Text: HF00570 Text: HF00572 Text: HF00500 - HF00599 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 1 2 HOUSE FILE 571 1 3 1 4 AN ACT 1 5 RELATING TO THE DEPOSIT OF PUBLIC FUNDS AND THE CONDITIONS 1 6 WHICH MUST BE MET BY A SAVINGS AND LOAN ASSOCIATION OR 1 7 SAVINGS BANK TO BE ELIGIBLE TO RECEIVE SUCH DEPOSITS, AND 1 8 PROVIDING AN EFFECTIVE DATE. 1 9 1 10 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 1 11 1 12 Section 1. Section 12C.1, subsection 2, paragraph c, Code 1 13 1999, is amended to read as follows: 1 14 c. "Bank" means a corporation engaged in the business of 1 15 banking authorized by law to receive deposits and whose 1 16 deposits are insured by the bank insurance fund of the federal 1 17 deposit insurance corporation and includes any office of a 1 18 bank. "Bank" also means a savings and loan or savings 1 19 association. 1 20 Sec. 2. Section 12C.1, subsection 2, paragraph f, Code 1 21 1999, is amended to read as follows: 1 22 f. "Financial institution" means a bank, savings and loan,1 23 or a credit union. 1 24 Sec. 3. Section 12C.1, subsection 3, paragraph a, Code 1 25 1999, is amended to read as follows: 1 26 a. If a depository isa savings and loan ora credit 1 27 union, then public deposits in thesavings and loan orcredit 1 28 union shall be secured pursuant to sections 12C.16 through 1 29 12C.19 and sections 12C.23 and 12C.24. 1 30 Sec. 4. Section 12C.1, subsection 3, paragraph b, Code 1 31 1999, is amended to read as follows: 1 32 b. If a depository is a bank,thenpublic deposits in the 1 33 bank shall be secured pursuant to sections12C.21,12C.23,and 1 34 12C.24. 1 35 Sec. 5. Section 12C.6A, subsection 5, paragraphs a, b, and 2 1 c, Code 1999, are amended to read as follows: 2 2 a. A person who believes a bank, savings and loan2 3association, or savings bankhas failed to meet its community 2 4 reinvestment responsibility may file a complaint with the 2 5 committee detailing the basis for that belief. 2 6 b. If any committee member, in the member's discretion, 2 7 finds that the complaint has merit, the member may order the 2 8 bank, savings and loan association, or savings bankalleged to 2 9 have failed to meet its community reinvestment responsibility 2 10 to attend and participate in a meeting with the complainant. 2 11 The committee member may specify who, at minimum, shall 2 12 represent the financial institution at the meeting. At the 2 13 meeting, or at any other time, thefinancial institutionbank 2 14 may, but is not required to, enter into an agreement with a 2 15 complainant to correct alleged failings. 2 16 c. A majority of the committee may order a bank, savings2 17and loan association, or savings bank,against which a 2 18 complaint has been filed pursuant to this subsection, to 2 19 disclose such additional information relating to community 2 20 reinvestment as required by the order of the majority of the 2 21 committee. 2 22 Sec. 6. Section 12C.15, Code 1999, is amended to read as 2 23 follows: 2 24 12C.15 RESTRICTION ON REQUIRING COLLATERAL. 2 25 A local government shall not require a pledge of collateral 2 26 for that portion of the local government's deposits in a 2 27savings and loan orcredit union that is covered by insurance 2 28 of a federal agency or instrumentality. 2 29 Sec. 7. Section 12C.16, Code 1999, is amended to read as 2 30 follows: 2 31 12C.16 SECURITY FOR DEPOSIT OF PUBLIC FUNDS. 2 32 1. Before a deposit of public funds is made by a public 2 33 officer with asavings and loan orcredit union in excess of 2 34 the amount federally insured, the public officer shall obtain 2 35 security for the deposit by one or more of the following: 3 1 a. Thesavings and loan orcredit union may give to the 3 2 public officer a corporate surety bond of a surety corporation 3 3 approved by the treasury department of the United States and 3 4 authorized to do business in this state, which bond shall be 3 5 in an amount equal to the public funds on deposit at any time. 3 6 The bond shall be conditioned that the deposit shall be paid 3 7 promptly on the order of the public officer making the deposit 3 8 and shall be approved by the officer making the deposit. 3 9 b. Thesavings and loan orcredit union may deposit, 3 10 maintain, pledge and assign for the benefit of the public 3 11 officer in the manner provided in this chapter, securities 3 12 approved by the public officer, the market value of which is 3 13 not less than one hundred ten percent of the total deposits of 3 14 public funds placed by that public officer in thesavings and3 15loan orcredit union. The securities shall consist of any of 3 16 the following: 3 17 (1) Direct obligations of, or obligations that are insured 3 18 or fully guaranteed as to principal and interest by, the 3 19 United States of America or an agency or instrumentality of 3 20 the United States of America. 