HB 989

1
A bill to be entitled
2An act relating to public depositories; amending s.
3280.02, F.S.; providing additional definitions; amending
4s. 280.04, F.S.; revising collateral requirements for
5public deposits; amending s. 280.07, F.S.; providing
6criteria and procedures for a qualified public depository
7to become an electing public depository; providing for
8termination of an election to become an electing public
9depository; providing authority and duties of the Chief
10Financial Officer; amending s. 280.08, F.S.; providing for
11application to participating public depositories of
12procedures for payment of loss to public depositors;
13providing an effective date.
14
15Be It Enacted by the Legislature of the State of Florida:
16
17     Section 1.  Section 280.02, Florida Statutes, is amended to
18read:
19     280.02  Definitions.-As used in this chapter, the term:
20     (1)  "Affiliate" means an entity that is related through a
21parent corporation's controlling interest. The term also
22includes any financial institution holding company or any
23subsidiary or service corporation of such holding company.
24     (2)  "Alternative participation agreement" means an
25agreement of restrictions that a qualified public depository
26completes as an alternative to immediately withdrawing from the
27public deposits program due to financial condition.
28     (3)  "Average daily balance" means the average daily
29balance of public deposits held during the reported month. The
30average daily balance must be determined by totaling, by
31account, the daily balances held by the depositor and then
32dividing the total by the number of calendar days in the month.
33Deposit insurance is then deducted from each account balance and
34the resulting amounts are totaled to obtain the average daily
35balance.
36     (4)  "Average monthly balance" means the average monthly
37balance of public deposits held, before deducting deposit
38insurance, by the depository during any 12 calendar months. The
39average monthly balance of the previous 12 calendar months must
40be determined by adding the average daily balance before
41deducting deposit insurance for the reported month and the
42average daily balances before deducting deposit insurance for
43the 11 months preceding that month and dividing the total by 12.
44     (5)  "Book-entry form" means that securities are not
45represented by a paper certificate but represented by an account
46entry on the records of a depository trust clearing system or,
47in the case of United States Government securities, a Federal
48Reserve Bank.
49     (6)  "Capital account" means total equity capital, as
50defined on the balance-sheet portion of the Consolidated Reports
51of Condition and Income (call report) or the Thrift Financial
52Report, less intangible assets, as submitted to the regulatory
53banking authority.
54     (7)  "Collateral-pledging level," for qualified public
55depositories, means the percentage of collateral required to be
56pledged as provided in s. 280.04 by a financial institution.
57     (8)  "Current month" means the month immediately following
58the month for which the monthly report is due from qualified
59public depositories.
60     (9)  "Custodian" means the Chief Financial Officer or any
61bank, savings association, or trust company that:
62     (a)  Is organized and existing under the laws of this
63state, any other state, or the United States;
64     (b)  Has executed all forms required under this chapter or
65any rule adopted hereunder;
66     (c)  Agrees to be subject to the jurisdiction of the courts
67of this state, or of courts of the United States which are
68located within this state, for the purpose of any litigation
69arising out of this chapter; and
70     (d)  Has been approved by the Chief Financial Officer to
71act as a custodian.
72     (10)  "Default or insolvency" includes, without limitation,
73the failure or refusal of a qualified public depository to pay
74any check or warrant drawn upon sufficient and collected funds
75by any public depositor or to return any deposit on demand or at
76maturity together with interest as agreed; the issuance of an
77order by any supervisory authority restraining such depository
78from making payments of deposit liabilities; or the appointment
79of a receiver for such depository.
80     (11)  "Effective date of notice of withdrawal or order of
81discontinuance" pursuant to s. 280.11(3) means that date which
82is set out as such in any notice of withdrawal or order of
83discontinuance from the Chief Financial Officer.
84     (12)  "Electing public depository" means a qualified public
85depository that has made the election under s. 280.07(2) and is
86in compliance with the collateral requirements of s. 280.04.
87     (13)(12)  "Eligible collateral" means securities, Federal
88Home Loan Bank letters of credit, and cash, as designated in s.
89280.13.
90     (14)(13)  "Financial institution" means, including, but not
91limited to, an association, bank, brokerage firm, credit union,
92industrial savings bank, savings and loan association, trust
93company, or other type of financial institution organized under
94the laws of this state or any other state of the United States
95and doing business in this state or any other state, in the
96general nature of the business conducted by banks and savings
97associations.
