HOUSE FILE 2168

BY  COMMITTEE ON COMMERCE

(SUCCESSOR TO HSB 535)

A BILL FOR

An Act relating to the authorized deposit of public funds. 
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 12B.10, subsection 7, Code Supplement 2011, is amended to read as follows:
   7.  Notwithstanding sections 12C.2, 12C.4, 12C.6, 12C.6A, and any other provision of law relating to the deposits of public funds, if public funds are deposited in a depository, as defined in section 12C.1, any uninsured portion of the public funds invested through the depository may be invested in
 
insured deposits or certificates of deposit arranged by the depository that are
 
placed in or issued by one or more federally insured banks or savings associations regardless of location for the account of the public funds depositor if all of the following requirements are satisfied:
   a.  The full amount of the principal and any accrued interest of each
 
on such public funds or each such certificate of deposit issued shall be covered by federal deposit insurance.
   b.  The depository, either directly or through an agent or subcustodian, shall act as custodian of the
 
insured deposits or certificates of deposit.
   c.  The
 
On the same day
 
that the public funds deposits are placed or the certificates of deposit are issued, the depository shall have received deposits in an amount eligible for federal deposit insurance from, and, with regard to certificates of deposit, shall have issued certificates of deposit to, customers of other financial institutions wherever located that are equal to or greater than the amount of public funds invested under this subsection by the public funds depositor through the depository.
    Sec. 2.  Section 12C.22, subsection 2, unnumbered paragraph 1, Code 2011, is amended to read as follows:
   The amount of the collateral required to be pledged by a bank shall at all times equal or exceed the total of the amount by which the public funds deposits in the bank exceeds the total capital of the bank. For purposes of this section, deposits that comply with section 12B.10, subsection 7, that are evidenced either by one or more certificates of deposit or one or more orders for the next business day settlement and issuance of certificates of deposit, by a federally insured bank or savings association other than the depository,
 
or that are public funds placed in accordance with section 12B.10, subsection 7, shall not be deemed public funds deposits in the bank or savings association. For purposes of this chapter, unless the context otherwise requires, “total capital of the bank” means its tier one capital plus both of the following components of tier two capital:
    Sec. 3.  Section 12C.22, subsection 6, Code 2011, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  f.  Certificates of deposit issued by a federal deposit insurance corporation insured bank, the payment of which is fully insured by the federal deposit insurance corporation both as to principal and accrued interest, and that have been assigned a committee on uniform security identification procedures number and deposited for the account of the public funds depository bank at the depository trust company.
EXPLANATION
   This bill relates to the investment of public funds deposited in a depository, as both are defined in Code section 12C.1. Currently, the uninsured portion of public funds invested through a depository may be invested in certificates of deposit arranged by the depository issued by one or more federally insured banks or savings associations. The bill expands such authorized investments to include insured deposits.
   The bill adds to the list of acceptable forms of collateral for the deposit of public funds specified in Code section 12C.22, subsection 6. Collateral may now include certificates of deposit issued by a federal deposit insurance corporation insured bank, the payment of which is fully insured by the federal deposit insurance corporation both as to principal and accrued interest, and that have been assigned a committee on uniform security identification procedures number and deposited for the account of the public funds depository bank at the depository trust company.