Bill Text: FL S0564 | 2014 | Regular Session | Comm Sub
Bill Title: Security for Public Deposits
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2014-04-23 - Laid on Table, companion bill(s) passed, see HB 7009 (Ch. 2014-145) [S0564 Detail]
Download: Florida-2014-S0564-Comm_Sub.html
Florida Senate - 2014 CS for SB 564
By the Committee on Banking and Insurance; and Senator Richter
597-01764-14 2014564c1
1 A bill to be entitled
2 An act relating to security for public deposits;
3 amending s. 280.02, F.S.; revising definitions;
4 amending s. 280.03, F.S.; clarifying provisions
5 relating to public deposits that are exempt from state
6 security requirements; amending s. 280.04, F.S.;
7 lowering the collateral-pledging level for public
8 deposits; amending s. 280.05, F.S.; conforming
9 provisions to changes made by the act; amending s.
10 280.051, F.S.; updating terms; repealing s. 280.071,
11 F.S., relating to the qualified public depository
12 oversight board; amending s. 280.085, F.S.; providing
13 that a notice of the default or insolvency of a
14 qualified public depository is not required if the
15 Florida public deposits are acquired by a bank,
16 savings bank, or savings association; amending s.
17 280.10, F.S.; providing that a bank, savings bank, or
18 savings association that is not a qualified public
19 depository and acquires Florida public deposits is
20 subject to certain requirements; amending s. 280.11,
21 F.S.; conforming provisions to changes made by the
22 act; amending s. 280.16, F.S.; deleting obsolete
23 provisions; revising provisions relating to required
24 reports and forms; amending s. 280.17, F.S.; deleting
25 obsolete provisions; deleting a provision requiring
26 public depositories to request confirmation
27 information from qualified public depositories by a
28 certain date; providing that a protection from loss is
29 effective when a public depositor does not comply with
30 certain provisions under specified circumstances;
31 providing an effective date.
32
33 Be It Enacted by the Legislature of the State of Florida:
34
35 Section 1. Section 280.02, Florida Statutes, is reordered
36 and amended to read:
37 280.02 Definitions.—As used in this chapter, the term:
38 (1) “Affiliate” means an entity that is related through a
39 parent corporation’s controlling interest. The term also
40 includes a any financial institution holding company or a any
41 subsidiary or service corporation of such holding company.
42 (2) “Alternative participation agreement” means an
43 agreement of restrictions that a qualified public depository
44 completes as an alternative to immediately withdrawing from the
45 public deposits program due to financial condition.
46 (3) “Average daily balance” means the average daily balance
47 of public deposits held during the reported month. The average
48 daily balance shall must be determined by totaling, by account,
49 the daily balances held by the depositor and then dividing the
50 total by the number of calendar days in the month. Deposit
51 insurance is then deducted from each account balance and the
52 resulting amounts are totaled to obtain the average daily
53 balance.
54 (4) “Average monthly balance” means the average monthly
55 balance of public deposits held, before deducting deposit
56 insurance, by the depository during any 12 calendar months. The
57 average monthly balance of the previous 12 calendar months shall
58 must be determined by adding the average daily balance before
59 deducting deposit insurance for the reported month and the
60 average daily balances before deducting deposit insurance for
61 the 11 months preceding that month and dividing the total by 12.
62 (5) “Book-entry form” means that securities are not
63 represented by a paper certificate but represented by an account
64 entry on the records of a depository trust clearing system or,
65 in the case of United States Government securities, a Federal
66 Reserve Bank.
67 (26)(6) “Tangible equity capital” “Capital account” means
68 total equity capital, as defined on the balance-sheet portion of
69 the Consolidated Reports of Condition and Income or (call
70 report) or the Thrift Financial Report, less intangible assets,
71 as submitted to the regulatory banking authority.
72 (7) “Collateral-pledging level,” for qualified public
73 depositories, means the percentage of collateral required to be
74 pledged by a qualified public depository as provided under in s.
75 280.04 by a financial institution.
76 (8) “Current month” means the month immediately following
77 the month for which the monthly report is due from qualified
78 public depositories.
