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2010 SESSION
10103657DBe it enacted by the General Assembly of Virginia:
1. That §§ 2.2-4400 through 2.2-4411 of the Code of Virginia are amended and reenacted as follows:
§ 2.2-4400. Short title; declaration of intent; applicability.
A. This chapter may be cited as the "Virginia Security for Public Deposits Act."
B. The General Assembly intends by this chapter to establish a
single body of law applicable to the pledge of security
as collateral for public funds
on deposit deposits in
financial institutions so that the procedure for securing public deposits may
be uniform throughout the Commonwealth.
C. All public deposits in qualified public depositories that are required to be secured by other provisions of law or by a public depositor shall be secured pursuant to this chapter. Public depositors are required to secure their deposits pursuant to several applicable provisions of law, including but not limited to §§ 2.2-1813, 2.2-1815, 8.01-582, 8.01-600, 15.2-1512.1, 15.2-1615, 15.2-2625, 15.2-6611, 15.2-6637, 58.1-3149, 58.1-3150, 58.1-3154, and 58.1-3158.
D. This chapter, however, shall not apply to deposits made by the State Treasurer in out-of-state financial institutions related to master custody and tri-party repurchase agreements, provided (i) such deposits do not exceed ten percent of average monthly investment balances and (ii) the out-of-state financial institutions used for this purpose have a short-term deposit rating of not less than A-1 by Standard & Poor's Rating Service or P-1 by Moody's Investors Service, Inc., respectively.
§ 2.2-4401. Definitions.
As used in this chapter, unless the context requires a different meaning:
"Dedicated method" or "opt-out method" means the securing of public deposits without accepting the contingent liability for the losses of public deposits of other qualified public depositories, pursuant to § 2.2-4404 and regulations and guidelines promulgated by the Treasury Board.
"Defaulting depository" means any qualified public depository determined to be in default or insolvent.
"Default or insolvency" includes, but shall not be limited to, the failure or refusal of any qualified public depository to return any public deposit upon demand or at maturity and the issuance of an order of supervisory authority restraining such depository from making payments of deposit liabilities or the appointment of a receiver for such depository.
"Eligible collateral" means securities
of the character or instruments
authorized as legal investments under the laws of the Commonwealth for public
sinking funds or other public funds and securities
acceptable under United States Treasury Department regulations as collateral
for the security of treasury tax and loan accounts and as well as Federal Home Loan
Bank letters-of-credit that
adhere to the letters of credit issued
in accordance with guidelines as promulgated
by the Treasury Board.
"Located in Virginia" means having a main office or branch office in the Commonwealth where deposits are accepted, checks are paid, and money is lent.
"Pooled method" means securing public deposits by accepting the contingent liability for the losses of public deposits of other qualified public depositories choosing this method, pursuant to § 2.2-4403 and regulations and guidelines promulgated by the Treasury Board.
"Public deposit" means moneys
of moneys held
by a public depositor who is charged with the duty to receive or administer
such moneys and is acting in an
official capacity, such moneys being
the Commonwealth or of
any county, city, town or other political subdivision thereof, including moneys
of any commission, institution, committee, board or officer of the foregoing
and any state, circuit, county or municipal court, which moneys are deposited
in any qualified public depository deposited
in any of the following types of accounts: nonnegotiable or registered time deposits, demand
deposits, savings deposits, and
or any other transaction
accounts, and security for such deposit is required by
other provisions of law, or is required due to an election of the public
depositor.
"Public depositor" means the Commonwealth or any county, city, town or other political subdivision thereof, including any commission, institution, committee, board or officer of the foregoing and any state court.
"Qualified escrow agent" means the State Treasurer or any bank or trust company approved by the Treasury Board to hold collateral pledged to secure public deposits.
"Qualified public depository" means any national
banking association, federal savings and loan association or federal savings bank
located in Virginia, any bank, trust company or savings institution organized
under Virginia law, or any state bank or savings institution organized under
the laws of another state located in Virginia, that
receives or holds public deposits that are secured pursuant to this chapter authorized by the Treasury Board to hold public
deposits according to this chapter.
