House Bill hb0625

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    Florida House of Representatives - 2001                 HB 625

        By Representative Bean






  1                      A bill to be entitled

  2         An act relating to security for public

  3         deposits; amending ss. 280.02, 280.04, 280.041,

  4         280.05, 280.051, 280.054, 280.055, 280.07,

  5         280.08, 280.09, 280.10, 280.11, 280.13, and

  6         280.16, F.S.; revising definitions; revising

  7         provisions requiring collateral for public

  8         deposits; providing for use of certain letters

  9         of credit; requiring additional collateral

10         under certain circumstances; providing

11         penalties; specifying certain agreements for

12         use as collateral; prohibiting a qualified

13         public depository from acting as its own

14         custodian; authorizing use of certain letters

15         of credit; providing requirements; revising

16         triggering events for certain actions by the

17         Treasurer; revising powers and duties of the

18         Treasurer; clarifying grounds for suspension or

19         disqualification of a qualified public

20         depository; revising conditions for imposition

21         of an administrative penalty; clarifying

22         criteria for the Treasurer to issue certain

23         orders; providing for contingent liability;

24         clarifying procedures for payment of losses;

25         providing for deposit of draws on letters of

26         credit into the Public Deposits Trust Fund;

27         revising procedures and requirements relating

28         to effect of mergers, acquisitions, or

29         consolidations; providing conditions for

30         eligibility of certain letters of credit as

31         collateral; clarifying requirements of

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  1         qualified public depositories; creating s.

  2         280.071, F.S.; creating the Qualified Public

  3         Depository Oversight Board; providing purposes;

  4         requiring the Treasurer to initiate selection

  5         of board members; providing for selection of

  6         board members by certain qualified public

  7         depositories; providing qualifications;

  8         providing powers and duties of the board;

  9         authorizing the Treasurer to adopt rules for

10         certain purposes; providing an effective date.

11

12  Be It Enacted by the Legislature of the State of Florida:

13

14         Section 1.  Section 280.02, Florida Statutes, is

15  amended to read:

16         280.02  Definitions.--As used in this chapter, the

17  term:

18         (1)  "Affiliate" means an entity that is related

19  through a parent corporation's controlling interest. The term

20  also includes any financial institution holding company or any

21  subsidiary or service corporation of such holding company.

22         (2)  "Alternative participation agreement" means an

23  agreement of restrictions that a qualified public depository

24  completes as an alternative to immediately withdrawing from

25  the public deposits program due to financial condition.

26         (3)(2)  "Average daily balance" means the average daily

27  balance of public deposits held during the reported month. The

28  average daily balance must be determined by totaling, by

29  account, the daily balances held by the depositor and then

30  dividing the total by the number of calendar days in the

31  month. Deposit insurance is then deducted from each account

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  1  balance and the resulting amounts are totaled to obtain the

  2  average daily balance.

  3         (4)(3)  "Average monthly balance" means the average

  4  monthly balance of public deposits held, before deducting

  5  deposit insurance, by the depository during any 12 calendar

  6  months.  The average monthly balance of the previous 12

  7  calendar months must be determined by adding the average daily

  8  balance before deducting deposit insurance for the reported

  9  month and the average daily balances before deducting deposit

10  insurance for the 11 months preceding that month and dividing

11  the total by 12.

12         (5)(4)  "Book-entry form" means that securities are not

13  represented by a paper certificate but represented by an

14  account entry on the records of a depository trust clearing

15  system or, in the case of United States Government securities,

16  a Federal Reserve Bank.

17         (6)(5)  "Capital account" means total equity capital,

18  as defined on the balance-sheet portion of the Consolidated

19  Reports of Condition and Income (call report) or the Thrift

20  Financial Report, less intangible assets, as submitted to the

21  regulatory banking authority.

22         (7)(6)  "Collateral-pledging level," for qualified

23  public depositories, means the percentage of collateral

24  required to be pledged as provided in s. 280.04 by a financial

25  institution.

26         (8)(7)  "Current month" means the month immediately

27  following the month for which the monthly report is due from

28  qualified public depositories.

29         (9)(8)  "Custodian" means the Treasurer or any bank,

30  savings association, or trust company that:

31

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  1         (a)  Is organized and existing under the laws of this

  2  state, any other state, or the United States;

  3         (b)  Has executed all forms required under this chapter

  4  or any rule adopted hereunder;

  5         (c)  Agrees to be subject to the jurisdiction of the

  6  courts of this state, or of courts of the United States which

  7  are located within this state, for the purpose of any

  8  litigation arising out of this chapter; and

  9         (d)  Has been approved by the Treasurer to act as a

10  custodian.

11         (10)(9)  "Default or insolvency" includes, without

12  limitation, the failure or refusal of a qualified public

13  depository to pay any check or warrant drawn upon sufficient

14  and collected funds by any public depositor or to return any

15  deposit on demand or at maturity together with interest as

16  agreed; the issuance of an order by any supervisory authority

17  restraining such depository from making payments of deposit

18  liabilities; or the appointment of a receiver for such

19  depository.

20         (11)(10)  "Effective date of notice of withdrawal or

21  order of discontinuance" pursuant to s. 280.11(3) means that

22  date which is set out as such in any notice of withdrawal or

23  order of discontinuance from the Treasurer.

24         (12)(11)  "Eligible collateral" means securities,

25  Federal Home Loan Bank letters of credit, and cash, as

26  designated in s. 280.13.

27         (13)(12)  "Financial institution" means, including, but

28  not limited to, an association, bank, brokerage firm, credit

29  union, industrial savings bank, savings and loan association,

30  trust company, or other type of financial institution

31  organized under the laws of this state or any other state of

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  1  the United States and doing business in this state or any

  2  other state, in the general nature of the business conducted

  3  by banks and savings associations.

  4         (14)(13)  "Governmental unit" means the state or any

  5  county, school district, community college district, special

  6  district, metropolitan government, or municipality, including

  7  any agency, board, bureau, commission, and institution of any

  8  of such entities, or any court.

  9         (15)(14)  "Loss to public depositors" means loss of all

10  principal and all interest or other earnings on the principal

11  accrued or accruing as of the date the qualified public

12  depository was declared in default or insolvent.

13         (16)  "Market value" means the value of collateral

14  calculated pursuant to s. 280.04.

15         (17)(15)  "Operating subsidiary" means the qualified

16  public depository's 100-percent owned corporation that has

17  ownership of pledged collateral. The operating subsidiary may

18  have no powers beyond those that its parent qualified public

19  depository may itself exercise. The use of an operating

20  subsidiary is at the discretion of the qualified public

21  depository and must meet the Treasurer's requirements.

22         (18)  "Oversight board" means the qualified public

23  depository oversight board created in s. 280.071 for the

24  purpose of safeguarding the integrity of the public deposits

25  program and preventing the realization of loss assessments

26  through standards, policies, and recommendations for actions

27  to the Treasurer.

28         (19)(16)  "Pledged collateral" means securities or cash

29  held separately and distinctly by an eligible custodian for

30  the benefit of the Treasurer to be used as security for

31

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  1  Florida public deposits. This includes maturity and call

  2  proceeds.

  3         (20)(17)  "Pledgor" means the qualified public

  4  depository and, if one is used, operating subsidiary.

  5         (21)(18)  "Pool figure" means the total average monthly

  6  balances of public deposits held by all qualified public

  7  depositories during the immediately preceding 12-month period.

  8         (22)(19)  "Previous month" means the month or months

  9  immediately preceding the month for which a monthly report is

10  due from qualified public depositories.

11         (23)(20)  "Public deposit" means the moneys of the

12  state or of any county, school district, community college

13  district, special district, metropolitan government, or

14  municipality, including agencies, boards, bureaus,

15  commissions, and institutions of any of the foregoing, or of

16  any court, and includes the moneys of all county officers,

17  including constitutional officers, that are placed on deposit

18  in a bank, savings bank, or savings association and for which

19  the bank, savings bank, or savings association is required to

20  maintain reserves. This includes, but is not limited to, time

21  deposit accounts, demand deposit accounts, and nonnegotiable

22  certificates of deposit. Moneys in deposit notes and in other

23  nondeposit accounts such as repurchase or reverse repurchase

24  operations are not public deposits. Securities, mutual funds,

25  and similar types of investments are not considered public

26  deposits and shall not be subject to the provisions of this

27  chapter.

