§ 5-13-13-7 — Shortage of assets in insurance fund; substitution of other security; pledge of other securities by depositories

(a) At any time when the board for depositories
determines that the assets of the insurance fund are insufficient to pay
its liabilities, accrued or contingent, or determines that the assessments
due or to become due will not be sufficient to maintain the insurance
fund in a solvent condition and insure the safekeeping and prompt
payment of public funds, the board may enter an order requiring any or
all then constituted depositories to substitute other security, in the
amount and type as determined by the board from time to time, to
secure the safekeeping and prompt payment of public funds. The
collateral to be accepted by the board for depositories under this
chapter may include, but is not limited to, the following:
(1) United States Treasury securities.
(2) Federal agency securities.
(3) An irrevocable letter of credit issued by a Federal Home Loan
Bank if:
(A) the federal home loan bank issuing the irrevocable letter of
credit maintains a rating of at least the third highest level from
at least one (1) of the nationally recognized rating agencies; and
(B) the irrevocable letter of credit provides that the board for
depositories may draw on the letter when necessary to satisfy
losses to the public deposit insurance fund under state law.
(b) The board may require any or all then constituted depositories
to deliver and pledge to the proper local board of finance or to the state
board of finance, under the conditions for joint control of the collateral
by the depositories as may be approved by the board for depositories,
bonds or other obligations that the board determines are acceptable
collateral. The market value of these securities, at the time of delivery,
must be an amount determined by the board, which may not exceed the
amount of public funds then on deposit with the respective
depositories. The board may require depositories to pledge acceptable
securities to such an extent that the market value of the pledge will at
all times be substantially equal to the amount of public funds on
deposit in the respective depositories.
(c) Whenever an order is in force and the amount of public funds on
deposit is at least ten percent (10%) less than the market value of
securities pledged to secure the payment, as required by the board, the
depository may withdraw the excess amount of pledged collateral.
(d) Any order of the board for depositories becomes effective within
the time fixed by the board. However, the time of effectiveness must
not be earlier than thirty (30) days from the date of entry of the order
by the board. The order continues in force until rescinded by the board.
Upon the entry of any order by the board for depositories, all then
constituted depositories affected by the order shall comply with the
order. Upon compliance, and full payment of all its liabilities by the
insurance fund, depositories are not required to pay any further
assessments for insurance under this chapter until the order requiring
collateral has been revoked or rescinded and the collateral returned to
the respective depositories.
(e) A depository may elect at any time to pledge and deliver
collateral to the board in an amount equal to one hundred percent
(100%) of the public funds the depository has on deposit. A depository
that:
(1) elects this option;
(2) has pledged and delivered the collateral to the board; and
(3) has maintained a one hundred percent (100%) collateral level
continuously for the twelve (12) months immediately preceding
an assessment;
is exempt from paying any assessment authorized by this article while
the collateral continues to be maintained with the board.
(f) If the fund balance is zero (0), each depository shall pledge and
deliver collateral to the board equal to the depository's pro rata share of
total deposit accounts of public funds based on an average of the
depository's total deposit accounts of public funds for the previous four
(4) quarters, as reported under this article, as determined by the board
from time to time, with at least fifteen (15) days notice to the
depository, to secure the safekeeping and prompt payment of public
funds.

Legislative History

As added by P.L.19-1987, SEC.15. Amended by P.L.115-2010, SEC.19.