"Required collateral" of a qualified public
depository means, (i) in the case of a
bank, a sum equal to 50 percent of the actual public deposits not covered by
federal deposit insurance held at the close of business on the last banking day
in the month immediately preceding the date of any computation of such balance,
or the average balance of all public deposits for such preceding month, whichever
is greater, and (ii) in the case of a savings and loan association or savings
bank, a sum equal to 100 percent of the average daily balance for the month
immediately preceding the date of any computation of such balance of all public
deposits not covered by federal deposit insurance held by such depository but
shall not be less than 100 percent of the public deposits held by such
depository at the close of business on the last banking day in such preceding
month the amount of eligible
collateral required to secure public
deposits set by regulations or an action of the
Treasury Board.
"Treasurer"
and "public depositor" means the State Treasurer, a county, city, or
town treasurer or director of finance or similar officer and the custodian of
any other public deposits secured pursuant to this chapter.
"Treasury Board" means the Treasury Board of the Commonwealth created by § 2.2-2415.
§ 2.2-4402. Collateral for public deposits.
Qualified public depositories shall elect to secure deposits by either the pooled method or the
dedicated method. Every
qualified public depository shall deposit with the
State Treasurer, or, with the approval of the Treasury Board, with the Federal
Reserve Bank of Richmond or any other bank or trust company located within or
without the Commonwealth, a
qualified escrow agent eligible collateral equal to or in
excess of the required collateral of such depository to
be held subject to the order of the Treasury Board.
Eligible collateral shall be valued as determined by the Treasury Board.
Substitutions and withdrawals of eligible collateral may be made from time to time under
regulations issued as determined by
the Treasury Board.
Each qualified public
depository shall, at the time of the deposit of eligible collateral, deliver to
the State Treasurer a power of attorney authorizing him to transfer any
registered securities deposited, or any part thereof, for the purpose of paying
any of the liabilities provided for in this chapter.
Notwithstanding any other provisions of law, no qualified public depository shall be required to give bond or pledge securities or instruments in the manner herein provided for the purpose of securing deposits received or held in the trust department of the depository and that are secured as required by § 6.1-21 of the Code of Virginia or that are secured pursuant to Title 12, § 92a of the United States Code by securities of the classes prescribed by § 6.1-21 of the Code of Virginia.
No qualified public depository shall accept or retain any
public deposit that is required to be secured unless it has deposited eligible
collateral equal to its required collateral with some
proper depository a
qualified escrow agent pursuant to this chapter.
§ 2.2-4403. Procedure for payment of losses by pooled method.
When the Treasury Board is
advised by any treasurer or otherwise determines that a default or insolvency has occurred with regard to a
qualified public depository securing public deposits in accordance with this
section is a defaulting depository that is a bank not otherwise governed by §
2.2-4404, it shall as promptly as practicable make payment to the proper treasurer of all funds
subject to such default or insolvency, pursuant to take steps to reimburse public depositors for
uninsured public deposits using
the following procedures:
1. The Treasury Board and the treasurer shall
ascertain the amount of uninsured public
funds on deposit with the qualified
public deposits held by the
defaulting depository in default
or insolvent that are secured pursuant to this chapter,
either with the cooperation of the Commissioner of Financial Institutions, the or receiver
appointed for such depository,
or by any other means available, and the amount of
deposit insurance applicable to such deposits.
2. The amount of such uninsured public
deposits ascertained as provided in subdivision 1, net of
applicable deposit insurance plus
any costs associated with liquidation, shall be assessed by
the Treasury Board first against the defaulting depository
in default or insolvent to the
extent of the full realizable current market
value of the collateral deposited by it pledged to
secure its public deposits, and second, to the
extent that such collateral.