79 (9) “Custodian” means the Chief Financial Officer or a any
80 bank, savings association, or trust company that:
81 (a) Is organized and existing under the laws of this state,
82 any other state, or the United States;
83 (b) Has executed all forms required under this chapter or
84 any rule adopted hereunder;
85 (c) Agrees to be subject to the jurisdiction of the courts
86 of this state, or of the courts of the United States which are
87 located within this state, for the purpose of any litigation
88 arising out of this chapter; and
89 (d) Has been approved by the Chief Financial Officer to act
90 as a custodian.
91 (10) “Default or insolvency” includes, without limitation,
92 the failure or refusal of a qualified public depository to pay a
93 any check or warrant drawn upon sufficient and collected funds
94 by a any public depositor or to return a any deposit on demand
95 or at maturity together with interest as agreed; the issuance of
96 an order by a any supervisory authority restraining such
97 depository from making payments of deposit liabilities; or the
98 appointment of a receiver for such depository.
99 (11) “Effective date of notice of withdrawal or order of
100 discontinuance” pursuant to s. 280.11(3) means that date which
101 is set out as such in any notice of withdrawal or order of
102 discontinuance from the Chief Financial Officer.
103 (11)(12) “Eligible collateral” means securities, Federal
104 Home Loan Bank letters of credit, and cash, as designated in s.
105 280.13.
106 (12)(13) “Financial institution” means, including, but not
107 limited to, an association, bank, brokerage firm, credit union,
108 industrial savings bank, savings and loan association, trust
109 company, or other type of financial institution organized under
110 the laws of this state or any other state of the United States
111 and doing business in this state or any other state, in the
112 general nature of the business conducted by banks and savings
113 associations.
114 (13)(14) “Governmental unit” means the state or any county,
115 school district, community college district, state university,
116 special district, metropolitan government, or municipality,
117 including any agency, board, bureau, commission, and institution
118 of any of such entities, or any court.
119 (14)(15) “Loss to public depositors” means loss of all
120 principal and all interest or other earnings on the principal
121 accrued or accruing as of the date the qualified public
122 depository was declared in default or insolvent.
123 (15)(16) “Market value” means the value of collateral
124 calculated pursuant to s. 280.04.
125 (16)(17) “Operating subsidiary” means the qualified public
126 depository’s 100 percent 100-percent owned corporation that has
127 ownership of pledged collateral. The operating subsidiary may
128 not have no powers beyond those that its parent qualified public
129 depository may itself exercise. The use of an operating
130 subsidiary is at the discretion of the qualified public
131 depository and must meet the Chief Financial Officer’s
132 requirements.
133 (18) “Oversight board” means the qualified public
134 depository oversight board created in s. 280.071 for the purpose
135 of safeguarding the integrity of the public deposits program and
136 preventing the realization of loss assessments through
137 standards, policies, and recommendations for actions to the
138 Chief Financial Officer.
139 (17)(19) “Pledged collateral” means securities or cash held
140 separately and distinctly by an eligible custodian for the
141 benefit of the Chief Financial Officer to be used as security
142 for Florida public deposits. This includes maturity and call
143 proceeds.
144 (18)(20) “Pledgor” means the qualified public depository
145 and, if one is used, operating subsidiary.
146 (19)(21) “Pool figure” means the total average monthly
147 balances of public deposits held by all qualified public
148 depositories during the immediately preceding 12-month period.
149 (22) “Previous month” means the month or months immediately
150 preceding the month for which a monthly report is due from
151 qualified public depositories.
152 (20)(23) “Public deposit” means the moneys of a
153 governmental unit the state or of any state university, county,
154 school district, community college district, special district,
155 metropolitan government, or municipality, including agencies,
156 boards, bureaus, commissions, and institutions of any of the
157 foregoing, or of any court, and includes the moneys of all
158 county officers, including constitutional officers, which that
159 are placed on deposit in a bank, savings bank, or savings
160 association and for which the bank, savings bank, or savings
161 association is required to maintain reserves. This includes, but
162 is not limited to, time deposit accounts, demand deposit
163 accounts, and nonnegotiable certificates of deposit. Moneys in
164 deposit notes and in other nondeposit accounts such as
165 repurchase or reverse repurchase operations are not public
166 deposits. Securities, mutual funds, and similar types of
167 investments are not considered public deposits and are shall not
168 be subject to the provisions of this chapter.