3 21 (2) Public bonds or obligations of this state or a 3 22 political subdivision of this state. 3 23 (3) Public bonds or obligations of another state or a 3 24 political subdivision of another state whose bonds are rated 3 25 within the two highest classifications of prime as established 3 26 by at least one of the standard rating services approved by 3 27 the superintendent of banking pursuant to chapter 17A. 3 28 (4) To the extent of the guarantee, loans, obligations, or 3 29 nontransferable letters of credit upon which the payment of 3 30 principal and interest is fully secured or guaranteed by the 3 31 United States of America or an agency or instrumentality of 3 32 the United States of America or the U.S. central credit union, 3 33 and the rating of the U.S. central credit union remains within 3 34 the two highest classifications of prime established by at 3 35 least one of the standard rating services approved by the 4 1 superintendent of banking by rule pursuant to chapter 17A. 4 2 The treasurer of state shall adopt rules pursuant to chapter 4 3 17A to implement this section. 4 4 (5) First lien mortgages which are valued according to 4 5 practices acceptable to the treasurer of state. 4 6 (6) Investments in an open-end management investment 4 7 company registered with the federal securities and exchange 4 8 commission under the federal Investment Company Act of 1940, 4 9 15 U.S.C. } 80(a), which is operated in accordance with 17 4 10 C.F.R. } 270.2a-7. 4 11 Direct obligations of, or obligations that are insured or 4 12 fully guaranteed as to principal and interest by, the United 4 13 States of America, which may be used to secure the deposit of 4 14 public funds under subparagraph (1), include investments in an 4 15 investment company or investment trust registered under the 4 16 federal Investment Company Act of 1940, 15 U.S.C. } 80a, the 4 17 portfolio of which is limited to the United States government 4 18 obligations described in subparagraph (1) and to repurchase 4 19 agreements fully collateralized by the United States 4 20 government obligations described in subparagraph (1), if the 4 21 investment company or investment trust takes delivery of the 4 22 collateral either directly or through an authorized custodian. 4 23 2. If public funds are secured by both the assets of a 4 24savings and loan orcredit union and a bond of a surety 4 25 company, the assets and bond shall be held as security for a 4 26 rateable proportion of the deposit on the basis of the market 4 27 value of the assets and of the total amount of the surety 4 28 bonds. 4 29 Sec. 8. Section 12C.17, Code 1999, is amended to read as 4 30 follows: 4 31 12C.17 DEPOSIT OF SECURITIES. 4 32 1. Asavings and loan orcredit union which receives 4 33 public funds shall pledge securities owned by it as required 4 34 by this chapter in one of the following methods: 4 35 a. The securities shall be deposited with the county, 5 1 city, or other public officers at the option of the officers. 5 2 b. The securities shall be deposited pursuant to a 5 3 bailment agreement with a financial institution having 5 4 facilities for the safekeeping of securities and doing 5 5 business in the state. A financial institution which receives 5 6 securities for safekeeping is liable to the public officer to 5 7 whom the securities are pledged for any loss suffered by the 5 8 public officer if the financial institution relinquishes 5 9 custody of the securities contrary to the provisions of this 5 10 chapter or the instrument governing the pledge of the 5 11 securities. 5 12 c. The securities shall be deposited with the federal 5 13 reserve bankof Chicago, Illinois, the federal home loan bank 5 14 of Des Moines, Iowa, or the U.S. central credit union pursuant 5 15 to a bailment agreement or a pledge custody agreement. 5 16 d. The securities may be deposited by any combination of 5 17 methods specified in paragraphs "a", "b", and "c". 5 18 2. A deposit of securities shall not be made in a facility 5 19 owned or controlled directly or indirectly by the financial 5 20 institution which deposits the securities. 