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Senate Study Bill 1124

Bill Text

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 is a savings and loan or a credit
  1 15 union, then public deposits in the savings and loan or credit
  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 loan
  1 21 association, or savings bank has 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 bank alleged 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, the financial institution bank
  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, savings
  1 35 and 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 10 savings and loan or credit 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 a savings and loan or credit 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.  The savings and loan or credit 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.  The savings and loan or credit 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 the savings and
  2 33 loan or credit 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 a
  3  5 political subdivision of this state.
  3  6    (3)  Public bonds or obligations of another state or a
  3  7 political subdivision of another state whose bonds are rated
  3  8 within the two highest classifications of prime as established
  3  9 by at least one of the standard rating services approved by
  3 10 the 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 to
  3 23 practices acceptable to the treasurer of state.
  3 24    (6)  Investments in an open-end management investment
  3 25 company registered with the federal securities and exchange
  3 26 commission under the federal Investment Company Act of 1940,
  3 27 15 U.S.C. } 80(a), which is operated in accordance with 17
  3 28 C.F.R. } 270.2a-7.
  3 29    Direct obligations of, or obligations that are insured or
  3 30 fully guaranteed as to principal and interest by, the United
  3 31 States of America, which may be used to secure the deposit of
  3 32 public funds under subparagraph (1), include investments in an
  3 33 investment company or investment trust registered under the
  3 34 federal Investment Company Act of 1940, 15 U.S.C. } 80a, the
  3 35 portfolio of which is limited to the United States government
  4  1 obligations described in subparagraph (1) and to repurchase
  4  2 agreements fully collateralized by the United States
  4  3 government obligations described in subparagraph (1), if the
  4  4 investment company or investment trust takes delivery of the
  4  5 collateral either directly or through an authorized custodian.
  4  6    2.  If public funds are secured by both the assets of a
  4  7 savings and loan or credit 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.  A savings and loan or credit 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 with the federal
  4 31 reserve bank of Chicago, Illinois, the federal home loan bank
  4 32 of Des Moines, Iowa, or the U.S.  central credit union
  4 33 pursuant to a bailment agreement or a pledge custody
  4 34 agreement.
  4 35    d.  The securities may be deposited by any combination of
  5  1 methods specified in paragraphs "a", "b", and "c".
  5  2    2.  A deposit of securities shall not be made in a facility
  5  3 owned or controlled directly or indirectly by the financial
  5  4 institution which deposits the securities.
  5  5    3.  All deposits of securities, other than deposits of
  5  6 securities with the appropriate public officer, shall have a
  5  7 joint custody receipt taken for the securities with one copy
  5  8 delivered to the public officer and one copy delivered to the
  5  9 savings and loan or credit union.  A savings and loan or
  5 10 credit union pledging securities with a public officer may
  5 11 cause the securities to be examined in the officer's office to
  5 12 show the securities are placed with the officer as collateral
  5 13 security and are not transferable except upon the conditions
  5 14 provided in this chapter.
  5 15    4.  Upon written request from the appropriate public
  5 16 officer but not less than quarterly, a savings and loan or
  5 17 credit union shall report the par value and the market value
  5 18 of any pledged collateral and the total deposits of public
  5 19 funds of that officer in the savings and loan or credit union.
  5 20    Sec. 8.  Section 12C.18, Code 1999, is amended to read as
  5 21 follows:
  5 22    12C.18  CONDITION OF SECURITY.
  5 23    The condition of the surety bond or the deposit of
  5 24 securities, instruments, or a joint custody receipt, must be
  5 25 that the savings and loan or credit union will promptly pay to
  5 26 the parties entitled public funds, including any interest on
  5 27 the funds, in its custody upon lawful demand and, when
  5 28 required by law, pay the funds to the public officer who made
  5 29 the deposit.
  5 30    Sec. 9.  Section 12C.19, subsections 3 and 4, Code 1999,
  5 31 are amended to read as follows:
  5 32    3.  In the event of substitution or exchange of securities,
  5 33 the holder or custodian of the securities shall, on the same
  5 34 day, forward by certified mail, return receipt requested, to
  5 35 the public officer and the savings and loan or credit union, a
  6  1 receipt specifically describing and identifying both the
  6  2 substituted securities and those released and returned to the
  6  3 savings and loan or credit union.
  6  4    4.  The public officer which deposits public funds with a
  6  5 savings and loan or credit union shall require, if the market
  6  6 value of the securities deposited with or for the benefit of
  6  7 the officer falls below one hundred ten percent of the deposit
  6  8 liability to the public officer, the deposit of additional
  6  9 security to bring the total market value of the security to
  6 10 one hundred ten percent of the amount of public funds held by
  6 11 the savings and loan or credit union.
  6 12    Sec. 10.  Section 12C.23, subsection 3, paragraph d,
  6 13 subparagraph (3), Code 1999, is amended by striking the
  6 14 subparagraph.
  6 15    Sec. 11.  Section 12C.25, subsection 3, Code 1999, is
  6 16 amended by striking the subsection.
  6 17    Sec. 12.  TRANSITION PROVISION.  All funds in the state
  6 18 sinking fund for public deposits in savings and loan
  6 19 associations and savings banks on the effective date of this
  6 20 Act shall be transferred to the state sinking fund for public
  6 21 deposits in banks, and the state sinking fund for public
  6 22 deposits in savings and loan associations and savings banks
  6 23 shall be closed.  
  6 24                           EXPLANATION
  6 25    This bill amends Code chapter 12C relating to the deposit
  6 26 of public funds and the conditions which must be met by a
  6 27 financial institution to be eligible to receive such deposits.
  6 28 The bill provides that a savings and loan association, a
  6 29 savings bank, or any branch of a savings and loan association
  6 30 or savings bank, be subject to substantially the same
  6 31 requirements as a bank.  
  6 32 LSB 2158SC 78
  6 33 mj/sc/14
     

Text: SSB01123                          Text: SSB01125
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