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H. 3870
STATUS INFORMATION
General Bill
Sponsors: Rep. Cato
Document Path: l:\council\bills\bbm\9950htc07.doc
Companion/Similar bill(s): 642
Introduced in the House on April 12, 2007
Currently residing in the House Committee on Ways and Means
Summary: Uninsured funds on deposit of a local government entity and state
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number
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4/12/2007 House Introduced and read first time HJ-8
4/12/2007 House Referred to Committee on Labor, Commerce and Industry
HJ-8
4/25/2007 House Recalled from Committee on Labor, Commerce and Industry
HJ-35
4/25/2007 House Referred to Committee on Ways and Means HJ-35
View the latest legislative information at the LPITS web site
VERSIONS OF THIS BILL
TO AMEND SECTION 6-5-15 AND SECTION 11-13-60, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE COLLATERAL REQUIRED TO SECURE THE UNINSURED FUNDS ON DEPOSIT OF A LOCAL GOVERNMENT ENTITY AND THE STATE, SO AS TO DEFINE A FINANCIAL INSTITUTION IN WHICH THESE FUNDS ARE DEPOSITED AS A QUALIFIED PUBLIC DEPOSITORY, TO ALLOW SUCH A DEPOSITORY TO SECURE THESE FUNDS USING THE DEDICATED METHOD OR THE POOLING METHOD, AND TO PROVIDE THAT THE LOCAL GOVERNMENT ENTITY OR STATE TREASURER MAY REQUIRE SUCH A DEPOSITORY TO USE THE DEDICATED METHOD.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 6-5-15 of the 1976 Code, as added by Act 270 of 2004, is amended to read:
"Section 6-5-15. (A) As used in this section, 'local entity' means the governing body of a municipality, county, school district, other local government unit or political subdivision, or a county treasurer.
(B) A bank or savings and loan association qualified public depository, as defined in subsection (G) of this section, upon the deposit of funds by a local entity, must secure these deposits by deposit insurance, surety bonds, collateral investment securities, or letters of credit to protect the local entity against loss in the event of insolvency or liquidation of the institution or for any other cause.
(C) To the extent that these deposits exceed the amount of insurance coverage provided by the Federal Deposit Insurance Corporation, the bank or savings and loan association qualified public depository at the time of deposit must:
(1) furnish an indemnity bond in a responsible surety company authorized to do business in this State; or
(2) pledge as collateral:
(a) obligations of the United States;
(b) obligations fully guaranteed both as to principal and interest by the United States;
(c) general obligations of this State or any political subdivision of this State; or
(d) obligations of the Federal National Mortgage Association, the Federal Home Loan Bank, Federal Farm Credit Bank, or the Federal Home Loan Mortgage Corporation; or
(3) provide an irrevocable letter of credit issued by the Federal National Mortgage Association, the Federal Home Loan Bank, Federal Farm Credit Bank, or the Federal Home Loan Mortgage Corporation, in which the local entity is named as beneficiary and the letter of credit otherwise meets the criteria established and prescribed by the local entity.
(D) The local entity must exercise prudence in accepting collateral securities or other forms of deposit security.
(E)(1) A qualified public depository has the following options:
(a) To secure all or a portion of uninsured funds under the Dedicated Method where all or a portion of the uninsured funds are secured separately. The qualified public depository shall maintain a record of all securities pledged, with the record being an official record of the qualified public depository and made available to examiners or representatives of all regulatory agencies. The local entity shall maintain a record of the securities pledged for monitoring purposes.
(b) To secure all or the remainder of uninsured funds under the Pooling Method where a pool of collateral is established by the qualified public depository with the local entity for the benefit of the local entity. The depository shall maintain a record of all securities pledged, with the record being an official record of the qualified public depository and made available to examiners or representatives of all regulatory agencies. The local entity shall maintain a record of the securities pledged for monitoring purposes.
(2) Notwithstanding the provisions of item (1) of this subsection, the local entity, in suitable cases, may require a qualified public depository to secure all uninsured funds separately under the Dedicated Method.
(F) A qualified public depository shall not accept or retain any funds that are required to be secured unless it has deposited eligible collateral equal to its required collateral with some proper depository pursuant to this chapter.
(G) 'Qualified public depository' means any national banking association, state banking association, federal savings and loan association, or federal savings bank located in this State and any bank, trust company, or savings institution organized under the law of this State that receives or holds funds that are secured pursuant to this chapter."
SECTION 2. Section 11-13-60 of the 1976 Code, as last amended by Act 211 of 2002, is further amended to read:
"Section 11-13-60. (A) A bank or savings and loan association qualified public depository, as defined in subsection (E) of this section, upon the deposit of state funds by the State Treasurer, must secure these deposits by deposit insurance, surety bonds, collateral investment securities, or letters of credit to protect the State against loss in the event of insolvency or liquidation of the institution or for any other cause. To the extent that these deposits exceed the amount of insurance coverage provided by the Federal Deposit Insurance Corporation, the bank or savings and loan association qualified public depository, at the time of deposit, shall:
(1) furnish an indemnity bond in a responsible surety company authorized to do business in this State; or
(2) pledge as collateral:
(a) obligations of the United States;
(b) obligations fully guaranteed both as to principal and interest by the United States;
(c) general obligations of this State or any political subdivision of this State; or
(d) obligations of the Federal National Mortgage Association, the Federal Home Loan Bank, Federal Farm Credit Bank, or the Federal Home Loan Mortgage Corporation; or
(3) provide an irrevocable letter of credit issued by the Federal National Mortgage Association, the Federal Home Loan Bank, Federal Farm Credit Bank, or the Federal Home Loan Mortgage Corporation, in which the State Treasurer is named as beneficiary and the letter of credit otherwise meets the criteria established and prescribed by the State Treasurer. The State Treasurer shall exercise prudence in accepting collateral securities or other forms of deposit security.
(B)(1) A qualified public depository has the following options:
(a) To secure all or a portion of uninsured state funds under the Dedicated Method where all or a portion of the uninsured state funds are secured separately. The qualified public depository shall maintain a record of all securities pledged, with the record being an official record of the qualified public depository and made available to examiners or representatives of all regulatory agencies. The State Treasurer shall maintain a record of the securities pledged for monitoring purposes.
(b) To secure all or the remainder of uninsured state funds under the Pooling Method where a pool of collateral is established by the qualified public depository with the State Treasurer for the benefit of the State. The depository shall maintain a record of all securities pledged, with the record being an official record of the qualified public depository and made available to examiners or representatives of all regulatory agencies. The State Treasurer shall maintain a record of the securities pledged for monitoring purposes.
(2) Notwithstanding the provisions of item (1) of this subsection, the State Treasurer, in suitable cases, may require a qualified public depository to secure all uninsured state funds separately under the Dedicated Method.
(C) A qualified public depository shall not accept or retain any state funds that are required to be secured unless it has deposited eligible collateral equal to its required collateral with some proper depository pursuant to this chapter.
(D) The State Treasurer may charge a fee for the operation and management costs associated with this section, and may retain and expend the fees to provide these services. These fees may be assessed against the investment earnings of various funds managed or invested by the Office of State Treasurer and may not exceed the costs associated with providing the services.
(E) 'Qualified public depository' means any national banking association, state banking association, federal savings and loan association, or federal savings bank located in this State, and any bank, trust company, or savings institution organized under the law of this State that receives or holds state funds that are secured pursuant to this chapter."
SECTION 3. This act takes effect upon approval by the Governor.
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