3. In the event the realized
value of the pledged collateral in subdivision 2 is
insufficient to satisfy the liability of the defaulting
depository upon its deposits
secured pursuant to this chapter against each of the to its public depositors and the Treasury
Board, the Treasury Board
shall assess the remaining liability
against all other qualified public
depositories not
otherwise governed by § 2.2-4404 according to the ratio that the average daily
balance for each month of the secured securing public deposits held
by the depository during the twelve calendar months immediately preceding the
date of the default or insolvency with respect to which the assessment is made
bears to the according to the
following ratio: total average daily public deposit balance for each month of
all secured public deposits qualified
public depository held during the immediately preceding twelve months divided
by the total average public deposit balance for the same period held
by all qualified public depositories under this section that are banks not
otherwise governed by § 2.2-4404, other than the defaulting
depository, during those twelve calendar months.
34. Assessments made by the
Treasury Board in accordance with
subdivision 3 shall be payable by the
close of business on the second business day following
demand, and in case of. Upon
the failure of any qualified public depository to pay such assessment when due,
the State Treasurer shall promptly take possession of the eligible collateral
deposited with the non-paying
depository's escrow agent him or with the Federal Reserve Bank of Richmond or
other bank or trust company pursuant to this chapter and
liquidate the same to the extent necessary to pay such the original assessment and turn over such
amounts received to the Treasury Board plus
any additional costs necessary to liquidate the
collateral.
45. Upon receipt of such assessment, payments or assessments and
the net proceeds of the eligible
collateral liquidated to pay such assessments from
the State Treasurer, the Treasury Board shall reimburse the public depositors
to the extent of the defaulting depository's
deposit liability to them, net
of any applicable deposit insurance.
§ 2.2-4404. Procedure for payment of losses by dedicated method.
When the Treasury Board is advised
by any treasurer or otherwise determines that a default or insolvency has occurred with regard to a
qualified public depository that
is a savings bank or a savings and loan association or bank not otherwise
governed by § 2.2-4403 securing public deposits in accordance with this section is a defaulting
depository, it shall as promptly as practicable take steps to reimburse public
depositors make payment to the
proper treasurer of all uninsured
public deposits using funds subject to such default or insolvency,
pursuant to the following procedures:
1. The Treasury Board and the treasurer shall
ascertain the amount of uninsured public
funds on deposit with the qualified
public deposits held by the
defaulting depository in default or insolvent that are secured pursuant
to this chapter, either with the cooperation of the
Commissioner of Financial Institutions, the or receiver appointed for such
depository or by any other means available, and
the amount of deposit insurance applicable to such deposits.
2. The amount of such uninsured public
deposits ascertained as provided in subdivision 1, plus
any costs associated with liquidation
of the eligible collateral
of the defaulting depository net
of applicable deposit insurance, shall be assessed by the
Treasury Board against the defaulting depository in default or insolvent.
The State Treasurer shall promptly take possession of
such of the eligible collateral deposited by such
depository with him,
or with any other depository pursuant to this chapter the depository's escrow agent,
as is necessary to satisfy the assessment of the Treasury Board and shall
liquidate the same and turn over the net proceeds
thereof to the Treasury Board.
3. Upon receipt from the State Treasurer of the payments or proceeds of the eligible
collateral liquidated to pay such assessments
from the State Treasurer, the Treasury Board shall
reimburse the public depositors from the proceeds of the
collateral up to the extent of the depository's deposit
liability to them, net of any applicable deposit insurance.
§ 2.2-4405. Powers of Treasury Board relating to the administration of this chapter.