169 (21)(24) “Public depositor” means the official custodian of
170 funds for a governmental unit who is responsible for handling
171 public deposits.
172 (22)(25) “Public deposits program” means the Florida
173 Security for Public Deposits Act contained in this chapter and
174 any rule adopted under this chapter.
175 (23)(26) “Qualified public depository” means a any bank,
176 savings bank, or savings association that:
177 (a) Is organized and exists under the laws of the United
178 States or, the laws of this state or any other state or
179 territory of the United States.
180 (b) Has its principal place of business in this state or
181 has a branch office in this state which is authorized under the
182 laws of this state or of the United States to receive deposits
183 in this state.
184 (c) Has deposit insurance pursuant to under the provision
185 of the Federal Deposit Insurance Act, as amended, 12 U.S.C. ss.
186 1811 et seq.
187 (d) Has procedures and practices for accurate
188 identification, classification, reporting, and collateralization
189 of public deposits.
190 (e) Meets all the requirements of this chapter.
191 (f) Has been designated by the Chief Financial Officer as a
192 qualified public depository.
193 (24)(27) “Reported month” means the month for which a
194 monthly report is due from qualified public depositories.
195 (25)(28) “Required collateral” of a qualified public
196 depository means eligible collateral having a market value equal
197 to or in excess of the amount required under pursuant to s.
198 280.04.
199 (6)(29) “Chief Financial Officer’s custody” is a collateral
200 arrangement governed by a contract between a designated Chief
201 Financial Officer’s custodian and the Chief Financial Officer.
202 This arrangement requires that collateral to be in the Chief
203 Financial Officer’s name in order to perfect the security
204 interest.
205 (27)(30) “Triggering events” are events set out in s.
206 280.041 which give the Chief Financial Officer the right to:
207 (a) Instruct the custodian to transfer securities pledged,
208 interest payments, and other proceeds of pledged collateral not
209 previously credited to the pledgor.
210 (b) Demand payment under letters of credit.
211 Section 2. Paragraph (e) of subsection (3) of section
212 280.03, Florida Statutes, is amended to read:
213 280.03 Public deposits to be secured; prohibitions;
214 exemptions.—
215 (3) The following are exempt from the requirements of, and
216 protection under, this chapter:
217 (e) Public deposits that which are fully secured pursuant
218 to a collateral requirement under federal regulations.
219 Section 3. Subsections (1) and (2) of section 280.04,
220 Florida Statutes, are amended to read:
221 280.04 Collateral for public deposits; general provisions.—
222 (1) The Chief Financial Officer shall determine the
223 collateral requirements and collateral-pledging collateral
224 pledging level for each qualified public depository following
225 procedures established by rule. These procedures must shall
226 include numerical parameters for 25 percent, 50 percent, 110
227 percent, and 150 percent 25-percent, 50-percent, 125-percent,
228 and 200-percent pledge levels based on nationally recognized
229 financial rating services information and established financial
230 performance guidelines.
231 (2) A qualified public depository may not accept or retain
232 any public deposit which is required to be secured unless it
233 deposits has deposited with the Chief Financial Officer eligible
234 collateral at least equal to the greater of:
235 (a) The average daily balance of public deposits which that
236 does not exceed the lesser of its tangible equity capital
237 account or 20 percent of the pool figure multiplied by the
238 depository’s collateral-pledging level, plus the greater of:
239 1. One hundred ten twenty-five percent of the average daily
240 balance of public deposits in excess of its tangible equity
241 capital accounts; or
242 2. One hundred ten twenty-five percent of the average daily
243 balance of public deposits in excess of 20 percent of the pool
244 figure.
