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PAG LIN 1 1 Section 1. Section 12C.1, subsection 2, paragraph c, Code 1 2 1999, is amended to read as follows: 1 3 c. "Bank" means a corporation engaged in the business of 1 4 banking authorized by law to receive deposits and whose 1 5 deposits are insured by the bank insurance fund of the federal 1 6 deposit insurance corporation and includes any office of a 1 7 bank. "Bank" also means a savings and loan. 1 8 Sec. 2. Section 12C.1, subsection 2, paragraph f, Code 1 9 1999, is amended to read as follows: 1 10 f. "Financial institution" means a bank, savings and loan,1 11 or a credit union. 1 12 Sec. 3. Section 12C.1, subsection 3, paragraph a, Code 1 13 1999, is amended to read as follows: 1 14 a. If a depository isa savings and loan ora credit 1 15 union, then public deposits in thesavings and loan orcredit 1 16 union shall be secured pursuant to sections 12C.16 through 1 17 12C.19 and sections 12C.23 and 12C.24. 1 18 Sec. 4. Section 12C.6A, subsection 5, paragraphs a, b, and 1 19 c, Code 1999, are amended to read as follows: 1 20 a. A person who believes a bank, savings and loan1 21association, or savings bankhas failed to meet its community 1 22 reinvestment responsibility may file a complaint with the 1 23 committee detailing the basis for that belief. 1 24 b. If any committee member, in the member's discretion, 1 25 finds that the complaint has merit, the member may order the 1 26 bank, savings and loan association, or savings bankalleged to 1 27 have failed to meet its community reinvestment responsibility 1 28 to attend and participate in a meeting with the complainant. 1 29 The committee member may specify who, at minimum, shall 1 30 represent the financial institution at the meeting. At the 1 31 meeting, or at any other time, thefinancial institutionbank 1 32 may, but is not required to, enter into an agreement with a 1 33 complainant to correct alleged failings. 1 34 c. A majority of the committee may order a bank, savings1 35and loan association, or savings bank,against which a 2 1 complaint has been filed pursuant to this subsection, to 2 2 disclose such additional information relating to community 2 3 reinvestment as required by the order of the majority of the 2 4 committee. 2 5 Sec. 5. Section 12C.15, Code 1999, is amended to read as 2 6 follows: 2 7 12C.15 RESTRICTION ON REQUIRING COLLATERAL. 2 8 A local government shall not require a pledge of collateral 2 9 for that portion of the local government's deposits in a 2 10savings and loan orcredit union that is covered by insurance 2 11 of a federal agency or instrumentality. 2 12 Sec. 6. Section 12C.16, Code 1999, is amended to read as 2 13 follows: 2 14 12C.16 SECURITY FOR DEPOSIT OF PUBLIC FUNDS. 2 15 1. Before a deposit of public funds is made by a public 2 16 officer with asavings and loan orcredit union in excess of 2 17 the amount federally insured, the public officer shall obtain 2 18 security for the deposit by one or more of the following: 2 19 a. Thesavings and loan orcredit union may give to the 2 20 public officer a corporate surety bond of a surety corporation 2 21 approved by the treasury department of the United States and 2 22 authorized to do business in this state, which bond shall be 2 23 in an amount equal to the public funds on deposit at any time. 2 24 The bond shall be conditioned that the deposit shall be paid 2 25 promptly on the order of the public officer making the deposit 2 26 and shall be approved by the officer making the deposit. 2 27 b. Thesavings and loan orcredit union may deposit, 2 28 maintain, pledge and assign for the benefit of the public 2 29 officer in the manner provided in this chapter, securities 2 30 approved by the public officer, the market value of which is 2 31 not less than one hundred ten percent of the total deposits of 2 32 public funds placed by that public officer in thesavings and2 33loan orcredit union. The securities shall consist of any of 2 34 the following: 2 35 (1) Direct obligations of, or obligations that are insured 3 1 or fully guaranteed as to principal and interest by, the 3 2 United States of America or an agency or instrumentality of 3 3 the United States of America. 