The Treasury Board shall have power to:
1. Make and enforce regulations and guidelines necessary and proper to the full and complete performance of its functions under this chapter;
2. Prescribe and enforce regulations
and guidelines fixing terms and
conditions consistent with this chapter under which public deposits may must be received and held secured;
3. Require such additional
collateral, in excess of the required collateral of any or all
qualified public depository,
of any and all such depositories as it may determine
prudent under the circumstances;
4. Determine what securities or instruments
shall be acceptable as eligible
collateral, and to fix
the percentage of face value or market value of such securities or instruments that
can be used to secure public deposits;
5. Establish guidelines to permit banks to withdraw from the
procedures for the payment of losses under § 2.2-4403 and instead be governed
by the procedures for the payment of losses under § 2.2-4404. The guidelines shall be, consistent with the primary
purpose of protecting public deposits;
6. Require any qualified public depository to furnish such provide information concerning
its public deposits as
requested by the Treasury Board; and
7. Determine when a default or insolvency has occurred and to take such action as it may deem advisable for the protection, collection, compromise or settlement of any claim arising in case of default or insolvency.
§ 2.2-4406. Subrogation of Treasury Board to depositor's rights; payment of sums received from distribution of assets.
Upon payment in full to any public depositor on any claim presented pursuant to §§ 2.2-4403 or
2.2-4404, the Treasury Board shall be subrogated to all of
such depositor's rights, title and interest against the depository in default
or insolvent and shall share in any distribution of its such defaulting or insolvement depository's assets ratably with other depositors. Any sums
received from any such distribution shall be paid to the other qualified public
depositories against which assessments were made, in proportion to such
assessments, net of any proper payment or
expense of the Treasury Board in enforcing any such claim.
§ 2.2-4407. Mandatory deposit of public funds in qualified public depositories.
No public deposit
that is Public
deposits required to be secured pursuant to this chapter
shall be deposited made
except in a qualified public depository.
§ 2.2-4408. Authority to make public deposits.
A. All treasurers and public
depositors are hereby authorized to deposit
funds make public deposits under their control in qualified public
depositories, securing such public
deposits pursuant to this chapter.
B. Local officials handling public funds deposits in the Commonwealth
may not require from a qualified public depository
institution any pledge of
collateral for their deposits in such institution
which is in excess of the requirements of this chapter.
§ 2.2-4409. Authority to secure public deposits; acceptance of liabilities and duties by public depositories.
All institutions located
in the Commonwealth that are permitted to hold and receive public deposits qualified public depositories are
hereby authorized to secure such public deposits in accordance
with this chapter.
Any institution
accepting a public deposit that is required to be secured pursuant to this
chapter and shall
be deemed to have accepted the liabilities and duties imposed upon it pursuant
to this chapter with
respect to the deposit.
§ 2.2-4410. Liability of public depositors.
When deposits are made in accordance with this chapter no treasurer or official of a public
depositor shall be personally liable
for any loss thereof resulting
from the failure or default or insolvency of any qualified public depository
in the absence of negligence, malfeasance, misfeasance, or nonfeasance on his
part or on the part of his assistants
or employees agents.
§ 2.2-4411. Reports of qualified public depositories.
Within ten daysBy the tenth day after the end
of each calendar reporting month
or when requested by the Treasury Board each qualified public depository shall
submit to the Treasury Board a written
an electronic report of such data required by the Treasury Board to
demonstrate that the current market value of its pledged collateral was equal
to or greater than the amount of required collateral for the previous month,
certified as to its accuracy by an authorized official of the qualified public
depository under oath, indicating
(i) the total amount of public deposits held by it at the close of business on
the last banking day in the month, (ii) the average daily balance for the month
of all secured public deposits held by it during the month, (iii) a detailed
schedule of pledged collateral at its current asset value for purposes of
collateral at the close of business on the last banking day in the month, and
(iv) any other information with respect to its secured public deposits that may
be required by the Treasury Board.
Each Upon request by a
public depositor, a qualified public depository shall also furnish at the same
time to each public depositor for which it holds deposits and that makes a
written request therefor provide a schedule detailing the
public deposit accounts reported to the Treasury Board for
that depositor, as well as the amount of total public deposits held by that
depository at the close of the applicable month and the
total market value of the collateral securing such public depositsof the secured public deposits to the credit of
such depositor as of the close of business on the last banking day in the month
and the total amount of all secured public deposits held by it upon such date.