98     (15)(14)  "Governmental unit" means the state or any
99county, school district, community college district, special
100district, metropolitan government, or municipality, including
101any agency, board, bureau, commission, and institution of any of
102such entities, or any court.
103     (16)(15)  "Loss to public depositors" means loss of all
104principal and all interest or other earnings on the principal
105accrued or accruing as of the date the qualified public
106depository was declared in default or insolvent.
107     (17)(16)  "Market value" means the value of collateral
108calculated pursuant to s. 280.04.
109     (18)(17)  "Operating subsidiary" means the qualified public
110depository's 100-percent owned corporation that has ownership of
111pledged collateral. The operating subsidiary may have no powers
112beyond those that its parent qualified public depository may
113itself exercise. The use of an operating subsidiary is at the
114discretion of the qualified public depository and must meet the
115Chief Financial Officer's requirements.
116     (19)(18)  "Oversight board" means the qualified public
117depository oversight board created in s. 280.071 for the purpose
118of safeguarding the integrity of the public deposits program and
119preventing the realization of loss assessments through
120standards, policies, and recommendations for actions to the
121Chief Financial Officer.
122     (20)  "Participating public depository" means a qualified
123public depository that is not an electing public depository on
124the date the Chief Financial Officer determines the qualified
125public depository to be in default or insolvent.
126     (21)(19)  "Pledged collateral" means securities or cash
127held separately and distinctly by an eligible custodian for the
128benefit of the Chief Financial Officer to be used as security
129for Florida public deposits. This includes maturity and call
130proceeds.
131     (22)(20)  "Pledgor" means the qualified public depository
132and, if one is used, operating subsidiary.
133     (23)(21)  "Pool figure" means the total average monthly
134balances of public deposits held by all qualified public
135depositories during the immediately preceding 12-month period.
136     (24)(22)  "Previous month" means the month or months
137immediately preceding the month for which a monthly report is
138due from qualified public depositories.
139     (25)(23)  "Public deposit" means the moneys of the state or
140of any state university, county, school district, community
141college district, special district, metropolitan government, or
142municipality, including agencies, boards, bureaus, commissions,
143and institutions of any of the foregoing, or of any court, and
144includes the moneys of all county officers, including
145constitutional officers, that are placed on deposit in a bank,
146savings bank, or savings association and for which the bank,
147savings bank, or savings association is required to maintain
148reserves. This includes, but is not limited to, time deposit
149accounts, demand deposit accounts, and nonnegotiable
150certificates of deposit. Moneys in deposit notes and in other
151nondeposit accounts such as repurchase or reverse repurchase
152operations are not public deposits. Securities, mutual funds,
153and similar types of investments are not considered public
154deposits and shall not be subject to the provisions of this
155chapter.
156     (26)(24)  "Public depositor" means the official custodian
157of funds for a governmental unit who is responsible for handling
158public deposits.
159     (27)(25)  "Public deposits program" means the Florida
160Security for Public Deposits Act contained in this chapter and
161any rule adopted under this chapter.
162     (28)(26)  "Qualified public depository" means any bank,
163savings bank, or savings association that:
164     (a)  Is organized and exists under the laws of the United
165States, the laws of this state or any other state or territory
166of the United States.
167     (b)  Has its principal place of business in this state or
168has a branch office in this state which is authorized under the
169laws of this state or of the United States to receive deposits
170in this state.
171     (c)  Has deposit insurance under the provision of the
172Federal Deposit Insurance Act, as amended, 12 U.S.C. ss. 1811 et
173seq.
174     (d)  Has procedures and practices for accurate
175identification, classification, reporting, and collateralization
176of public deposits.
177     (e)  Meets all the requirements of this chapter.
178     (f)  Has been designated by the Chief Financial Officer as
179a qualified public depository.
180     (29)(27)  "Reported month" means the month for which a
181monthly report is due from qualified public depositories.
182     (30)(28)  "Required collateral" of a qualified public
183depository means eligible collateral having a market value equal
184to or in excess of the amount required pursuant to s. 280.04.
185     (31)(29)  "Chief Financial Officer's custody" is a
186collateral arrangement governed by a contract between a
187designated Chief Financial Officer's custodian and the Chief
188Financial Officer. This arrangement requires collateral to be in
189the Chief Financial Officer's name in order to perfect the
190security interest.
191     (32)(30)  "Triggering events" are events set out in s.