28         (24)(21)  "Public depositor" means the Treasurer or

29  other chief financial officer or designee responsible for

30  handling public deposits.

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  1         (25)(22)  "Public deposits program" means the Florida

  2  Security for Public Deposits Act contained in administration

  3  of this chapter and any rule adopted under this chapter by or

  4  on behalf of the Treasurer.

  5         (26)(23)  "Qualified public depository" means any bank,

  6  savings bank, or savings association that:

  7         (a)  Is organized and exists under the laws of the

  8  United States, the laws of this state or any other state or

  9  territory of the United States.

10         (b)  Has its principal place of business in this state

11  or has a branch office in this state which is authorized under

12  the laws of this state or of the United States to receive

13  deposits in this state.

14         (c)  Has deposit insurance under the provision of the

15  Federal Deposit Insurance Act, as amended, 12 U.S.C. ss. 1811

16  et seq.

17         (d)  Has procedures and practices for accurate

18  identification, classification, reporting, and

19  collateralization of public deposits.

20         (e)  Meets all the requirements of this chapter.

21         (f)  Has been designated by the Treasurer as a

22  qualified public depository.

23         (27)(24)  "Reported month" means the month for which a

24  monthly report is due from qualified public depositories.

25         (28)(25)  "Required collateral" of a qualified public

26  depository means eligible collateral having a market value

27  equal to or in excess of the amount required to be pledged

28  pursuant to s. 280.04 as computed and reported monthly or when

29  requested by the Treasurer.

30         (29)(26)  "Treasurer" means the Treasurer of the State

31  of Florida.

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  1         (30)(27)  "Treasurer's custody" is a collateral

  2  arrangement governed by a contract between a designated

  3  Treasurer's custodian and the Treasurer. This arrangement

  4  requires collateral to be in the Treasurer's name in order to

  5  perfect the security interest.

  6         (31)(28)  "Triggering events" are events set out in

  7  section subsection 280.041(4) which give the Treasurer, as

  8  pledgee, the right to:

  9         (a)  Instruct the custodian to transfer securities

10  pledged, interest payments, and other proceeds of pledged

11  collateral not previously credited to the pledgor.

12         (b)  Demand payment under letters of credit.

13         Section 2.  Section 280.04, Florida Statutes, is

14  amended to read:

15         280.04  Collateral for public deposits; general

16  provisions.--

17         (1)  The Treasurer shall determine the collateral

18  requirements and collateral pledging level for each qualified

19  public depository following procedures established by rule.

20  These procedures shall include numerical parameters for

21  25-percent, 50-percent, 125-percent, and 200-percent pledge

22  levels based on nationally recognized financial rating

23  services information and established financial performance

24  guidelines.

25         (2)  A qualified public depository may not accept or

26  retain any public deposit which is required to be secured

27  unless it has deposited with the Treasurer eligible collateral

28  at least equal to the greater of:

29         (a)  The average daily balance of public deposits that

30  does not exceed the lesser of its capital account or 20

31

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  1  percent of the pool figure multiplied by the depository's

  2  collateral-pledging level, plus the greater of:

  3         1.  One hundred twenty-five percent of the average

  4  daily balance of public deposits in excess of capital

  5  accounts; or

  6         2.  One hundred twenty-five percent of the average

  7  daily balance of public deposits in excess of 20 percent of

  8  the pool figure.

  9         (b)  Twenty-five percent of the average monthly balance

10  of public deposits.

11         (c)  One hundred twenty-five percent of the average

12  daily balance of public deposits if the qualified public

13  depository:

14         1.  Has been established for less than 3 years;

15         2.  Has experienced material decreases in its capital

16  accounts; or

17         3.  Has an overall financial condition that is

18  materially deteriorating.

19         (d)  Two hundred percent of an established maximum

20  amount of public deposits that has been mutually agreed upon

21  by and between the Treasurer and the qualified public

22  depository.

23         (e)  Minimum required collateral of $100,000.

24         (f)  As required in special instructions from the

25  Treasurer.

26         (3)  Each qualified public depository shall report its

27  required collateral on the monthly report required in s.

28  280.16 and simultaneously pledge, deposit, or issue eligible

29  collateral needed.

30         (4)(3)  Additional collateral is required within 2

31  business days 48 hours if public deposits are accepted that

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  1  would increase the qualified public depository's average daily

  2  balance for the current month by 25 percent over the average

  3  daily balance of the previously reported month.

  4         (5)(4)  Additional collateral of 20 percent of required

  5  collateral is necessary if a valuation date other than the

  6  close of business as described below has been approved for the

  7  qualified public depository and the required collateral is

  8  found to be insufficient based on the Treasurer's valuation.

  9         (6)(5)  Each qualified public depository shall value

10  its collateral in the following manner; it must:

11         (a)  Use a nationally recognized source.

12         (b)  Use market price, quality ratings, and pay-down

13  factors as of the close of business on the last banking day in

14  the reported month, or as of a date approved by the Treasurer.

15         (c)  Report any material decline in value that occurs

16  before the date of mailing the monthly report, required in s.

17  280.16, to the Treasurer.

18         (d)  Use 100 percent of the maximum amount available

19  under Federal Home Loan Bank letters of credit as market

20  value.

21         (7)  A qualified public depository shall pledge,

22  deposit, or issue additional eligible collateral between

23  filing periods of the monthly report required in s. 280.16

24  when notified by the Treasurer that current market value of

25  collateral does not meet required collateral.  The pledge,

26  deposit, or issuance of such additional collateral shall be

27  made within 2 business days after the Treasurer's

28  notification.

29         (8)  A qualified public depository may be required to

30  return public deposits to governmental units and be suspended

31  or disqualified or subjected to administrative penalty as

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  1  provided in s. 280.051 or s. 280.054 for failure to meet

  2  required collateral.

  3         (9)  The Treasurer shall adopt rules for the

  4  establishment of collateral requirements, collateral pledging

  5  levels, required collateral calculations, and market value and

  6  clarifying terms.

  7         Section 3.  Section 280.041, Florida Statutes, is

  8  amended to read:

  9         280.041  Collateral arrangements; agreements,

10  provisions, and triggering events.--

11         (1)  Eligible collateral listed in s. 280.13 may be

12  pledged, deposited, or issued using the following collateral

13  arrangements as approved by the Treasurer for a qualified

14  public depository or operating subsidiary, if one is used, to

15  meet required collateral:

16         (a)  Regular custody arrangement for collateral pledged

17  to the Treasurer pursuant to subsection (2).

18         (b)  Federal Reserve Bank custody arrangement for

19  collateral pledged to the Treasurer pursuant to subsection

20  (3).

21         (c)  Treasurer's custody arrangement for collateral

22  deposited in the Treasurer's name pursuant to subsection (4).

23         (d)  Federal Home Loan Bank letter of credit

24  arrangement for collateral issued with the Treasurer as

25  beneficiary pursuant to subsection (5).

26         (e)  Cash arrangement for collateral held by the

27  Treasurer or a custodian.

28         (2)(1)  With the approval of the Treasurer, a qualified

29  public depository or operating subsidiary, as pledgor, may

30  deposit eligible collateral with a custodian. A qualified

31  public depository shall not act as its own custodian. Except

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  1  in the case of using a Federal Reserve Bank as custodian,

  2  which may require other collateral agreement provisions, the

  3  following are necessary for the Treasurer's approval:

  4         (a)  A completed collateral agreement in a form

  5  prescribed by the Treasurer in which the pledgor agrees to the

  6  following provisions:

  7         1.  The pledgor shall own the pledged collateral. The

  8  pledged collateral shall be eligible collateral and shall be

  9  at least equal to the amount of required collateral.

10         2.  The pledgor shall grant to the Treasurer an

11  interest in pledged collateral for the purposes of this

12  section. The pledgor shall not enter into or execute any other

13  agreement related to the pledged collateral that would create

14  an interest in or lien on that collateral in any manner in

15  favor of any third party without the written consent of the

16  Treasurer.

17         3.  The pledgor shall not grant the custodian any lien

18  that attaches to the collateral in favor of the custodian that

19  is superior or equal to the security interest of the

20  Treasurer.

21         4.  The pledgor shall agree that the Treasurer may,

22  without notice to or consent by the pledgor, require the

23  custodian to comply with and perform any and all requests and

24  orders directly from the Treasurer. These include, but are not

25  limited to, liquidating all collateral and submitting the

26  proceeds directly to the Treasurer in the name of the

27  Treasurer only or transferring all collateral into an account

28  designated solely by the Treasurer.