5 21 3. All deposits of securities, other than deposits of 5 22 securities with the appropriate public officer, shall have a 5 23 joint custody receipt taken for the securities with one copy 5 24 delivered to the public officer and one copy delivered to the 5 25savings and loan orcredit union. Asavings and loan or5 26 credit union pledging securities with a public officer may 5 27 cause the securities to be examined in the officer's office to 5 28 show the securities are placed with the officer as collateral 5 29 security and are not transferable except upon the conditions 5 30 provided in this chapter. 5 31 4. Upon written request from the appropriate public 5 32 officer but not less thanquarterly, a savings and loan or5 33credit unionmonthly, the federal home loan bank of Des 5 34 Moines, Iowa, or the U.S. central credit union, shall report a 5 35 description, the par value and the market value of any pledged 6 1 collateraland the total deposits of public funds of that6 2officer in the savings and loan orby a credit union. 6 3 Sec. 9. Section 12C.18, Code 1999, is amended to read as 6 4 follows: 6 5 12C.18 CONDITION OF SECURITY. 6 6 The condition of the surety bond or the deposit of 6 7 securities, instruments, or a joint custody receipt, must be 6 8 that thesavings and loan orcredit union will promptly pay to 6 9 the parties entitled public funds, including any interest on 6 10 the funds, in its custody upon lawful demand and, when 6 11 required by law, pay the funds to the public officer who made 6 12 the deposit. 6 13 Sec. 10. Section 12C.19, subsections 3 and 4, Code 1999, 6 14 are amended to read as follows: 6 15 3. In the event of substitution, addition, or exchange of 6 16 securities, the holder or custodian of the securities shall, 6 17 on the same day, forward bycertified mail, return receipt6 18requested,regular mail to the public officer and thesavings6 19and loan orcredit union, a receipt specifically describing 6 20 and identifying both the substituted or additional securities 6 21and those released and returned to the savings and loan or6 22credit union. 6 23 4. The public officer which deposits public funds with a 6 24savings and loan orcredit union shall require, if the market 6 25 value of the securities deposited with or for the benefit of 6 26 the officer falls below one hundred ten percent of the deposit 6 27 liability to the public officer, the deposit of additional 6 28 security to bring the total market value of the security to 6 29 one hundred ten percent of the amount of public funds held by 6 30 thesavings and loan orcredit union. 6 31 Sec. 11. Section 12C.23, Code 1999, is amended to read as 6 32 follows: 6 33 12C.23 PAYMENT OF LOSSES IN A CREDIT UNION. 6 34 1. The pledging of securities by adepositorycredit union 6 35 pursuant to this chapter constitutes consent by thedepository7 1 credit union to the disposition of the securities in 7 2 accordance with this section. 7 3 The acceptance of public funds by adepositorycredit union 7 4 pursuant to this chapter constitutes consent by thedepository7 5 credit union to assessments by the treasurer of state in 7 6 accordance with this chapter. 7 7 2. Thedepositorycredit union and the security given for 7 8 the public funds in its hands are liable for payment if the 7 9depositorycredit union fails to pay a check, draft, or 7 10 warrant drawn by the public officer or to account for a check, 7 11 draft, warrant, order, or certificates of deposit, or any 7 12 public funds entrusted to it if, in failing to pay, the 7 13depositorycredit union acts contrary to the terms of an 7 14 agreement between thedepositorycredit union and the public 7 15 body treasurer. Thedepositorycredit union and the security 7 16 given for the public funds in its hands are also liable for 7 17 payment if thedepositorycredit union fails to pay an 7 18 assessment by the treasurer of state when the assessment is 7 19 due. 7 20 3. If adepositorycredit union is closed by its primary 7 21 regulatory officials, the public body with deposits in the 7 22depository shall notify the treasurer of state of the amount7 23of any claim within thirty days of the closingcredit union 7 24 may sell the collateral to pay for any loss of principal and 7 25 accrued interest.The treasurer of state shall implement the7 26following procedures:7 27 a. In cooperation with the responsible regulatory 7 28 officials for thedepositorycredit union, thetreasurer7 29 public body shall validate the amount of public funds on 7 30 deposit at the defaultingdepositorycredit union and the 7 31 amount of deposit insurance applicable to the deposits. 