3 4 (2)Public bonds or obligations of this state or a3 5political subdivision of this state.3 6(3) Public bonds or obligations of another state or a3 7political subdivision of another state whose bonds are rated3 8within the two highest classifications of prime as established3 9by at least one of the standard rating services approved by3 10the superintendent of banking pursuant to chapter 17A.3 11(4)To the extent of the guarantee, loans, obligations, or 3 12 nontransferable letters of credit upon which the payment of 3 13 principal and interest is fully secured or guaranteed by the 3 14 United States of America or an agency or instrumentality of 3 15 the United States of America or the U.S. central credit union, 3 16 and the rating of the U.S. central credit union remains within 3 17 the two highest classifications of prime established by at 3 18 least one of the standard rating services approved by the 3 19 superintendent of banking by rule pursuant to chapter 17A. 3 20 The treasurer of state shall adopt rules pursuant to chapter 3 21 17A to implement this section. 3 22(5) First lien mortgages which are valued according to3 23practices acceptable to the treasurer of state.3 24(6) Investments in an open-end management investment3 25company registered with the federal securities and exchange3 26commission under the federal Investment Company Act of 1940,3 2715 U.S.C. } 80(a), which is operated in accordance with 173 28C.F.R. } 270.2a-7.3 29Direct obligations of, or obligations that are insured or3 30fully guaranteed as to principal and interest by, the United3 31States of America, which may be used to secure the deposit of3 32public funds under subparagraph (1), include investments in an3 33investment company or investment trust registered under the3 34federal Investment Company Act of 1940, 15 U.S.C. } 80a, the3 35portfolio of which is limited to the United States government4 1obligations described in subparagraph (1) and to repurchase4 2agreements fully collateralized by the United States4 3government obligations described in subparagraph (1), if the4 4investment company or investment trust takes delivery of the4 5collateral either directly or through an authorized custodian.4 6 2. If public funds are secured by both the assets of a 4 7savings and loan orcredit union and a bond of a surety 4 8 company, the assets and bond shall be held as security for a 4 9 rateable proportion of the deposit on the basis of the market 4 10 value of the assets and of the total amount of the surety 4 11 bonds. 4 12 Sec. 7. Section 12C.17, Code 1999, is amended to read as 4 13 follows: 4 14 12C.17 DEPOSIT OF SECURITIES. 4 15 1. Asavings and loan orcredit union which receives 4 16 public funds shall pledge securities owned by it as required 4 17 by this chapter in one of the following methods: 4 18 a. The securities shall be deposited with the county, 4 19 city, or other public officers at the option of the officers. 4 20 b. The securities shall be deposited pursuant to a 4 21 bailment agreement with a financial institution having 4 22 facilities for the safekeeping of securities and doing 4 23 business in the state. A financial institution which receives 4 24 securities for safekeeping is liable to the public officer to 4 25 whom the securities are pledged for any loss suffered by the 4 26 public officer if the financial institution relinquishes 4 27 custody of the securities contrary to the provisions of this 4 28 chapter or the instrument governing the pledge of the 4 29 securities. 4 30 c. The securities shall be deposited withthe federal4 31reserve bank of Chicago, Illinois,the federal home loan bank 4 32 of Des Moines, Iowa, or the U.S. central credit union pursuant 4 33 to a bailment agreement or a pledge custody agreement. 4 34 d. The securities may be deposited by any combination of 4 35 methods specified in paragraphs "a", "b", and "c". 5 1 2. A deposit of securities shall not be made in a facility 5 2 owned or controlled directly or indirectly by the financial 5 3 institution which deposits the securities. 5 4 3. All deposits of securities, other than deposits of 5 5 securities with the appropriate public officer, shall have a 5 6 joint custody receipt taken for the securities with one copy 5 7 delivered to the public officer and one copy delivered to the 5 8savings and loan orcredit union. Asavings and loan or5 9 credit union pledging securities with a public officer may 5 10 cause the securities to be examined in the officer's office to 5 11 show the securities are placed with the officer as collateral 5 12 security and are not transferable except upon the conditions 5 13 provided in this chapter. 