29         5.  The pledgor shall acknowledge that the Treasurer

30  may, without notice to or consent by the pledgor, require the

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  1  custodian to hold principal payments and income for the

  2  benefit of the Treasurer.

  3         6.  The pledgor shall initiate collateral transactions

  4  on forms prescribed by the Treasurer in the following manner:

  5         a.  A deposit transaction of eligible collateral may be

  6  made without prior approval from the Treasurer provided:

  7  security types that have restrictions have been approved in

  8  advance of the transaction by the Treasurer and simultaneous

  9  notification is given to the Treasurer; and the custodian has

10  not received notice from the Treasurer prohibiting deposits

11  without prior approval.

12         b.  A substitution transaction of eligible collateral

13  may be made without prior approval from the Treasurer

14  provided: security types that have restrictions have been

15  approved in advance of the transaction by the Treasurer; the

16  market value of the securities to be substituted is at least

17  equal to the amount withdrawn; simultaneous notification is

18  given to the Treasurer; and the custodian has not received

19  notice from the Treasurer prohibiting substitution.

20         c.  A transfer of collateral between accounts at a

21  custodian requires the Treasurer's prior approval. The

22  collateral shall be released subject to redeposit in the new

23  account with a pledge to the Treasurer intact.

24         d.  A transfer of collateral from a custodian to

25  another custodian requires the Treasurer's prior approval and

26  a valid collateral agreement with the new custodian. The

27  collateral shall be released subject to redeposit at the new

28  custodian with a pledge to the Treasurer intact.

29         e.  A withdrawal transaction requires the Treasurer's

30  prior approval. The market value of eligible collateral

31  remaining after the withdrawal shall be at least equal to the

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  1  amount of required collateral. A withdrawal transaction shall

  2  be executed for any release of collateral including maturity

  3  or call proceeds.

  4         f.  Written notice shall be sent to the Treasurer to

  5  remove from the inventory of pledged collateral a pay-down

  6  security that has paid out with zero principal remaining.

  7         7.  If pledged collateral includes definitive

  8  (physical) securities in registered form which are in the name

  9  of the pledgor or a nominee, the pledgor shall deliver the

10  following documents when requested by the Treasurer:

11         a.  A separate certified power of attorney in a form

12  prescribed by the Treasurer for each issue of securities.

13         b.  Separate bond assignment forms as required by the

14  bond agent or trustee.

15         c.  Certified copies of resolutions adopted by the

16  pledgor's governing body authorizing execution of these

17  documents.

18         8.  The pledgor shall be responsible for all costs

19  necessary to the functioning of the collateral agreement or

20  associated with confirmation of pledged collateral to the

21  Treasurer and acknowledges that these costs shall not be a

22  charge against the Treasurer or his or her interests in the

23  pledged collateral.

24         9.  The pledgor, if notified by the Treasurer, shall

25  not be allowed to use a custodian if that custodian fails to

26  complete the collateral agreement, releases pledged collateral

27  without the Treasurer's approval, fails to properly complete

28  confirmations of pledged collateral, fails to honor a request

29  for examination of definitive pledged collateral and records

30  of book-entry securities, or fails to provide requested

31

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  1  documents on definitive securities. The period for disallowing

  2  the use of a custodian shall be 1 year.

  3         10.  The pledgor shall be subject to the jurisdiction

  4  of the courts of the State of Florida, or of courts of the

  5  United States located within the State of Florida, for the

  6  purpose of any litigation arising out of the act.

  7         11.  The pledgor is responsible and liable to the

  8  Treasurer for any action of agents the pledgor uses to execute

  9  collateral transactions or submit reports to the Treasurer.

10         12.  The pledgor shall agree that any information,

11  forms, or reports electronically transmitted to the Treasurer

12  shall have the same enforceability as a signed writing.

13         13.  The pledgor shall submit proof that authorized

14  individuals executed the collateral agreement on behalf of the

15  pledgor.

16         14.  The pledgor shall agree by resolution of the board

17  of directors that collateral agreements entered into for

18  purposes of this section have been formally accepted and

19  constitute official records of the pledgor.

20         15.  The pledgor shall be bound by any other provisions

21  found necessary for a perfected security interest in

22  collateral under the Uniform Commercial Code.

23         (b)  A completed collateral agreement in a form

24  prescribed by the Treasurer in which the custodian agrees to

25  the following provisions:

26         1.  The custodian shall have no responsibility to

27  ascertain whether the pledged securities are at least equal to

28  the amount of required collateral nor whether the pledged

29  securities are eligible collateral.

30         2.  The custodian shall hold pledged collateral in a

31  custody account for the Treasurer for purposes of this

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  1  section. The custodian shall not enter into or execute any

  2  other agreement related to the collateral that would create an

  3  interest in or lien on that collateral in any manner in favor

  4  of any third party without the written consent of the

  5  Treasurer.

  6         3.  The custodian shall agree that any lien that

  7  attaches to the collateral in favor of the custodian shall not

  8  be superior or equal to the security interest of the

  9  Treasurer.

10         4.  The custodian shall, without notice to or consent

11  by the pledgor, comply with and perform any and all requests

12  and orders directly from the Treasurer. These include, but are

13  not limited to, liquidating all collateral and submitting the

14  proceeds directly to the Treasurer in the name of the

15  Treasurer only or transferring all collateral into an account

16  designated solely by the Treasurer.

17         5.  The custodian shall consider principal payments on

18  pay-down securities and income paid on pledged collateral as

19  the property of the pledgor and shall pay thereto provided the

20  custodian has not received written notice from the Treasurer

21  to hold such principal payments and income for the benefit of

22  the Treasurer.

23         6.  The custodian shall process collateral transactions

24  on forms prescribed by the Treasurer in the following manner:

25         a.  A deposit transaction of eligible collateral may be

26  made without prior approval from the Treasurer unless the

27  custodian has received notice from the Treasurer requiring the

28  Treasurer's prior approval.

29         b.  A substitution transaction of eligible collateral

30  may be made without prior approval from the Treasurer provided

31  the pledgor certifies the market value of the securities to be

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  1  substituted is at least equal to the market value amount of

  2  the securities to be withdrawn and the custodian has not

  3  received notice from the Treasurer prohibiting substitution.

  4         c.  A transfer of collateral between accounts at a

  5  custodian requires the Treasurer's prior approval. The

  6  collateral shall be released subject to redeposit in the new

  7  account with a pledge to the Treasurer intact. Confirmation

  8  from the custodian to the Treasurer must be received within 5

  9  business days of the redeposit.

10         d.  A transfer of collateral from a custodian to

11  another custodian requires the Treasurer's prior approval. The

12  collateral shall be released subject to redeposit at the new

13  custodian with a pledge to the Treasurer intact. Confirmation

14  from the new custodian to the Treasurer must be received

15  within 5 business days of the redeposit.

16         e.  A withdrawal transaction requires the Treasurer's

17  prior approval. A withdrawal transaction shall be executed for

18  the release of any pledged collateral including maturity or

19  call proceeds.

20         7.  If pledged collateral includes definitive

21  (physical) securities in registered form, which are in the

22  name of the custodian or a nominee, the custodian shall

23  deliver the following documents when requested by the

24  Treasurer:

25         a.  A separate certified power of attorney in a form

26  prescribed by the Treasurer for each issue of securities.

27         b.  Separate bond assignment forms as required by the

28  bond agent or trustee.

29         c.  Certified copies of resolutions adopted by the

30  custodian's governing body authorizing execution of these

31  documents.

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  1         8.  The custodian shall acknowledge that the pledgor is

  2  responsible for all costs necessary to the functioning of the

  3  collateral agreement or associated with confirmation of

  4  securities pledged to the Treasurer and that these costs shall

  5  not be a charge against the Treasurer or his or her interests

  6  in the pledged collateral.

  7         9.  The custodian shall agree to provide confirmation

  8  of pledged collateral upon request from the Treasurer. This

  9  confirmation shall be provided within 15 working days after

10  the request, in a format prescribed by the Treasurer, and

11  shall require no identification other than the pledgor name

12  and location, unless the special identification is provided in

13  the collateral agreement.