7 32 b. The loss to public depositors shall be satisfied, first 7 33 through any applicable deposit insurance and then through the 7 34 sale of securities pledged by the defaultingdepositorycredit 7 35 union, and then the assets of the defaultingdepositorycredit 8 1 union. The priority of claims are those established pursuant 8 2 tosection 524.1312, subsection 2,section 533.22, subsection 8 3 1, paragraph "b", or section 534.517. To the extent permitted 8 4 by federal law, in the distribution of an insolvent federally 8 5 chartereddepository'scredit union's assets, the order of 8 6 payment of liabilities if its assets are insufficient to pay 8 7 in full all its liabilities for which claims are made shall be 8 8 in the same order as for the equivalent type of state 8 9 chartereddepositorycredit union as provided insection8 10524.1312, subsection 2,section 533.22, subsection 1, 8 11 paragraph "b", or section 534.517. 8 12 c. The claim of a public depositor for purposes of this 8 13 section shall be the amount of the depositor's deposits plus 8 14 interest to the date the funds are distributed to the public 8 15 depositor at the rate thedepository institutioncredit union 8 16 agreed to pay on the funds reduced by the portion of the funds 8 17 which is insured by federal deposit insurance. 8 18 d. If the loss to public funds is not covered by insurance 8 19 and the proceeds of the faileddepository'scredit union's 8 20 assets which are liquidated within thirty days of the closing 8 21 of thedepositorycredit union and pledged collateral, the 8 22 treasurer shall provide coverage of the remaining lossas8 23follows:8 24(1) If the loss was incurred in a bank, then any further8 25payments to cover the loss will come from the state sinking8 26fund for public deposits in banks. If the balance in that8 27sinking fund is inadequate to pay the entire loss, then the8 28treasurer shall obtain the additional amount needed by making8 29an assessment against other banks whose public funds deposits8 30exceed deposit insurance coverage. A bank's assessment shall8 31be determined by multiplying the total amount of the remaining8 32loss to all public depositors by a percentage that represents8 33that bank's proportional share of the average of uninsured8 34public funds deposits held by all banks as of the reporting8 35date under section 12C.21 immediately preceding the date the9 1depository was closed. Each bank shall pay its assessment to9 2the treasurer within three business days after it receives9 3notice of assessment. If a bank fails to pay its assessment9 4when due, the treasurer shall satisfy the assessment by9 5selling securities pledged by that bank. If the securities9 6pledged by that bank are inadequate to pay the assessment, the9 7treasurer of state shall make additional assessments as may be9 8necessary against other banks which hold uninsured public9 9funds to satisfy any unpaid assessment. Any additional9 10assessments shall be determined, collected, and satisfied in9 11the same manner as the first assessment. If a bank fails to9 12pay its assessment when due, the treasurer of state shall9 13initiate a lawsuit to collect the assessment. If a bank is9 14found to have failed to pay the assessment as required by this9 15subparagraph, the court shall order it to pay the assessment,9 16court costs, reasonable attorney's fees based on the amount of9 17time the attorney general's office spent preparing and9 18bringing the action, and reasonable expenses incurred by the9 19treasurer of state. Idle balances in the fund shall be9 20invested by the treasurer with earnings credited to the fund.9 21Fees paid by banks for administration of this chapter shall be9 22credited to the fund and the treasurer may deduct actual costs9 23of administration from the fund.9 24(2) If the loss was incurred in a credit union, then any9 25further payments to cover the loss will comefrom the state 9 26 sinking fund for public deposits in credit unions. If the 9 27 funds are inadequate to cover the entire loss, then the 9 28 treasurer shall make an assessment against other credit unions 9 29 who hold public funds. The assessment shall be determined by 9 30 multiplying the total amount of the remaining loss to public 9 31 depositors by a percentage that represents the average of 9 32 public funds deposits held by all credit unions during the 9 33 preceding twelve-month period ending on the last day of the 9 34 month immediately