House Study Bill 535 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON SODERBERG) A BILL FOR An Act relating to the authorized deposit of public funds. 1 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 2 TLSB 5426YC (3) 84 rn/sc

H.F. _____ Section 1. Section 12B.10, subsection 7, Code Supplement 1 2011, is amended to read as follows: 2 7. Notwithstanding sections 12C.2 , 12C.4 , 12C.6 , 12C.6A , 3 and any other provision of law relating to the deposits of 4 public funds, if public funds are deposited in a depository, 5 as defined in section 12C.1 , any uninsured portion of the 6 public funds invested through the depository may be invested 7 in insured deposits or certificates of deposit arranged by 8 the depository that are placed in or issued by one or more 9 federally insured banks or savings associations regardless of 10 location for the account of the public funds depositor if all 11 of the following requirements are satisfied: 12 a. The full amount of the principal and any accrued interest 13 of each on such public funds or each such certificate of 14 deposit issued shall be covered by federal deposit insurance. 15 b. The depository, either directly or through an agent or 16 subcustodian, shall act as custodian of the insured deposits or 17 certificates of deposit. 18 c. The On the same day that the public funds deposits 19 are placed or the certificates of deposit are issued, the 20 depository shall have received deposits in an amount eligible 21 for federal deposit insurance from, and , with regard to 22 certificates of deposit, shall have issued certificates of 23 deposit to, customers of other financial institutions wherever 24 located that are equal to or greater than the amount of public 25 funds invested under this subsection by the public funds 26 depositor through the depository. 27 Sec. 2. Section 12C.22, subsection 2, unnumbered paragraph 28 1, Code 2011, is amended to read as follows: 29 The amount of the collateral required to be pledged by 30 a bank shall at all times equal or exceed the total of the 31 amount by which the public funds deposits in the bank exceeds 32 the total capital of the bank. For purposes of this section , 33 deposits that comply with section 12B.10, subsection 7 , that 34 are evidenced either by one or more certificates of deposit or 35 -1- LSB 5426YC (3) 84 rn/sc 1/ 3

H.F. _____ one or more orders for the next business day settlement and 1 issuance of certificates of deposit, by a federally insured 2 bank or savings association other than the depository, or that 3 are public funds placed in accordance with section 12B.10, 4 subsection 7, shall not be deemed public funds deposits in the 5 bank or savings association. For purposes of this chapter , 6 unless the context otherwise requires, “total capital of the 7 bank” means its tier one capital plus both of the following 8 components of tier two capital: 9 Sec. 3. Section 12C.22, subsection 6, Code 2011, is amended 10 by adding the following new paragraph: 11 NEW PARAGRAPH . f. Certificates of deposit issued by a 12 federal deposit insurance corporation insured bank, the payment 13 of which is fully insured by the federal deposit insurance 14 corporation both as to principal and accrued interest, and 15 that have been assigned a committee on uniform security 16 identification procedures number and deposited for the account 17 of the public funds depository bank at the depository trust 18 company. 19 EXPLANATION 20 This bill relates to the investment of public funds 21 deposited in a depository, as both are defined in Code section 22 12C.1. Currently, the uninsured portion of public funds 23 invested through a depository may be invested in certificates 24 of deposit arranged by the depository issued by one or more 25 federally insured banks or savings associations. The bill 26 expands such authorized investments to include insured 27 deposits. 28 The bill adds to the list of acceptable forms of collateral 29 for the deposit of public funds specified in Code section 30 12C.22, subsection 6. Collateral may now include certificates 31 of deposit issued by a federal deposit insurance corporation 32 insured bank, the payment of which is fully insured by the 33 federal deposit insurance corporation both as to principal and 34 accrued interest, and that have been assigned a committee on 35 -2- LSB 5426YC (3) 84 rn/sc 2/ 3

H.F. _____ uniform security identification procedures number and deposited 1 for the account of the public funds depository bank at the 2 depository trust company. 3 -3- LSB 5426YC (3) 84 rn/sc 3/ 3