5 14 4. Upon written request from the appropriate public 5 15 officer but not less thanquarterly, a savings and loan or5 16credit unionmonthly, the federal home loan bank of Des 5 17 Moines, Iowa, shall report the par value and the market value 5 18 of any pledged collateraland the total deposits of public5 19funds of that officer in the savings and loan orby a credit 5 20 union to the public entity represented by the requesting 5 21 public officer. 5 22 Sec. 8. Section 12C.18, Code 1999, is amended to read as 5 23 follows: 5 24 12C.18 CONDITION OF SECURITY. 5 25 The condition of the surety bond or the deposit of 5 26 securities, instruments, or a joint custody receipt, must be 5 27 that thesavings and loan orcredit union will promptly pay to 5 28 the parties entitled public funds, including any interest on 5 29 the funds, in its custody upon lawful demand and, when 5 30 required by law, pay the funds to the public officer who made 5 31 the deposit. 5 32 Sec. 9. Section 12C.19, subsections 3 and 4, Code 1999, 5 33 are amended to read as follows: 5 34 3. In the event of substitution, addition, or exchange of 5 35 securities, the holder or custodian of the securities shall, 6 1 on the same day, forward bycertified mail, return receipt6 2requested,regular mail to the public officer and thesavings6 3and loan orcredit union, a receipt specifically describing 6 4 and identifying both the substituted or additional securities 6 5and those released and returned to the savings and loan or6 6credit union. 6 7 4. The public officer which deposits public funds with a 6 8savings and loan orcredit union shall require, if the market 6 9 value of the securities deposited with or for the benefit of 6 10 the officer falls below one hundred ten percent of the deposit 6 11 liability to the public officer, the deposit of additional 6 12 security to bring the total market value of the security to 6 13 one hundred ten percent of the amount of public funds held by 6 14 thesavings and loan orcredit union. 6 15 Sec. 10. Section 12C.23, Code 1999, is amended to read as 6 16 follows: 6 17 12C.23 PAYMENT OF LOSSES IN A CREDIT UNION. 6 18 1. The pledging of securities by adepositorycredit union 6 19 pursuant to this chapter constitutes consent by thedepository6 20 credit union to the disposition of the securities in 6 21 accordance with this section. 6 22 The acceptance of public funds by adepositorycredit union 6 23 pursuant to this chapter constitutes consent by thedepository6 24 credit union to assessments by the treasurer of state in 6 25 accordance with this chapter. 6 26 2. Thedepositorycredit union and the security given for 6 27 the public funds in its hands are liable for payment if the 6 28depositorycredit union fails to pay a check, draft, or 6 29 warrant drawn by the public officer or to account for a check, 6 30 draft, warrant, order, or certificates of deposit, or any 6 31 public funds entrusted to it if, in failing to pay, the 6 32depositorycredit union acts contrary to the terms of an 6 33 agreement between thedepositorycredit union and the public 6 34 body treasurer. Thedepositorycredit union and the security 6 35 given for the public funds in its hands are also liable for 7 1 payment if thedepositorycredit union fails to pay an 7 2 assessment by the treasurer of state when the assessment is 7 3 due. 7 4 3. If adepositorycredit union is closed by its primary 7 5 regulatory officials, the public body with deposits in the 7 6depository shall notify the treasurer of state of the amount7 7of any claim within thirty days of the closingcredit union 7 8 may sell the collateral to pay for any loss of principal.The7 9treasurer of state shall implement the following procedures:7 10 a. In cooperation with the responsible regulatory 7 11 officials for thedepositorycredit union, the public body 7 12 treasurer shall validate the amount of public funds on deposit 7 13 at the defaultingdepositorycredit union and the amount of 7 14 deposit insurance applicable to the deposits. 7 15 b. The loss to public depositors shall be satisfied, first 7 16 through any applicable deposit insurance and then through the 7 17 sale of securities pledged by the defaultingdepositorycredit 7 18 union, and then the assets of the defaultingdepositorycredit 7 19 union. The priority of claims are those established pursuant 7 20 tosection 524.1312, subsection 2,section 533.22, subsection 7 21 1, paragraph "b", or section 534.517. To the extent permitted 7 22 by federal law, in the distribution of an insolvent federally 7 23 chartereddepository'scredit union's assets, the order of 7 24 payment of liabilities if its assets are insufficient to pay 7 25 in full all its liabilities for which claims are made shall be 7 26 in the same order as for the equivalent type of state 7 27 chartereddepositorycredit union as provided insection7 28524.1312, subsection 2,section 533.22, subsection 1, 7 29 paragraph "b", or section 534.517. 