preceding the month thedepositorycredit 9 35 union was closed. Each credit union shall pay its assessment 10 1 to the treasurer within three business days after it receives 10 2 notice of assessment. If a credit union fails to pay its 10 3 assessment when due, the treasurer of state shall initiate a 10 4 lawsuit to collect the assessment. If a credit union is found 10 5 to have failed to pay the assessment as required by this 10 6 subparagraph, the court shall order it to pay the assessment, 10 7 court costs, reasonable attorney's fees based upon the amount 10 8 of time the attorney general's office spent preparing and 10 9 bringing the action, and reasonable expenses incurred by the 10 10 treasurer of state's office. Idle balances in the fund are to 10 11 be invested by the treasurer with earnings credited to the 10 12 fund. Fees paid by credit unions for administration of this 10 13 chapter will be credited to the fund and the treasurer may 10 14 deduct actual costs of administration from the fund. 10 15(3) If the loss was incurred in a savings and loan or a10 16savings bank, then any further payments to cover the loss will10 17come from the state sinking fund for public deposits in10 18savings and loan associations and savings banks. If the funds10 19are inadequate to cover the entire loss, then the treasurer10 20shall make an assessment against other savings and loans and10 21savings banks who hold public funds. The assessment shall be10 22determined by multiplying the total amount of the remaining10 23loss to public depositors by a percentage that represents the10 24average of public funds deposits held by all savings and loans10 25and savings banks during the preceding twelve month period10 26ending on the last day of the month immediately preceding the10 27month the depository was closed. Each savings and loan and10 28savings bank shall pay its assessment to the treasurer within10 29three business days after it receives notice of assessment.10 30If a savings and loan or savings bank fails to pay its10 31assessment when due, the treasurer shall initiate a lawsuit to10 32collect the assessment. If a savings and loan association or10 33a savings bank is found to have failed to pay the assessment10 34as required by this subparagraph, the court shall order it to10 35pay the assessment, court costs of the action, reasonable11 1attorney's fees based upon the amount of time the attorney11 2general's office spent preparing and bringing the action, and11 3reasonable expenses incurred by the treasurer of state's11 4office.11 5 e. Any amount realized from the sale of collateral 11 6 pursuant to paragraph "d",subparagraphs (1) and (2)in excess 11 7 of the amount of adepository'scredit union's assessment, 11 8 shall continue to be held by the treasurer, in the same 11 9 interest bearing investments available for public funds, as 11 10 collateral until thatdepositorycredit union provides 11 11 substitute collateral or is otherwise entitled to its release. 11 12f. Following collection of the assessments, the state11 13treasurer shall distribute funds to the public depositors of11 14the failed depository according to their validated claims. If11 15the assets available are less than the total deposits, the11 16treasurer shall prorate the claims. A public depositor11 17receiving payment under this section shall assign to the11 18treasurer any interest the public depositor may have in funds11 19that subsequently become available to depositors of the11 20defaulting depository.11 21 Sec. 12. NEW SECTION. 12C.23A PAYMENT OF LOSSES IN A 11 22 BANK. 11 23 1. The acceptance of public funds by a bank pursuant to 11 24 this chapter constitutes consent by the bank to assessments by 11 25 the treasurer of state in accordance with this chapter. 11 26 2. The bank is liable for payment if the bank fails to pay 11 27 a check, draft, or warrant drawn by the public officer or to 11 28 account for a check, draft, warrant, order, or certificates of 11 29 deposit, or any public funds entrusted to it if, in failing to 11 30 pay, the bank acts contrary to the terms of an agreement 11 31 between the bank and the public body treasurer. The bank is 11 32 also liable for payment if the bank fails to pay an assessment 11 33 by the treasurer of state when the assessment is due. 11 34 3. If a bank is closed by its primary regulatory 11 35 officials, the public body with deposits in the bank shall 12 1 notify the treasurer of state of the amount of any claim 12 2 within thirty days of the closing. The treasurer of state 12 3 shall implement the following procedures: 12 4 a. In cooperation with the responsible regulatory 12 5 officials for the bank, the treasurer shall validate the 12 6 amount of public funds on deposit at the defaulting bank and 12 7 the amount of deposit insurance applicable to the deposits. 