14         10.  The custodian shall be subject to the jurisdiction

15  of the courts of the State of Florida, or of courts of the

16  United States located within the State of Florida, for the

17  purpose of any litigation arising out of the act.

18         11.  The custodian shall be responsible and liable to

19  the Treasurer for any action of agents the custodian uses to

20  hold and service collateral pledged to the Treasurer.

21         12.  The custodian shall agree that any information,

22  forms, or reports electronically transmitted to the Treasurer

23  shall have the same enforceability as a signed writing.

24         13.  The Treasurer shall have the right to examine

25  definitive pledged collateral and records of book-entry

26  securities during the regular business hours of the custodian

27  without cost to the Treasurer.

28         14.  The responsibilities of the custodian for the

29  safekeeping of the pledged collateral shall be limited to the

30  diligence and care usually exercised by a banking or trust

31  institution toward its own property.

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  1         15.  The custodian shall be bound by any other

  2  provisions found necessary for the Treasurer to have a

  3  perfected security interest in collateral under the Uniform

  4  Commercial Code.

  5         (3)(2)  With the approval of the Treasurer, a pledgor

  6  may deposit eligible collateral pursuant to an agreement with

  7  a Federal Reserve Bank. The Federal Reserve Bank agreement may

  8  require terms not consistent with subsection (2) but may not

  9  subject the Treasurer to any costs or indemnification

10  requirements (1).

11         (4)(3)  The Treasurer may require deposit or transfer

12  of collateral into a custodial account established in the

13  Treasurer's name at a designated custodian. This requirement

14  for Treasurer's custody shall have the following

15  characteristics:

16         (a)  One or more triggering events must have occurred.

17         (b)  The custodian used must be a Treasurer's approved

18  custodian that must:

19         1.  Meet the definition of custodian.

20         2.  Not be an affiliate of the qualified public

21  depository.

22         3.  Be bound under a distinct Treasurer's custodial

23  contract.

24         (c)  All deposit transactions require the approval of

25  the Treasurer.

26         (d)  All collateral must be in book-entry form.

27         (e)  The qualified public depository shall be

28  responsible for all costs necessary to the functioning of the

29  contract or associated with the confirmation of securities in

30  the name of the Treasurer and acknowledges that these costs

31

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  1  shall not be a charge against the Treasurer and may be

  2  deducted from the collateral or income earned if unpaid.

  3         (5)  With the approval of the Treasurer, a qualified

  4  public depository may use Federal Home Loan Bank letters of

  5  credit to meet collateral requirements.  A completed agreement

  6  that includes the following provisions is necessary for the

  7  Treasurer's approval:

  8         (a)  The letter of credit shall meet the definition of

  9  eligible collateral.

10         (b)  The qualified public depository shall agree that

11  the Treasurer, as beneficiary, may, without notice to or

12  consent by the qualified public depository, demand payment

13  under the letter of credit if any of the triggering events

14  listed in s. 280.041 occur.

15         (c)  The qualified public depository shall agree that

16  funds received by the Treasurer due to the occurrence of one

17  or more triggering events may be deposited in the Treasury

18  Cash Deposit Trust Fund for purposes of eligible collateral.

19         (d)  The qualified public depository shall arrange for

20  the issue of letters of credit which meet the requirements of

21  s. 280.13 and delivery to the Treasurer.  All transactions

22  involving letters of credit require the Treasurer's approval.

23         (e)  The qualified public depository shall be

24  responsible for all costs necessary in the use or confirmation

25  of letters of credit issued on behalf of the Treasurer and

26  acknowledges that these costs shall not be a charge against

27  the Treasurer.

28         (f)  The qualified public depository shall be subject

29  to the jurisdiction of the courts of this state, or of courts

30  of the United States which are located within this state, for

31  the purpose of any litigation arising out of the act.

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  1         (g)  The qualified public depository shall agree that

  2  any information, form, or report electronically transmitted to

  3  the Treasurer shall have the same enforceability as a signed

  4  writing.

  5         (h)  The qualified public depository shall submit proof

  6  that authorized individuals executed the letters of credit

  7  agreement on its behalf.

  8         (i)  The qualified public depository shall agree by

  9  resolution of the board of directors that the letters of

10  credit agreements entered into for purposes of this section

11  have been formally accepted and constitute official records of

12  the qualified public depository.

13         (6)(4)  The Treasurer may demand payment under a letter

14  of credit or direct a custodian to deposit or transfer

15  collateral and proceeds of securities not previously credited

16  upon the occurrence of one or more triggering events provided

17  that, to the extent not incompatible with the protection of

18  public deposits, as determined in the Treasurer's sole and

19  absolute discretion, the Treasurer shall provide a custodian

20  and the qualified public depository with 48 hours' advance

21  notice before directing such deposit or transfer. These events

22  include:

23         (a)  The Treasurer determines that an immediate danger

24  to the public health, safety, or welfare exists.

25         (b)  The qualified public depository fails to have

26  adequate procedures and practices for the accurate

27  identification, classification, reporting, and

28  collateralization of public deposits.

29         (c)  The custodian fails to provide or allow inspection

30  and verification of documents, reports, records, or other

31

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  1  information dealing with the pledged collateral or financial

  2  information.

  3         (d)  The qualified public depository or its operating

  4  subsidiary fails to provide or allow inspection and

  5  verification of documents, reports, records, or other

  6  information dealing with Florida public deposits, pledged

  7  collateral, or financial information.

  8         (e)  The custodian fails to hold income and principal

  9  payments made on securities held as collateral or fails to

10  deposit or transfer such payments pursuant to the Treasurer's

11  instructions.

12         (f)  The qualified public depository defaults or

13  becomes insolvent.

14         (g)  The qualified public depository fails to pay an

15  assessment.

16         (h)  The qualified public depository fails to pay an

17  administrative penalty.

18         (i)  The qualified public depository fails to meet

19  financial condition standards.

20         (j)  The qualified public depository charges a

21  withdrawal penalty to public depositors when the qualified

22  public depository is suspended, disqualified, or withdrawn

23  from the public deposits program.

24         (k)  The qualified public depository does not provide,

25  as required, the public depositor with annual confirmation

26  information on all open Florida public deposit accounts.

27         (l)  The qualified public depository pledges, deposits,

28  or has issued insufficient or unacceptable collateral to meet

29  required collateral within the required time cover public

30  deposits.

31

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  1         (m)  Pledged Collateral, other than a proper

  2  substitution, is released without the prior approval of the

  3  Treasurer.

  4         (n)  The qualified public depository, custodian,

  5  operating subsidiary, or agent violates any provision of the

  6  act and the Treasurer determines that such violation may be

  7  remedied by a move of collateral.

  8         (o)  The qualified public depository, custodian,

  9  operating subsidiary, or agent fails to timely cooperate in

10  resolving problems by the date established in written

11  communication from the Treasurer.

12         (p)  The custodian fails to provide sufficient

13  confirmation information.

14         (q)  The Federal Home Loan Bank or the qualified public

15  depository gives notification that a letter of credit will not

16  be extended or renewed and other eligible collateral equal to

17  required collateral has not been deposited within 30 days

18  after the notice or 30 days before expiration of the letter of

19  credit.

20         (r)  The qualified public depository, if involved in a

21  merger, acquisition, consolidation, or other organizational

22  change, fails to notify the Treasurer or ensure that required

23  collateral is properly maintained by the depository holding

24  the Florida public deposits.

25         (s)(q)  Events that would bring about an administrative

26  or legal action by the Treasurer.

27         (7)(5)  The Treasurer shall adopt rules to identify

28  forms and establish procedures for collateral agreements and

29  transactions, furnish confirmation requirements, establish

30  procedures for using an operating subsidiary and agents, and

31  clarify terms.

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  1         Section 4.  Section 280.05, Florida Statutes, is

  2  amended to read:

  3         280.05  Powers and duties of the Treasurer.--In

  4  fulfilling the requirements of this act, the Treasurer has the

  5  power to take the following actions he or she deems necessary:

  6         (1)  Identify representative qualified public

  7  depositories and furnish notification for the qualified public

  8  depository oversight board selection pursuant to s. 280.071.

