" means the total average monthly
134	balances of public deposits held by all qualified public
135	depositories during the immediately preceding 12-month period.
136	(24)(22) "Previous month" means the month or months
137	immediately preceding the month for which a monthly report is
138	due from qualified public depositories.
139	(25)(23) "Public deposit" means the moneys of the state or
140	of any state university, county, school district, community
141	college district, special district, metropolitan government, or
142	municipality, including agencies, boards, bureaus, commissions,
143	and institutions of any of the foregoing, or of any court, and
144	includes the moneys of all county officers, including
145	constitutional officers, that are placed on deposit in a bank,
146	savings bank, or savings association and for which the bank,
147	savings bank, or savings association is required to maintain
148	reserves. This includes, but is not limited to, time deposit
149	accounts, demand deposit accounts, and nonnegotiable
150	certificates of deposit. Moneys in deposit notes and in other
151	nondeposit accounts such as repurchase or reverse repurchase
152	operations are not public deposits. Securities, mutual funds,
153	and similar types of investments are not considered public
154	deposits and shall not be subject to the provisions of this
155	chapter.
156	(26)(24) "Public depositor" means the official custodian
157	of funds for a governmental unit who is responsible for handling
158	public deposits.
159	(27)(25) "Public deposits program" means the Florida
160	Security for Public Deposits Act contained in this chapter and
161	any rule adopted under this chapter.
162	(28)(26) "Qualified public depository" means any bank,
163	savings bank, or savings association that:
164	(a) Is organized and exists under the laws of the United
165	States, the laws of this state or any other state or territory
166	of the United States.
167	(b) Has its principal place of business in this state or
168	has a branch office in this state which is authorized under the
169	laws of this state or of the United States to receive deposits
170	in this state.
171	(c) Has deposit insurance under the provision of the
172	Federal Deposit Insurance Act, as amended, 12 U.S.C. ss. 1811 et
173	seq.
174	(d) Has procedures and practices for accurate
175	identification, classification, reporting, and collateralization
176	of public deposits.
177	(e) Meets all the requirements of this chapter.
178	(f) Has been designated by the Chief Financial Officer as
179	a qualified public depository.
180	(29)(27) "Reported month" means the month for which a
181	monthly report is due from qualified public depositories.
182	(30)(28) "Required collateral" of a qualified public
183	depository means eligible collateral having a market value equal
184	to or in excess of the amount required pursuant to s. 280.04.
185	(31)(29) "Chief Financial Officer's custody" is a
186	collateral arrangement governed by a contract between a
187	designated Chief Financial Officer's custodian and the Chief
188	Financial Officer. This arrangement requires collateral to be in
189	the Chief Financial Officer's name in order to perfect the
190	security interest.
191	(32)(30) "Triggering events" are events set out in s.
192	280.041 which give the Chief Financial Officer the right to:
193	(a) Instruct the custodian to transfer securities pledged,
194	interest payments, and other proceeds of pledged collateral not
195	previously credited to the pledgor.
196	(b) Demand payment under letters of credit.
197	Section 2. Subsection (1) of section 280.04, Florida
198	Statutes, is amended, and paragraph (g) is added to subsection
199	(2) of that section, to read:
200	280.04 Collateral for public deposits; general
201	provisions.-
202	(1) The Chief Financial Officer shall determine the
203	collateral requirements and collateral pledging level for each
204	qualified public depository following procedures established by
205	rule. These procedures shall include numerical parameters for
206	25-percent, 50-percent, 110-percent, 125-percent, and 200-
207	percent pledge levels based on nationally recognized financial
208	rating services information and established financial
209	performance guidelines.
210	(2) A qualified public depository may not accept or retain
211	any public deposit which is required to be secured unless it has
212	deposited with the Chief Financial Officer eligible collateral
213	at least equal to the greater of:
214	(g) One hundred percent of the average daily balance of
215	public deposits if the qualified public depository is an
216	electing public depository.
217	Section 3. Section 280.07, Florida Statutes, is amended to
218	read:
219	280.07 Mutual responsibility and contingent liability.-
220	(1) Any bank or savings association that is designated as
221	a participating qualified public depository and that is not
222	insolvent shall guarantee public depositors against loss caused
223	by the default or insolvency of other qualified public
224	depositories. Each participating qualified public depository
225	shall execute a form prescribed by the Chief Financial Officer
226	for such guarantee which shall be approved by the board of
227	directors and shall become an official record of the
228	institution.
229	(2) A qualified public depository becomes an electing
230	public depository upon written notice to the Chief Financial
231	Officer that the depository desires to be classified as an
232	electing public depository and complies with the collateral
233	requirements of s. 280.04 for an electing public depository. An
234	electing public depository is not subject to the cross-guaranty
235	pool requirements of a participating public depository, and any
236	security agreement, guarantee, or other agreement with the Chief
237	Financial Officer to the contrary shall be suspended while the
238	qualified public depository is an electing public depository. A
239	qualified public depository that makes the election shall be
240	treated as a participating public depository at any time it is
241	not in compliance with the collateral requirements of s. 280.04
242	applicable to an electing public depository.
243	(3) An electing public depository may terminate its
244	election and reenter the cross-guaranty pool by written notice
245	to the Chief Financial Officer. The Chief Financial Officer may
246	deny revocation of the election and reentry into the cross-
247	guaranty pool after considering the electing public depository's
248	level of capitalization, credit rating, or other bank-health
249	related factors. Upon revocation of the election, the Chief
250	Financial Officer shall release any excess collateral applicable
251	to the electing public depository's status.
252	Section 4. Subsections (3) and (4) of section 280.08,
253	Florida Statutes, are amended to read:
254	280.08 Procedure for payment of losses.-When the Chief
255	Financial Officer determines that a default or insolvency has
256	occurred, he or she shall provide notice as required in s.
257	280.085 and implement the following procedures:
258	(3)(a) The loss to public depositors shall be satisfied,
259	insofar as possible, first through any applicable deposit
260	insurance and then through demanding payment under letters of
261	credit or the sale of collateral pledged or deposited by the
262	defaulting depository. The Chief Financial Officer may assess
263	participating qualified public depositories as provided in
264	paragraph (b) for the total loss if the demand for payment or
265	sale of collateral cannot be accomplished within 7 business
266	days.
267	(b) The Chief Financial Officer shall provide coverage of
268	any remaining loss by assessment against the other participating
269	qualified public depositories. The Chief Financial Officer shall
270	determine such assessment for each participating qualified
271	public depository by multiplying the total amount of any
272	remaining loss to all public depositors by a percentage which
273	represents the average monthly balance of public deposits held
274	by each participating qualified public depository during the
275	previous 12 months divided by the total average monthly balances
276	of public deposits held by all participating qualified public
277	depositories, excluding the defaulting depository, during the
278	same period. The assessment calculation shall be computed to six
279	decimal places.
280	(4) Each participating qualified public depository shall
281	pay its assessment to the Chief Financial Officer within 7
282	business days after it receives notice of the assessment. If a
283	depository fails to pay its assessment when due, the Chief
284	Financial Officer shall satisfy the assessment by demanding
285	payment under letters of credit or selling collateral pledged or
286	deposited by that depository.
287	Section 5. This act shall take effect July 1, 2010.

CODING: Words stricken are deletions; words underlined are additions.