245 (b) Twenty-five percent of the average monthly balance of
246 public deposits.
247 (c) One hundred ten twenty-five percent of the average
248 daily balance of public deposits if the qualified public
249 depository:
250 1. Has been established for less than 3 years;
251 2. Has experienced material decreases in its tangible
252 equity capital accounts; or
253 3. Has an overall financial condition that is materially
254 deteriorating.
255 (d) One Two hundred fifty percent of an established maximum
256 amount of public deposits which that has been mutually agreed
257 upon by and between the Chief Financial Officer and the
258 qualified public depository.
259 (e) Minimum required collateral of $100,000.
260 (f) An amount as required in special instructions from the
261 Chief Financial Officer to protect the integrity of the public
262 deposits program.
263 Section 4. Subsections (1), (2), (3), and (16) of section
264 280.05, Florida Statutes, are amended to read:
265 280.05 Powers and duties of the Chief Financial Officer.—In
266 fulfilling the requirements of this act, the Chief Financial
267 Officer has the power to take the following actions he or she
268 deems necessary to protect the integrity of the public deposits
269 program:
270 (1) Identify representative qualified public depositories
271 and furnish notification for the qualified public depository
272 oversight board selection pursuant to s. 280.071.
273 (2) Provide data for the qualified public depository
274 oversight board duties pursuant to s. 280.071 regarding:
275 (a) Establishing standards for qualified public
276 depositories and custodians.
277 (b) Evaluating requests for exceptions to standards and
278 alternative participation agreements.
279 (c) Reviewing and recommending action for qualified public
280 depository or custodian violations.
281 (3) Review, implement, monitor, evaluate, and modify all or
282 any part of the standards, policies, or recommendations of the
283 qualified public depository oversight board.
284 (13)(16) Require the filing of the following reports, which
285 the Chief Financial Officer shall process as provided:
286 (a) Qualified public depository monthly reports and
287 schedules. The Chief Financial Officer shall review the reports
288 of each qualified public depository for material changes in
289 tangible equity capital accounts or changes in name, address, or
290 type of institution; record the average daily balances of public
291 deposits held; and monitor the collateral-pledging levels and
292 required collateral.
293 (b) Quarterly regulatory reports from qualified public
294 depositories. The Chief Financial Officer shall analyze
295 qualified public depositories ranked in the lowest category
296 based on established financial condition criteria.
297 (c) Qualified public depository annual reports and public
298 depositor annual reports. The Chief Financial Officer shall
299 compare public deposit information reported by qualified public
300 depositories and public depositors. Such comparison shall be
301 conducted for qualified public depositories that which are
302 ranked in the lowest category based on established financial
303 condition criteria of record on September 30. Additional
304 comparison processes may be performed as public deposits program
305 resources permit.
306 (d) Any related documents, reports, records, or other
307 information deemed necessary by the Chief Financial Officer in
308 order to ascertain compliance with this chapter.
309 Section 5. Subsections (2), (6), and (12) of section
310 280.051, Florida Statutes, are amended to read:
311 280.051 Grounds for suspension or disqualification of a
312 qualified public depository.—A qualified public depository may
313 be suspended or disqualified or both if the Chief Financial
314 Officer determines that the qualified public depository has:
315 (2) Submitted reports containing inaccurate or incomplete
316 information regarding public deposits or collateral for such
317 deposits, tangible equity capital accounts, or the calculation
318 of required collateral.
319 (6) Failed to furnish the Chief Financial Officer with
320 prompt and accurate information, or failed to allow inspection
321 and verification of any information, dealing with public
322 deposits or dealing with the exact status of its tangible equity
323 capital accounts, or any other financial information that the
324 Chief Financial Officer deems determines necessary to verify
325 compliance with this chapter or any rule adopted pursuant to
326 this chapter.
327 (12) Failed to execute or have the custodian execute a
328 collateral control public depository pledge agreement before
329 prior to using a custodian.