7 30 c. The claim of a public depositor for purposes of this 7 31 section shall be the amount of the depositor's deposits plus 7 32 interest to the date the funds are distributed to the public 7 33 depositor at the rate thedepository institutioncredit union 7 34 agreed to pay on the funds reduced by the portion of the funds 7 35 which is insured by federal deposit insurance. 8 1 d. If the loss to public funds is not covered by insurance 8 2 and the proceeds of the faileddepository'scredit union's 8 3 assets which are liquidated within thirty days of the closing 8 4 of thedepositorycredit union and pledged collateral, the 8 5 treasurer shall provide coverage of the remaining lossas8 6follows:8 7(1) If the loss was incurred in a bank, then any further8 8payments to cover the loss will come from the state sinking8 9fund for public deposits in banks. If the balance in that8 10sinking fund is inadequate to pay the entire loss, then the8 11treasurer shall obtain the additional amount needed by making8 12an assessment against other banks whose public funds deposits8 13exceed deposit insurance coverage. A bank's assessment shall8 14be determined by multiplying the total amount of the remaining8 15loss to all public depositors by a percentage that represents8 16that bank's proportional share of the average of uninsured8 17public funds deposits held by all banks as of the reporting8 18date under section 12C.21 immediately preceding the date the8 19depository was closed. Each bank shall pay its assessment to8 20the treasurer within three business days after it receives8 21notice of assessment. If a bank fails to pay its assessment8 22when due, the treasurer shall satisfy the assessment by8 23selling securities pledged by that bank. If the securities8 24pledged by that bank are inadequate to pay the assessment, the8 25treasurer of state shall make additional assessments as may be8 26necessary against other banks which hold uninsured public8 27funds to satisfy any unpaid assessment. Any additional8 28assessments shall be determined, collected, and satisfied in8 29the same manner as the first assessment. If a bank fails to8 30pay its assessment when due, the treasurer of state shall8 31initiate a lawsuit to collect the assessment. If a bank is8 32found to have failed to pay the assessment as required by this8 33subparagraph, the court shall order it to pay the assessment,8 34court costs, reasonable attorney's fees based on the amount of8 35time the attorney general's office spent preparing and9 1bringing the action, and reasonable expenses incurred by the9 2treasurer of state. Idle balances in the fund shall be9 3invested by the treasurer with earnings credited to the fund.9 4Fees paid by banks for administration of this chapter shall be9 5credited to the fund and the treasurer may deduct actual costs9 6of administration from the fund.9 7(2) If the loss was incurred in a credit union, then any9 8further payments to cover the loss will comefrom the state 9 9 sinking fund for public deposits in credit unions. If the 9 10 funds are inadequate to cover the entire loss, then the 9 11 treasurer shall make an assessment against other credit unions 9 12 who hold public funds. The assessment shall be determined by 9 13 multiplying the total amount of the remaining loss to public 9 14 depositors by a percentage that represents the average of 9 15 public funds deposits held by all credit unions during the 9 16 preceding twelve-month period ending on the last day of the 9 17 month immediately preceding the month thedepositorycredit 9 18 union was closed. Each credit union shall pay its assessment 9 19 to the treasurer within three business days after it receives 9 20 notice of assessment. If a credit union fails to pay its 9 21 assessment when due, the treasurer of state shall initiate a 9 22 lawsuit to collect the assessment. If a credit union is found 9 23 to have failed to pay the assessment as required by this 9 24 subparagraph, the court shall order it to pay the assessment, 9 25 court costs, reasonable attorney's fees based upon the amount 9 26 of time the attorney general's office spent preparing and 9 27 bringing the action, and reasonable expenses incurred by the 9 28 treasurer of state's office. Idle balances in the fund are