  9  Establish criteria, based on the overall financial condition

10  of the participant and applicants, as may be necessary, to

11  protect the integrity of the public deposits program, to:

12         (a)  Refuse entry into the program by an applicant;

13         (b)  Order discontinuance of participation in the

14  program by a qualified public depository;

15         (c)  Restrict the total amount of public deposits a

16  depository may hold;

17         (d)  Establish collateral-pledging levels based on

18  qualitative and quantitative standards; and

19         (e)  Restrict substitutions of collateral subject to

20  the approval of the Treasurer.

21         (2)  Appoint a six-member advisory committee to review

22  and recommend criteria to be used by the Treasurer for

23  purposes stated in subsection (1) in order to protect public

24  deposits and the depositories in the program.  Each member

25  selected to serve on the advisory committee must be a

26  representative of his or her industry.  Advisory committee

27  members must represent active qualified public depositories,

28  not in the process of withdrawing from the public deposits

29  program, in compliance with all applicable rules, regulations,

30  and reporting requirements of this chapter. Members must

31

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  1  possess knowledge, skill, and experience in one or more of the

  2  following areas:

  3         (a)  Financial analysis;

  4         (b)  Trend analysis;

  5         (c)  Accounting;

  6         (d)  Banking;

  7         (e)  Risk management; or

  8         (f)  Investment management.

  9

10  Members' terms shall be for 4 years.  Any person appointed to

11  fill a vacancy on the advisory committee may serve only for

12  the remainder of the unexpired term.  Any member is eligible

13  for reappointment and shall serve until a successor qualifies.

14  The advisory committee shall elect a chair and vice chair and

15  shall also designate a secretary who need not be a member of

16  the advisory committee. The secretary shall keep a record of

17  the proceedings of the advisory committee and shall be the

18  custodian of all printed materials filed with or by the

19  advisory committee.  Notwithstanding the existence of

20  vacancies on the advisory committee, a majority of the members

21  constitutes a quorum. The advisory committee shall not take

22  official action in the absence of a quorum.  Each member may

23  name a designee to serve on the advisory committee on behalf

24  of the member.  However, any designee so named must meet the

25  qualifications required of the selected member and be approved

26  by the Treasurer.  The advisory committee shall convene as

27  needed.

28         (2)(3)  Establish goals and objectives and Provide

29  other data for the qualified public depository oversight board

30  duties pursuant to s. 280.071 regarding:

31

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  1         (a)  Establishing standards for qualified public

  2  depositories and custodians.

  3         (b)  Evaluating requests for exceptions to standards

  4  and alternative participation agreements.

  5         (c)  Reviewing and recommending action for qualified

  6  public depository or custodian violations as may be necessary

  7  to assist the advisory committee established under subsection

  8  (2) in developing standards for the program.

  9         (3)(4)  Review, implement, monitor, evaluate, and

10  modify, as needed, all or any part of the standards, and

11  policies, or recommendations of the qualified public

12  depository oversight board recommended by an advisory

13  committee.

14         (4)(5)  Perform financial analysis of any qualified

15  public depositories depository as needed.

16         (5)(6)  Require such collateral, or increase the

17  collateral-pledging level, of any qualified public depository

18  as may be necessary to administer the provisions of this

19  chapter and to protect the integrity of the public deposits

20  program.

21         (7)  Establish a minimum amount of required collateral

22  as the Treasurer deems necessary to provide for the contingent

23  liability pool.

24         (6)(8)  Decline to accept, or reduce the reported value

25  of, collateral as circumstances may require in order to ensure

26  the pledging or depositing of sufficient marketable collateral

27  and acceptable letters of credit to meet the purposes of this

28  chapter.

29         (7)(9)  Maintain perpetual inventory of pledged

30  collateral and perform monthly market valuations and quality

31  ratings.

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  1         (8)(10)  Monitor and confirm, as often as deemed

  2  necessary by the Treasurer, the pledged collateral with held

  3  by third party custodians and letter of credit issuers.

  4         (9)(11)  Move Perfect interest in pledged collateral by

  5  having pledged securities moved into an account established in

  6  the Treasurer's name upon the occurrence of one or more

  7  triggering events.  This action shall be taken at the

  8  discretion of the Treasurer.

  9         (10)  Issue notice to a qualified public depository

10  that use of a custodian will be disallowed when the custodian

11  has failed to follow collateral agreement terms.

12         (11)(12)  Furnish written notice to custodians of

13  collateral to hold interest and principal payments made on

14  securities held as collateral and to deposit or transfer such

15  payments pursuant to the Treasurer's instructions.

16         (12)(13)  Release collateral held in the Treasurer's

17  name, subject to sale and transfer of funds directly from the

18  custodian to public depositors of a withdrawing depository.

19         (13)  Demand payment under letters of credit for any of

20  the triggering events listed in s. 280.041 and deposit the

21  funds in:

22         (a)  The Public Deposits Trust Fund for purposes of

23  paying losses to public depositors.

24         (b)  The Treasurer's Administrative and Investment

25  Trust Fund for receiving payment of administrative penalties.

26         (c)  The Treasury Cash Deposit Trust Fund for purposes

27  of eligible collateral.

28         (14)  Sell securities for the purpose of paying losses

29  to public depositors not covered by deposit insurance.

30

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  1         (15)  Transfer funds directly from the custodian to

  2  public depositors or the receiver in order to facilitate

  3  prompt payment of claims.

  4         (16)  Require the filing of the following reports which

  5  the Treasurer shall process as provided:

  6         (a)  Qualified public depository monthly reports and

  7  schedules. The Treasurer shall review the reports of each

  8  qualified public depository for material changes in capital

  9  accounts or changes in name, address, or type of institution;

10  record the average daily balances of public deposits held; and

11  monitor the collateral-pledging levels and required

12  collateral.

13         (b)  Quarterly regulatory reports from qualified public

14  depositories. The Treasurer shall analyze qualified public

15  depositories ranked in the lowest category based on

16  established financial condition criteria.

17         (c)  Qualified public depository annual reports and

18  public depositor annual reports. The Treasurer shall compare

19  public deposit information reported by qualified public

20  depositories and public depositors.  Such comparison shall be

21  conducted for qualified public depositories which are ranked

22  in the lowest category based on established financial

23  condition criteria of record on September 30. Additional

24  comparison processes may be performed as public deposits

25  program resources permit.

26         (d)  Any related documents, reports, records, or other

27  information deemed necessary by the Treasurer in order to

28  ascertain compliance with this chapter.

29         (17)  Verify the reports of any qualified public

30  depository relating to public deposits it holds when necessary

31  to protect the integrity of the public deposits program.

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  1         (18)  Confirm public deposits, to the extent possible

  2  under current law, when needed.

  3         (19)  Require at his or her discretion the filing of

  4  any information or forms required under this chapter to be by

  5  electronic data transmission. Such filings of information or

  6  forms shall have the same enforceability as a signed writing.

  7         (20)  Suspend or disqualify or disqualify after

  8  suspension any qualified public depository that has violated

  9  any of the provisions of this chapter or of rules adopted

10  hereunder.

11         (a)  Any qualified public depository that is suspended

12  or disqualified pursuant to this subsection is subject to the

13  provisions of s. 280.11(2) governing withdrawal from the

14  public deposits program and return of pledged collateral. Any

15  suspension shall not exceed a period of 6 months.  Any

16  qualified public depository which has been disqualified may

17  not reapply for qualification until after the expiration of 1

18  year from the date of the final order of disqualification or

19  the final disposition of any appeal taken therefrom.

20         (b)  In lieu of suspension or disqualification, impose

21  an administrative penalty upon the qualified public depository

22  as provided in s. 280.054.

23         (c)  If the Treasurer has reason to believe that any

24  qualified public depository or any other financial institution

25  holding public deposits is or has been violating any of the

26  provisions of this chapter or of rules adopted hereunder, he

27  or she may issue to the qualified public depository or other

28  financial institution an order to cease and desist from the

29  violation or to correct the condition giving rise to or

30  resulting from the violation.  If any qualified public

31  depository or other financial institution violates a

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  1  cease-and-desist or corrective order, the Treasurer may impose

  2  an administrative penalty upon the qualified public depository

  3  or other financial institution as provided in s. 280.054 or s.

  4  280.055.  In addition to the administrative penalty, the

  5  Treasurer may suspend or disqualify any qualified public

  6  depository for violation of any order issued pursuant to this

  7  paragraph.