330 Section 6. Section 280.071, Florida Statutes, is repealed.
331 Section 7. Section 280.085, Florida Statutes, is amended to
332 read:
333 280.085 Notice to claimants.—
334 (1) Upon determining the default or insolvency of a
335 qualified public depository, the Chief Financial Officer shall
336 notify, by first-class mail, all public depositors that have
337 complied with s. 280.17 of such default or insolvency. The
338 notice must shall direct all public depositors having claims or
339 demands against the Public Deposits Trust Fund occasioned by the
340 default or insolvency to file their claims with the Chief
341 Financial Officer within 30 days after the date of the notice.
342 (a)(2) A No claim against the Public Deposits Trust Fund is
343 binding on the fund only if unless presented within 30 days
344 after the date of the notice.
345 (b) The notice is not required if the default or insolvency
346 is resolved in a manner whereby all Florida public deposits are
347 acquired by a bank, savings bank, or savings association.
348 (2)(3) This section does not affect any proceeding to:
349 (a) Enforce any real property mortgage, chattel mortgage,
350 security interest, or other lien on property of a qualified
351 public depository that is in default or insolvency; or
352 (b) Establish liability of a qualified public depository
353 that is in default or insolvency to the limits of any federal or
354 other casualty insurance protection.
355 Section 8. Present subsections (3) through (6) of section
356 280.10, Florida Statutes, are redesignated as subsections (4)
357 through (7), respectively, and a new subsection (3) is added to
358 that section, to read:
359 280.10 Effect of merger, acquisition, or consolidation;
360 change of name or address.—
361 (3) If the default or insolvency of a qualified public
362 depository results in the acquisition of all or part of its
363 Florida public deposits by a bank, savings bank, or savings
364 association that is not a qualified public depository, such
365 bank, savings bank, or savings association is subject to
366 subsection (1).
367 Section 9. Subsection (3) of section 280.11, Florida
368 Statutes, is amended to read:
369 280.11 Withdrawal from public deposits program; return of
370 pledged collateral.—
371 (3) A qualified public depository that which is required to
372 withdraw from the public deposits program pursuant to s.
373 280.05(17) may s. 280.05(1)(b) shall not receive or retain
374 public deposits after the effective date of withdrawal. The
375 contingent liability, required collateral, and reporting
376 requirements of the withdrawing depository shall continue until
377 the effective date of withdrawal. The effective date of
378 withdrawal means the date set out as such in a notice of
379 withdrawal or (order of discontinuance) from the Chief Financial
380 Officer which is shall be mailed to the qualified public
381 depository by registered or certified mail. Penalties incurred
382 because of withdrawal from the public deposits program are shall
383 be the responsibility of the withdrawing depository.
384 Section 10. Subsection (1) of section 280.16, Florida
385 Statutes, is amended to read:
386 280.16 Requirements of qualified public depositories;
387 confidentiality.—
388 (1) In addition to any other requirements specified in this
389 chapter, qualified public depositories shall:
390 (a) Take the following actions for each public deposit
391 account:
392 1. Identify the account as a “Florida public deposit” on
393 the deposit account record with the name of the public depositor
394 or provide a unique code for the account for such designation.
395 2. When the form prescribed by the Chief Financial Officer
396 for acknowledgment of receipt of each public deposit account is
397 presented to the qualified public depository by the public
398 depositor opening an account, the qualified public depository
399 shall execute and return the completed form to the public
400 depositor.
401 3. When the acknowledgment of receipt form is presented to
402 the qualified public depository by the public depositor due to a
403 change of account name, account number, or qualified public
404 depository name on an existing public deposit account, the
405 qualified public depository shall execute and return the
406 completed form to the public depositor within 45 calendar days
407 after such presentation.
408 4. When the acknowledgment of receipt form is presented to
409 the qualified public depository by the public depositor on an
410 account existing before July 1, 1998, the qualified public
411 depository shall execute and return the completed form to the
412 public depositor within 45 calendar days after such
413 presentation.
414 (b) Within 15 days after the end of each calendar month, or
415 when requested by the Chief Financial Officer, submit to the
416 Chief Financial Officer a written report, under oath, indicating
417 the average daily balance of all public deposits held by it
418 during the reported month, required collateral, a detailed
419 schedule of all securities pledged as collateral, selected
420 financial information, and any other information that the Chief
421 Financial Officer deems determines necessary to administer this
422 chapter.