12 8 b. The recovery of any loss to public depositors shall 12 9 begin with applicable deposit insurance. The priority of 12 10 claims are those established pursuant to section 524.1312, 12 11 subsection 2, section 533.22, subsection 1, paragraph "b", or 12 12 section 534.517. To the extent permitted by federal law, in 12 13 the distribution of an insolvent federally chartered bank's 12 14 assets, the order of payment of liabilities if its assets are 12 15 insufficient to pay in full all its liabilities for which 12 16 claims are made shall be in the same order as for a state- 12 17 chartered bank as provided in section 524.1312, subsection 2. 12 18 c. The claim of a public depositor for purposes of this 12 19 section shall be the amount of the depositor's deposits plus 12 20 interest to the date the funds are distributed to the public 12 21 depositor at the rate the bank agreed to pay on the funds 12 22 reduced by the portion of the funds which is insured by 12 23 federal deposit insurance. 12 24 d. If the loss to public funds is not covered by insurance 12 25 and the proceeds of the failed bank's assets which are 12 26 liquidated within thirty days of the closing of the bank, are 12 27 not sufficient to cover the loss, then any further payments to 12 28 cover the loss will come from the state sinking fund for 12 29 public deposits in banks. If the balance in that sinking fund 12 30 is inadequate to pay the entire loss, then the treasurer shall 12 31 obtain the additional amount needed by making an assessment 12 32 against other banks whose public funds deposits exceed deposit 12 33 insurance coverage. A bank's assessment shall be determined 12 34 by multiplying the total amount of the remaining loss to all 12 35 public depositors by a percentage that represents that bank's 13 1 proportional share of the average of uninsured public funds 13 2 deposits held by all banks. Each bank shall pay its 13 3 assessment to the treasurer within three business days after 13 4 it receives notice of assessment. If a bank fails to pay its 13 5 assessment when due, the treasurer of state shall initiate a 13 6 lawsuit to collect the assessment. If a bank is found to have 13 7 failed to pay the assessment as required by this subparagraph, 13 8 the court shall order it to pay the assessment, court costs, 13 9 reasonable attorney fees based on the amount of time the 13 10 attorney general's office spent preparing and bringing the 13 11 action, and reasonable expenses incurred by the treasurer of 13 12 state. Idle balances in the fund shall be invested by the 13 13 treasurer with earnings credited to the fund. Fees paid by 13 14 banks for administration of this chapter shall be credited to 13 15 the fund and the treasurer may deduct actual costs of 13 16 administration from the fund. 13 17 e. Following collection of the assessments, the state 13 18 treasurer shall distribute funds to the public depositors of 13 19 the failed bank according to their validated claims. If the 13 20 assets available are less than the total deposits, the 13 21 treasurer shall prorate the claims. A public depositor 13 22 receiving payment under this section shall assign to the 13 23 treasurer any interest the public depositor may have in funds 13 24 that subsequently become available to depositors of the 13 25 defaulting bank. 13 26 Sec. 13. Section 12C.25, subsection 3, Code 1999, is 13 27 amended by striking the subsection. 13 28 Sec. 14. Section 12C.21, Code 1999, is repealed. 13 29 Sec. 15. EFFECTIVE DATE. This Act, being deemed of 13 30 immediate importance, takes effect upon enactment. 13 31 13 32 13 33 RON J. CORBETT 13 34 Speaker of the House 13 35 14 1 14 2 14 3 MARY E. KRAMER 14 4 President of the Senate 14 5 14 6 I hereby certify that this bill originated in the House and 14 7 is known as House File 571, Seventy-eighth General Assembly. 14 8 14 9 14 10 14 11 ELIZABETH ISAACSON 14 12 Chief Clerk of the House 14 13 Approved , 1999 14 14 14 15 14 16 14 17 THOMAS J. VILSACK 14 18 Governor
Text: HF00570 Text: HF00572 Text: HF00500 - HF00599 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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