  8         Section 5.  Subsections (2) and (3) of section 280.051,

  9  Florida Statutes, are amended to read:

10         280.051  Grounds for suspension or disqualification of

11  a qualified public depository.--A qualified public depository

12  may be suspended or disqualified or both if the Treasurer

13  determines that the qualified public depository has:

14         (2)  Submitted reports containing inaccurate or

15  incomplete information regarding public deposits or the

16  securities pledged as collateral for such deposits, capital

17  accounts, or the calculation of required collateral.

18         (3)  Failed to maintain required pledge sufficient

19  collateral to cover public deposits.

20         Section 6.  Subsection (3) of section 280.054, Florida

21  Statutes, is amended to read:

22         280.054  Administrative penalty in lieu of suspension

23  or disqualification.--

24         (3)  A qualified public depository that violates s.

25  280.04(5) or a custodian that violates s. 280.04(6) is subject

26  to an administrative penalty in an amount not exceeding the

27  greater of $1,000 or 10 percent of the amount of withdrawal,

28  not exceeding $10,000, if the depository fails to provide

29  required collateral using eligible collateral and prescribed

30  collateral agreements or withdraws collateral without the

31  Treasurer's approval.

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  1         Section 7.  Paragraph (c) of subsection (1) of section

  2  280.055, Florida Statutes, is amended to read:

  3         280.055  Cease and desist order; corrective order;

  4  administrative penalty.--

  5         (1)  The Treasurer may issue a cease and desist order

  6  and a corrective order upon determining that:

  7         (c)  A qualified public depository pledges, deposits,

  8  or arranges for the issuance of unacceptable collateral;

  9         Section 8.  Section 280.07, Florida Statutes, is

10  amended to read:

11         280.07  Mutual responsibility and contingent

12  liability.--Any bank or savings association that is designated

13  as a qualified public depository and that is not insolvent

14  shall guarantee public depositors against loss caused by the

15  default or insolvency of other qualified public depositories.

16  Each qualified public depository shall execute a form

17  prescribed by the Treasurer for such guarantee which shall be

18  approved by the board of directors and shall become an

19  official record of the institution.

20         Section 9.  Section 280.071, Florida Statutes, is

21  created to read:

22         280.071  Qualified Public Depository Oversight Board;

23  purpose; identifying representative qualified public

24  depositories; member selection; responsibilities.--A Qualified

25  Public Depository Oversight Board is created comprised of six

26  members and six alternate members who represent the interests

27  of all qualified public depositories in safeguarding the

28  integrity of the public deposits program and preventing the

29  realization of loss assessments.

30

31

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  1         (1)  On July 31 of each year and as vacancies occur,

  2  the Treasurer shall initiate the selection of oversight board

  3  representation in the following manner:

  4         (a)  Categorize eligible qualified public depositories

  5  into three groups according to average asset size.  Eligible

  6  qualified public depositories must be in compliance with all

  7  requirements and may not be suspended, disqualified,

  8  withdrawing, or under an alternative participation agreement

  9  in the public deposits program.

10         (b)  Identify the two qualified public depositories in

11  each of the three groups that have the greatest shares of

12  contingent liability based on the average monthly balances of

13  public deposits reported pursuant to s. 280.16.

14         (c)  Send notification to the six qualified public

15  depositories that have been identified.

16         (2)  Each of the six representative qualified public

17  depositories shall select a member and alternate member for

18  the oversight board and give the Treasurer written information

19  on the selections within 30 calendar days of the Treasurer's

20  notice.

21         (3)  If an identified qualified public depository

22  declines to select a member, does not respond within 30

23  calendar days, or becomes ineligible, the Treasurer shall

24  furnish notice to the Florida Bankers Association which shall

25  select a member and alternate member to represent that average

26  asset category within 30 calendar days.

27         (4)  Each member and alternate member selected must:

28         (a)  Have resources available for review of qualified

29  public depository issues.

30         (b)  Possess knowledge, skill, and experience in one or

31  more of the following areas:

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  1         1.  Financial analysis;

  2         2.  Trend analysis;

  3         3.  Accounting;

  4         4.  Banking;

  5         5.  Risk management; or

  6         6.  Investment management.

  7         (5)  The oversight board members and alternate members

  8  shall be subject to the Treasurer's approval.

  9         (6)  The alternate member shall act on the member's

10  behalf if the member is unable to perform oversight board

11  functions and shall have the same rights, duties, and

12  responsibilities as the member.

13         (7)  Each member shall serve until a successor is

14  selected.

15         (8)  Expenses incurred by a member in carrying out

16  duties of the oversight board shall be paid by his or her

17  representative qualified public depository.

18         (9)  The oversight board shall organize, communicate,

19  and conduct meetings as follows:

20         (a)  Elect a chair and vice chair.

21         (b)  Designate a secretary who need not be a member of

22  the oversight board. The secretary shall:

23         1.  Keep a record of communications and meeting

24  proceedings.

25         2.  Act as custodian of all printed materials filed

26  with or by the oversight board.

27         (c)  Communicate through electronic means and express

28  delivery services when possible.

29         (d)  Meet upon call of the chair or any three members.

30         (e)  Take no official action in the absence of a

31  quorum.

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  1         1.  A quorum shall consist of the majority of voting

  2  members of the oversight board.

  3         2.  Each member shall have one vote.

  4         3.  A member shall not vote on issues directly related

  5  to the qualified public depository he or she represents.

  6         4.  The Treasurer or his or her representative shall

  7  vote as a member of the oversight board in the absence of a

  8  quorum.

  9         (10)  The oversight board has the power and

10  responsibility to safeguard the integrity of the public

11  deposits program and prevent the realization of loss

12  assessments by:

13         (a)  Establishing standards in the following areas:

14         1.  Financial institution entry requirements;

15         2.  Qualified public depository reporting requirements;

16         3.  Qualitative and quantitative financial condition

17  requirements;

18         4.  Custodian characteristic requirements and adherence

19  to collateral agreement terms;

20         5.  Collateral-pledging levels and adequacy of required

21  collateral;

22         6.  Collateral eligibility and restrictions;

23         7.  Operating subsidiary and agent requirements;

24         8.  Merger, acquisition, and name change requirements;

25         9.  Participation restrictions;

26         10.  Participation status and conditions for

27  suspension, disqualification, and mandatory withdrawal;

28         11.  Penalties and fines; and

29         12.  Corrective actions and administrative orders.

30

31

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  1         (b)  Recommending approval or rejection to the

  2  Treasurer for exceptions that do not meet established

  3  standards.  These requests for exceptions may be:

  4         1.  Referred by the Treasurer; or

  5         2.  Submitted directly by the qualified public

  6  depository seeking exception.

  7         (c)  Issuing approvals or rejections for alternative

  8  participation agreements referred by the Treasurer.

  9         (d)  Reviewing program violations and recommending that

10  the Treasurer impose penalties and fines or issue corrective

11  actions and administrative orders.

12         (e)  Studying public deposit program areas referred by

13  the Treasurer.

14         (f)  Assessing qualified public depositories to pay for

15  the implementation of standards established by the oversight

16  board which exceed the resources of the public deposits

17  program.

18         (11)  Official actions of the oversight board regarding

19  the establishment of standards, exception and alternate

20  participation agreement decisions, and recommendations

21  concerning violations shall be:

22         (a)  Communicated to the Treasurer in writing.

23         (b)  Subject to approval of the Treasurer.

24         (c)  Implemented as public deposits program resources

25  or payment described in subsection (10) above permit.

26         (12)  Members and alternate members shall be subject to

27  the confidentiality requirement of s. 280.16 in the same

28  manner as the Treasurer.

29         (13)  The Treasurer may adopt rules to establish

30  procedures and forms for oversight board member and alternate

31  member selection and oversight board functions.

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  1         Section 10.  Paragraph (a) of subsection (3) and

  2  subsections (4) and (7) of section 280.08, Florida Statutes,

  3  are amended to read:

  4         280.08  Procedure for payment of losses.--When the

  5  Treasurer determines that a default or insolvency has

  6  occurred, he or she shall provide notice as required in s.

  7  280.085(1) and implement the following procedures:

  8         (3)(a)  The loss to public depositors shall be

  9  satisfied, insofar as possible, first through any applicable

10  deposit insurance and then through demanding payment under

11  letters of credit or the sale of collateral securities pledged

12  or deposited by the defaulting depository. The Treasurer may

13  assess qualified public depositories as provided in paragraph

14  (b) for the total loss if the demand for payment or sale of

15  collateral securities cannot be accomplished within 7 business

16  days.