423 (c) Provide to each public depositor annually by, not later
424 than October 30, the following information on all open accounts
425 identified as a “Florida public deposit” for that public
426 depositor as of September 30, to be used for confirmation
427 purposes: the federal employer identification number of the
428 qualified public depository, the name on the deposit account
429 record, the federal employer identification number on the
430 deposit account record, and the account number, account type,
431 and actual account balance on deposit. Any discrepancy found in
432 the confirmation process must shall be reconciled before
433 November 30.
434 (d) Submit to the Chief Financial Officer annually by, not
435 later than November 30, a report of all public deposits held for
436 the credit of all public depositors at the close of business on
437 September 30. Such annual report must shall consist of public
438 deposit information in a report format prescribed by the Chief
439 Financial Officer. The manner of required filing may be as a
440 signed writing or electronic data transmission, at the
441 discretion of the Chief Financial Officer.
442 (e) Submit to the Chief Financial Officer not later than
443 the date required to be filed with the federal agency:
444 1. A copy of the quarterly Consolidated Reports of
445 Condition and Income, and any amended reports, required by the
446 Federal Deposit Insurance Act, 12 U.S.C. ss. 1811 et seq., if
447 such depository is a bank; or
448 2. A copy of the Thrift Financial Report, and any amended
449 reports, required to be filed with the Office of Thrift
450 Supervision if such depository is a savings and loan
451 association.
452 Section 11. Subsections (2), (5), and (8) of section
453 280.17, Florida Statutes, are amended to read:
454 280.17 Requirements for public depositors; notice to public
455 depositors and governmental units; loss of protection.—In
456 addition to any other requirement specified in this chapter,
457 public depositors shall comply with the following:
458 (2) Beginning July 1, 1998, Each public depositor shall
459 take the following actions For each public deposit account, the
460 public depositor shall:
461 (a) Ensure that the name of the public depositor is on the
462 account or certificate or other form provided to the public
463 depositor by the qualified public depository in a manner
464 sufficient to identify that the account is a Florida public
465 deposit.
466 (b) Execute a form prescribed by the Chief Financial
467 Officer for identification of each public deposit account and
468 obtain acknowledgment of receipt on the form from the qualified
469 public depository at the time of opening the account. Such
470 public deposit identification and acknowledgment form shall be
471 replaced with a current form as required in subsection (3). A
472 public deposit account existing before July 1, 1998, must have a
473 form completed before September 30, 1998.
474 (c) Maintain the current public deposit identification and
475 acknowledgment form as a valuable record. Such form is mandatory
476 for filing a claim with the Chief Financial Officer upon the
477 default or insolvency of a qualified public depository.
478 (5) Each public depositor shall confirm annually confirm
479 that public deposit information as of the close of business on
480 September 30 has been provided by each qualified public
481 depository and is in agreement with public depositor records.
482 Such confirmation must shall include the federal employer
483 identification number of the qualified public depository, the
484 name on the deposit account record, the federal employer
485 identification number on the deposit account record, and the
486 account number, account type, and actual account balance on
487 deposit. Public depositors shall request such confirmation
488 information from qualified public depositories on or before the
489 fifth calendar day of October and shall allow until October 31
490 to receive such information. Any discrepancy found in the
491 confirmation process must shall be resolved reconciled before
492 November 30.
493 (8) If a public depositor does not comply with this section
494 with respect to on each public deposit account, the protection
495 from loss provided under in s. 280.18 is not effective as to
496 that public deposit account. However, if a public depositor
497 fails to present the form prescribed by the Chief Financial
498 Officer for identifying public deposit accounts, the protection
499 from loss provided under s. 280.18 is effective if the Chief
500 Financial Officer determines that the defaulting depository has
501 classified, reported, and collateralized the account as public
502 deposits.
503 Section 12. This act shall take effect July 1, 2014.