to 9 29 be invested by the treasurer with earnings credited to the 9 30 fund. Fees paid by credit unions for administration of this 9 31 chapter will be credited to the fund and the treasurer may 9 32 deduct actual costs of administration from the fund. 9 33(3) If the loss was incurred in a savings and loan or a9 34savings bank, then any further payments to cover the loss will9 35come from the state sinking fund for public deposits in10 1savings and loan associations and savings banks. If the funds10 2are inadequate to cover the entire loss, then the treasurer10 3shall make an assessment against other savings and loans and10 4savings banks who hold public funds. The assessment shall be10 5determined by multiplying the total amount of the remaining10 6loss to public depositors by a percentage that represents the10 7average of public funds deposits held by all savings and loans10 8and savings banks during the preceding twelve month period10 9ending on the last day of the month immediately preceding the10 10month the depository was closed. Each savings and loan and10 11savings bank shall pay its assessment to the treasurer within10 12three business days after it receives notice of assessment.10 13If a savings and loan or savings bank fails to pay its10 14assessment when due, the treasurer shall initiate a lawsuit to10 15collect the assessment. If a savings and loan association or10 16a savings bank is found to have failed to pay the assessment10 17as required by this subparagraph, the court shall order it to10 18pay the assessment, court costs of the action, reasonable10 19attorney's fees based upon the amount of time the attorney10 20general's office spent preparing and bringing the action, and10 21reasonable expenses incurred by the treasurer of state's10 22office.10 23 e. Any amount realized from the sale of collateral 10 24 pursuant to paragraph "d",subparagraphs (1) and (2)in excess 10 25 of the amount of adepository'scredit union's assessment, 10 26 shall continue to be held by the treasurer, in the same 10 27 interest bearing investments available for public funds, as 10 28 collateral until thatdepositorycredit union provides 10 29 substitute collateral or is otherwise entitled to its release. 10 30f. Following collection of the assessments, the state10 31treasurer shall distribute funds to the public depositors of10 32the failed depository according to their validated claims. If10 33the assets available are less than the total deposits, the10 34treasurer shall prorate the claims. A public depositor10 35receiving payment under this section shall assign to the11 1treasurer any interest the public depositor may have in funds11 2that subsequently become available to depositors of the11 3defaulting depository.11 4 Sec. 11. NEW SECTION. 12C.23A PAYMENT OF LOSSES IN A 11 5 BANK. 11 6 1. The acceptance of public funds by a bank pursuant to 11 7 this chapter constitutes consent by the bank to assessments by 11 8 the treasurer of state in accordance with this chapter. 11 9 2. The bank is liable for payment if the bank fails to pay 11 10 a check, draft, or warrant drawn by the public officer or to 11 11 account for a check, draft, warrant, order, or certificates of 11 12 deposit, or any public funds entrusted to it if, in failing to 11 13 pay, the bank acts contrary to the terms of an agreement 11 14 between the bank and the public body treasurer. The bank is 11 15 also liable for payment if the bank fails to pay an assessment 11 16 by the treasurer of state when the assessment is due. 11 17 3. If a bank is closed by its primary regulatory 11 18 officials, the public body with deposits in the bank shall 11 19 notify the treasurer of state of the amount of any claim 11 20 within thirty days of the closing. The treasurer of state 11 21 shall implement the following procedures: 11 22 a. In cooperation with the responsible regulatory 11 23 officials for the bank, the treasurer shall validate the 11 24 amount of public funds on deposit at the defaulting bank and 11 25 the amount of deposit insurance applicable to the deposits. 11 26 b. The loss to public depositors shall be satisfied, first 11 27 through any applicable deposit insurance and then through the 11 28 sale of securities pledged by the defaulting bank. The 11 29 priority of claims are those established pursuant to section 11 30 524.1312, subsection 2, section 533.22, subsection 1, 11 31 paragraph "b", or section 534.517. To the extent permitted by 11 32 federal law, in the distribution of an insolvent federally 11 33 chartered bank's assets, the order of payment of liabilities 11 34 if its assets are insufficient to pay in full all its 11 35 liabilities for which claims are made shall be in the same 12 1 order as for a state-chartered bank as provided in section 12 2 524.1312, subsection 2. 