17         (4)  Each qualified public depository shall pay its

18  assessment to the Treasurer within 7 business days after it

19  receives notice of the assessment.  If a depository fails to

20  pay its assessment when due, the Treasurer shall satisfy the

21  assessment by demanding payment under letters of credit or

22  selling collateral securities pledged or deposited by that

23  depository.

24         (7)  Expenses incurred by the Treasurer in connection

25  with a default or insolvency which are not normally incurred

26  by the Treasurer in the administration of this act must be

27  paid out of the amount paid under letters of credit or

28  proceeds from the sale of pledged collateral.

29         Section 11.  Section 280.09, Florida Statutes, is

30  amended to read:

31         280.09  Public Deposits Trust Fund.--

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  1         (1)  In order to facilitate the administration of this

  2  chapter, there is created the Public Deposits Trust Fund,

  3  hereafter in this section designated "the fund."  The proceeds

  4  from the sale of securities or draw on letters of credit held

  5  pledged as collateral or from any assessment pursuant to s.

  6  280.08 shall be deposited into the fund.  Any administrative

  7  penalty collected pursuant to this chapter shall be deposited

  8  into the Treasurer's Administrative and Investment Trust Fund.

  9         (2)  The Treasurer is authorized to pay any losses to

10  public depositors from the fund, and there are hereby

11  appropriated from the fund such sums as may be necessary from

12  time to time to pay the losses. The term "losses," for

13  purposes of this chapter, shall also include losses of

14  interest or other accumulations to the public depositor as a

15  result of penalties for early withdrawal required by

16  Depository Institution Deregulatory Commission Regulations or

17  applicable successor federal laws or regulations because of

18  suspension or disqualification of a qualified public

19  depository by the Treasurer pursuant to s. 280.05(20) or

20  because of withdrawal from the public deposits program

21  pursuant to s. 280.11.  In that event, the Treasurer is

22  authorized to assess against the suspended, disqualified, or

23  withdrawing public depository, in addition to any amount

24  authorized by any other provision of this chapter, an

25  administrative penalty equal to the amount of the early

26  withdrawal penalty and to pay that amount over to the public

27  depositor as reimbursement for such loss.  Any money in the

28  fund estimated not to be needed for immediate cash

29  requirements shall be invested pursuant to s. 18.125.

30         Section 12.  Section 280.10, Florida Statutes, is

31  amended to read:

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  1         280.10  Effect of merger, or acquisition, or

  2  consolidation; change of name or address.--

  3         (1)  When In the event a qualified public depository is

  4  merged into, acquired by, or consolidated with a bank, savings

  5  bank, or savings association that is not a qualified public

  6  depository:,

  7         (a)  The resulting institution shall automatically

  8  become a qualified public depository subject to the

  9  requirements of the public deposits program., and

10         (b)  The contingent liability of the former institution

11  shall be a liability of the resulting institution.

12         (c)  The public deposits and associated collateral of

13  the former institution shall be public deposits and collateral

14  of the resulting institution.

15         (d)  The resulting institution shall, within 90

16  calendar 30 days after the effective date of the merger,

17  acquisition, or consolidation, deliver to the Treasurer: the

18  resulting institution shall

19         1.  Documentation execute in its own name and deliver

20  to the Treasurer the contingent liability agreement required

21  by s. 280.07, and all information and documentation as may be

22  required for participation in the public deposits program; or.

23         2.  Written notice of intent to withdraw If the

24  resulting institution chooses not to remain a qualified public

25  depository, or does not meet the requirements to become a

26  qualified public depository, such institution shall comply

27  with the procedures for withdrawal from the program as

28  provided in s. 280.11 and a proposed effective date of

29  withdrawal which shall be within 180 days after the effective

30  date of the acquisition, merger, or consolidation of the

31  former institution.

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  1         (e)  If the resulting institution does not meet

  2  qualifications to become a qualified public depository or does

  3  not submit required documentation within 90 calendar days

  4  after the effective date of the merger, acquisition, or

  5  consolidation, the Treasurer shall initiate mandatory

  6  withdrawal actions as provided in s. 280.11 and shall set an

  7  effective date of withdrawal that is within 180 days after the

  8  effective date of the acquisition, merger, or consolidation of

  9  the former institution.

10         (2)  When a qualified public depository which sells or

11  disposes of any of its Florida public deposits or collateral

12  securing such deposits in a manner not covered by subsection

13  (1), the qualified public depository originally holding the

14  public deposits branches to an institution that is not a

15  qualified public depository, and such branches continue to

16  hold public deposits, shall be responsible for:

17         (a)  Ensuring the institution receiving such public

18  deposits becomes a qualified public depository and meets

19  collateral requirements with the Treasurer as part of the

20  transaction.

21         (b)  Notifying the Treasurer within 30 calendar days

22  after the final approval by the appropriate regulator.

23

24  A qualified public depository that fails to meet such

25  responsibilities shall and continue to collateralize and

26  report such public deposits until the receiving purchasing

27  institution becomes a qualified public depository and

28  collateralizes the deposits or the deposits are returned to

29  the governmental public unit.  The qualified public depository

30  shall notify the Treasurer of any acquisition of its branches

31  on its next monthly report after the final approval by the

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  1  appropriate regulator if the acquisition includes public

  2  deposits.

  3         (3)  The qualified public depository shall notify the

  4  Treasurer of any acquisition or merger within 30 calendar days

  5  on its next monthly report after the final approval of the

  6  acquisition or merger by its appropriate regulator.

  7         (4)  Collateral subject to a collateral depository

  8  pledge agreement may not be released by the Treasurer or the

  9  custodian until the assumed liability is evidenced by the

10  deposit of collateral pursuant to the collateral depository

11  pledge agreement of the successor entity.  The reporting

12  requirement and pledge of collateral will remain in force

13  until the Treasurer determines that the liability no longer

14  exists.  The surviving or new qualified public depository

15  shall be responsible and liable for all of the liabilities and

16  obligations of each qualified public depository merged with or

17  acquired by it.

18         (5)  Each qualified public depository shall report any

19  change of name and address to the Treasurer on a form provided

20  by the Treasurer regardless of whether the name change is a

21  result of an acquisition, or merger, or consolidation.

22  Notification of such change must be made within 30 calendar

23  days after the effective date of the change on its next

24  monthly report.

25         (6)  The Treasurer shall adopt rules establishing

26  procedures for mergers, acquisitions, consolidations, and

27  changes in name and address, providing forms, and clarifying

28  terms.

29         Section 13.  Subsection (1) of section 280.11, Florida

30  Statutes, is amended to read:

31

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  1         280.11  Withdrawal from public deposits program; return

  2  of pledged collateral.--

  3         (1)  A qualified public depository may withdraw from

  4  the public deposits program by giving written notice to the

  5  Treasurer.  The contingent liability, required collateral, and

  6  reporting requirements of the depository withdrawing from the

  7  program shall continue for a period of 12 months after the

  8  effective date of the withdrawal, except that the filing of

  9  reports may no longer be required when the average monthly

10  balance of public deposits is equal to zero.  Notice of

11  withdrawal shall be mailed or delivered in sufficient time to

12  be received by the Treasurer at least 30 days before the

13  effective date of withdrawal. The Treasurer shall timely

14  publish the withdrawal notice in the Florida Administrative

15  Weekly which shall constitute notice to all depositors.  The

16  withdrawing depository shall not receive or retain public

17  deposits after the effective date of the withdrawal until such

18  time as it again becomes a qualified public depository. The

19  Treasurer shall, upon request, return to the depository that

20  portion of the collateral pledged that is in excess of the

21  required collateral as reported on the current public

22  depository monthly report.  Losses of interest or other

23  accumulations, if any, because of withdrawal under this

24  section shall be assessed and paid as provided in s.

25  280.09(2).

26         Section 14.  Section 280.13, Florida Statutes, is

27  amended to read:

28         280.13  Eligible collateral eligible for pledge by

29  banks and savings associations.--

30         (1)  Securities eligible to be pledged as collateral by

31  banks and savings associations shall be limited to:

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  1         (a)  Direct obligations of the United States

  2  Government.

  3         (b)  Obligations of any federal agency that are fully

  4  guaranteed as to payment of principal and interest by the

  5  United States Government.

  6         (c)  Obligations of the following federal agencies:

  7         1.  Farm credit banks.