192280.041 which give the Chief Financial Officer the right to:
193     (a)  Instruct the custodian to transfer securities pledged,
194interest payments, and other proceeds of pledged collateral not
195previously credited to the pledgor.
196     (b)  Demand payment under letters of credit.
197     Section 2.  Subsection (1) of section 280.04, Florida
198Statutes, is amended, and paragraph (g) is added to subsection
199(2) of that section, to read:
200     280.04  Collateral for public deposits; general
201provisions.-
202     (1)  The Chief Financial Officer shall determine the
203collateral requirements and collateral pledging level for each
204qualified public depository following procedures established by
205rule. These procedures shall include numerical parameters for
20625-percent, 50-percent, 110-percent, 125-percent, and 200-
207percent pledge levels based on nationally recognized financial
208rating services information and established financial
209performance guidelines.
210     (2)  A qualified public depository may not accept or retain
211any public deposit which is required to be secured unless it has
212deposited with the Chief Financial Officer eligible collateral
213at least equal to the greater of:
214     (g)  One hundred percent of the average daily balance of
215public deposits if the qualified public depository is an
216electing public depository.
217     Section 3.  Section 280.07, Florida Statutes, is amended to
218read:
219     280.07  Mutual responsibility and contingent liability.-
220     (1)  Any bank or savings association that is designated as
221a participating qualified public depository and that is not
222insolvent shall guarantee public depositors against loss caused
223by the default or insolvency of other qualified public
224depositories. Each participating qualified public depository
225shall execute a form prescribed by the Chief Financial Officer
226for such guarantee which shall be approved by the board of
227directors and shall become an official record of the
228institution.
229     (2)  A qualified public depository becomes an electing
230public depository upon written notice to the Chief Financial
231Officer that the depository desires to be classified as an
232electing public depository and complies with the collateral
233requirements of s. 280.04 for an electing public depository. An
234electing public depository is not subject to the cross-guaranty
235pool requirements of a participating public depository, and any
236security agreement, guarantee, or other agreement with the Chief
237Financial Officer to the contrary shall be suspended while the
238qualified public depository is an electing public depository. A
239qualified public depository that makes the election shall be
240treated as a participating public depository at any time it is
241not in compliance with the collateral requirements of s. 280.04
242applicable to an electing public depository.
243     (3)  An electing public depository may terminate its
244election and reenter the cross-guaranty pool by written notice
245to the Chief Financial Officer. The Chief Financial Officer may
246deny revocation of the election and reentry into the cross-
247guaranty pool after considering the electing public depository's
248level of capitalization, credit rating, or other bank-health
249related factors. Upon revocation of the election, the Chief
250Financial Officer shall release any excess collateral applicable
251to the electing public depository's status.
252     Section 4.  Subsections (3) and (4) of section 280.08,
253Florida Statutes, are amended to read:
254     280.08  Procedure for payment of losses.-When the Chief
255Financial Officer determines that a default or insolvency has
256occurred, he or she shall provide notice as required in s.
257280.085 and implement the following procedures:
258     (3)(a)  The loss to public depositors shall be satisfied,
259insofar as possible, first through any applicable deposit
260insurance and then through demanding payment under letters of
261credit or the sale of collateral pledged or deposited by the
262defaulting depository. The Chief Financial Officer may assess
263participating qualified public depositories as provided in
264paragraph (b) for the total loss if the demand for payment or
265sale of collateral cannot be accomplished within 7 business
266days.
267     (b)  The Chief Financial Officer shall provide coverage of
268any remaining loss by assessment against the other participating
269qualified public depositories. The Chief Financial Officer shall
270determine such assessment for each participating qualified
271public depository by multiplying the total amount of any
272remaining loss to all public depositors by a percentage which
273represents the average monthly balance of public deposits held
274by each participating qualified public depository during the
275previous 12 months divided by the total average monthly balances
276of public deposits held by all participating qualified public
277depositories, excluding the defaulting depository, during the
278same period. The assessment calculation shall be computed to six
279decimal places.
280     (4)  Each participating qualified public depository shall
281pay its assessment to the Chief Financial Officer within 7
282business days after it receives notice of the assessment. If a
283depository fails to pay its assessment when due, the Chief
284Financial Officer shall satisfy the assessment by demanding
285payment under letters of credit or selling collateral pledged or
286deposited by that depository.
287     Section 5.  This act shall take effect July 1, 2010.


CODING: Words stricken are deletions; words underlined are additions.