12 3 c. The claim of a public depositor for purposes of this 12 4 section shall be the amount of the depositor's deposits plus 12 5 interest to the date the funds are distributed to the public 12 6 depositor at the rate the bank agreed to pay on the funds 12 7 reduced by the portion of the funds which is insured by 12 8 federal deposit insurance. 12 9 d. If the loss to public funds is not covered by insurance 12 10 and the proceeds of the failed bank's assets which are 12 11 liquidated within thirty days of the closing of the bank, are 12 12 not sufficient to cover the loss, then any further payments to 12 13 cover the loss will come from the state sinking fund for 12 14 public deposits in banks. If the balance in that sinking fund 12 15 is inadequate to pay the entire loss, then the treasurer shall 12 16 obtain the additional amount needed by making an assessment 12 17 against other banks whose public funds deposits exceed deposit 12 18 insurance coverage. A bank's assessment shall be determined 12 19 by multiplying the total amount of the remaining loss to all 12 20 public depositors by a percentage that represents that bank's 12 21 proportional share of the average of uninsured public funds 12 22 deposits held by all banks as of the reporting date under 12 23 section 12C.21 immediately preceding the date the bank was 12 24 closed. Each bank shall pay its assessment to the treasurer 12 25 within three business days after it receives notice of 12 26 assessment. If a bank fails to pay its assessment when due, 12 27 the treasurer of state shall initiate a lawsuit to collect the 12 28 assessment. If a bank is found to have failed to pay the 12 29 assessment as required by this subparagraph, the court shall 12 30 order it to pay the assessment, court costs, reasonable 12 31 attorney fees based on the amount of time the attorney 12 32 general's office spent preparing and bringing the action, and 12 33 reasonable expenses incurred by the treasurer of state. Idle 12 34 balances in the fund shall be invested by the treasurer with 12 35 earnings credited to the fund. Fees paid by banks for 13 1 administration of this chapter shall be credited to the fund 13 2 and the treasurer may deduct actual costs of administration 13 3 from the fund. 13 4 e. Following collection of the assessments, the state 13 5 treasurer shall distribute funds to the public depositors of 13 6 the failed bank according to their validated claims. If the 13 7 assets available are less than the total deposits, the 13 8 treasurer shall prorate the claims. A public depositor 13 9 receiving payment under this section shall assign to the 13 10 treasurer any interest the public depositor may have in funds 13 11 that subsequently become available to depositors of the 13 12 defaulting bank. 13 13 Sec. 12. Section 12C.25, subsection 3, Code 1999, is 13 14 amended by striking the subsection. 13 15 EXPLANATION 13 16 This bill amends Code chapter 12C relating to the deposit 13 17 of public funds and the conditions which must be met by a 13 18 financial institution to be eligible to receive such deposits. 13 19 The bill provides that a savings and loan association, a 13 20 savings bank, or any branch of a savings and loan association 13 21 or savings bank, be subject to substantially the same 13 22 requirements as a bank. 13 23 The bill strikes certain options with respect to securities 13 24 which may be deposited, maintained, pledged, or assigned for 13 25 the security of a public deposit including public bonds or 13 26 obligations of this state or a political subdivision of this 13 27 state; public bonds or obligations of another state or a 13 28 political subdivision of another state whose bonds are rated 13 29 within the two highest classifications of prime; first lien 13 30 mortgages which are valued according to practices acceptable 13 31 to the treasurer of state; and investments in an open-end 13 32 management investment company registered with the federal 13 33 securities and exchange commission. 13 34 LSB 2158SV 78 13 35 mj/sc/14
Text: SF00318 Text: SF00320 Text: SF00300 - SF00399 Text: SF Index Bills and Amendments: General Index Bill History: General Index
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