  8         2.  Federal land banks.

  9         3.  The Federal Home Loan Bank and its district banks.

10         4.  Federal intermediate credit banks.

11         5.  The Federal Home Loan Mortgage Corporation.

12         6.  The Federal National Mortgage Association.

13         7.  Obligations guaranteed by the Government National

14  Mortgage Association.

15         (d)  General obligations of a state of the United

16  States, or of Puerto Rico, or of a political subdivision or

17  municipality thereof.

18         (e)  Obligations issued by the Florida State Board of

19  Education under authority of the State Constitution or

20  applicable statutes.

21         (f)  Tax anticipation certificates or warrants of

22  counties or municipalities having maturities not exceeding 1

23  year.

24         (g)  Public housing authority obligations.

25         (h)  Revenue bonds or certificates of a state of the

26  United States or of a political subdivision or municipality

27  thereof.

28         (i)  Corporate bonds of any corporation that is not an

29  affiliate or subsidiary of the qualified public depository.

30         (2)  In addition to the securities listed in subsection

31  (1), the Treasurer may, in his or her discretion, allow the

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  1  pledge of the following types of securities. The Treasurer

  2  shall, by rule, define any restrictions, specific criteria, or

  3  circumstances for which these instruments will be acceptable.

  4         (a)  Securities of, or other interests in, any open-end

  5  management investment company registered under the Investment

  6  Company Act of 1940, 15 U.S.C. ss. 80a-1 et seq., as amended

  7  from time to time, provided the portfolio of such investment

  8  company is limited to direct obligations of the United States

  9  Government and to repurchase agreements fully collateralized

10  by such direct obligations of the United States Government and

11  provided such investment company takes delivery of such

12  collateral either directly or through an authorized custodian.

13         (b)  Collateralized Mortgage Obligations.

14         (c)  Real Estate Mortgage Investment Conduits.

15         (3)  Except as to obligations issued by or with respect

16  to which payment of interest and principal is guaranteed by

17  the United States Government or obligations of federal

18  agencies listed in subsection (1), the debt obligations

19  mentioned in this section shall be rated in one of the four

20  highest classifications by an established, nationally

21  recognized investment rating service.

22         (4)  To be eligible as collateral under this section,

23  all debt obligations shall be interest bearing or accruing.

24         (5)  Letters of credit issued by a Federal Home Loan

25  Bank are eligible as collateral under this section provided

26  that:

27         (a)  The letter of credit has been delivered to the

28  Treasurer in the standard format approved by the Treasurer.

29         (b)  The letter of credit meets required conditions of:

30         1.  Being irrevocable.

31

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  1         2.  Being clean and unconditional and containing a

  2  statement that it is not subject to any agreement, condition,

  3  or qualification outside of the letter of credit and providing

  4  that a beneficiary need only present the original letter of

  5  credit with any amendments and the demand form to promptly

  6  obtain funds, and that no other document need be presented.

  7         3.  Being issued, presentable, and payable at a Federal

  8  Home Loan Bank in U.S. dollars.  Presentation may be made by

  9  the beneficiary submitting the original letter of credit,

10  including any amendments, and the demand in writing, by

11  overnight delivery.

12         4.  Containing a statement that identifies and defines

13  the Treasurer as beneficiary.

14         5.  Containing an issue date and a date of expiration.

15         6.  Containing a term of at least 1 year and an

16  evergreen clause that provides at least 60 days written notice

17  to the beneficiary prior to expiration date for nonrenewal.

18         7.  Containing a statement that it is subject to and

19  governed by the laws of the State of Florida and that, in the

20  event of any conflict with other laws, the laws of the State

21  of Florida will control.

22         8.  Containing a statement that the letter of credit is

23  an obligation of the Federal Home Loan Bank and is in no way

24  contingent upon reimbursement.

25         9.  Any other provision found necessary under the

26  Uniform Commercial Code--Letters of Credit.

27         (c)  Obligations issued by the Federal Home Loan Bank

28  remain triple A rated by a nationally recognized source.

29         (d)  The Federal Home Loan Bank issuing the letter of

30  credit agrees to provide confirmation upon request from the

31  Treasurer.  Such confirmation shall be provided within 15

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  1  working days after the request, in a format prescribed by the

  2  Treasurer, and shall require no identification other than the

  3  qualified public depository's name and location.

  4         (e)  The qualified public depository completes an

  5  agreement covering the use of the letters of credit as

  6  eligible collateral, as described in s. 280.041(5).

  7         (f)  The qualified public depository, if notified by

  8  the Treasurer, shall not be allowed to use letters of credit

  9  if the Federal Home Loan Bank fails to pay a draw request as

10  provided for in the letters of credit or fails to properly

11  complete a confirmation of such letters of credit.

12         (6)  Cash held by the Treasurer in the Treasury Cash

13  Deposit Trust Fund or by a custodian is eligible as collateral

14  under this section.  Interest earned on cash deposits that is

15  in excess of required collateral shall be paid to the

16  qualified public depository upon request.

17         (7)(5)  The Treasurer may disapprove any security that

18  does not meet the requirements of this section or any rule

19  adopted pursuant to this section or any security for which no

20  current market price can be obtained from a nationally

21  recognized source deemed acceptable to the Treasurer or cannot

22  be converted to cash.

23         (8)  The Treasurer shall adopt rules defining

24  restrictions and special requirements for eligible collateral

25  and clarifying terms.

26         Section 15.  Paragraph (a) of subsection (1), paragraph

27  (b) of subsection (2), and subsection (3) of section 280.16,

28  Florida Statutes, are amended to read:

29         280.16  Requirements of qualified public depositories;

30  confidentiality.--

31

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  1         (1)  In addition to any other requirements specified in

  2  this chapter, qualified public depositories shall:

  3         (a)  Beginning July 1, 1998, Take the following actions

  4  for each public deposit account:

  5         1.  Identify the account as a "Florida public deposit"

  6  on the deposit account record with the name of the public

  7  depositor or provide a unique code for the account for such

  8  designation.

  9         2.  When the form prescribed by the Treasurer for

10  acknowledgment of receipt of each public deposit account is

11  presented to the qualified public depository by the public

12  depositor opening an account, the qualified public depository

13  shall execute and return the completed form to the public

14  depositor.

15         3.  When the acknowledgment of receipt form is

16  presented to the qualified public depository by the public

17  depositor due to a change of account name, account number, or

18  qualified public depository name on an existing public deposit

19  account, the qualified public depository shall execute and

20  return the completed form to the public depositor within 45

21  calendar days after such presentation.

22         4.  When the acknowledgment of receipt form is

23  presented to the qualified public depository by the public

24  depositor on an account existing before July 1, 1998, the

25  qualified public depository shall execute and return the

26  completed form to the public depositor within 45 calendar days

27  after such presentation.

28         (2)  The following forms must be made under oath:

29         (b)  Collateral control agreements and letter of credit

30  agreements The public depository pledge agreement.

31

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  1         (3)  Any information contained in a report of a

  2  qualified public depository required under this chapter or any

  3  rule adopted under this chapter, together with any information

  4  required of a financial institution that is not a qualified

  5  public depository, shall, if made confidential by any law of

  6  the United States or of this state or any other state or

  7  territory of the United States, be considered confidential and

  8  exempt from the provisions of s. 119.07(1) and not subject to

  9  dissemination to anyone other than the Treasurer or the

10  Qualified Public Depository Oversight Board under the

11  provisions of this chapter; however, it is the responsibility

12  of each qualified public depository and each financial

13  institution from which information is required to inform the

14  Treasurer of information that is confidential and the law

15  providing for the confidentiality of that information, and the

16  Treasurer does not have a duty to inquire into whether

17  information is confidential.

18         Section 16.  This act shall take effect October 1,

19  2001.

20

21            *****************************************

22                          HOUSE SUMMARY

23
      Revises provisions relating to security for public
24    deposits. Revises qualifications and criteria for
      qualified public depositories. Authorizes Federal Home
25    Loan Bank letters of credit as eligible collateral.
      Revises powers and duties of the Treasurer. Creates the
26    Qualified Public Depository Oversight Board and provides
      for selection and powers and duties of members. See bill
27    for details.

28

29

30

31

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