Florida Senate - 2020                                     SB 990
       By Senator Hutson
       7-01050A-20                                            2020990__
    1                        A bill to be entitled                      
    2         An act relating to public deposits; amending s.
    3         280.02, F.S.; redefining terms; adding credit unions
    4         meeting certain criteria to a list of qualified public
    5         depositories; amending s. 280.03, F.S.; conforming a
    6         provision to changes made by the act; creating s.
    7         280.042, F.S.; specifying criteria for a credit union
    8         to be designated as a qualified public depository by
    9         the Chief Financial Officer; requiring the Chief
   10         Financial Officer to withdraw from a collateral
   11         agreement with a credit union under certain
   12         circumstances; specifying a requirement and a
   13         procedure for a credit union that is a party to a
   14         withdrawn collateral agreement; authorizing the Chief
   15         Financial Officer to limit, for certain purposes, the
   16         amount of public deposits held by a credit union;
   17         amending ss. 280.05, 280.052, 280.053, and 280.055,
   18         F.S.; conforming provisions to changes made by the
   19         act; amending s. 280.07, F.S.; revising and specifying
   20         the mutual responsibility and contingent liability of
   21         financial institutions designated as qualified public
   22         depositories; amending ss. 280.08 and 280.085, F.S.;
   23         conforming provisions to changes made by the act;
   24         amending s. 280.09, F.S.; requiring the Chief
   25         Financial Officer to segregate and separately account
   26         for certain amounts attributable to credit unions in
   27         the Public Deposits Trust Fund; amending ss. 280.10,
   28         280.13, and 280.17, F.S.; conforming provisions to
   29         changes made by the act; reenacting ss. 17.57(1), (2),
   30         and (7)(a); 17.58(1) and (2); 17.62; 17.68(4) and (5);
   31         24.114(1); 125.901(3)(e) and (f); 136.01; 159.608(11);
   32         175.301; 175.401(8); 185.30; 185.50(8); 190.007(3);
   33         191.006(16); 215.322(4); 215.34(2); 218.415(16)(c),
   34         (17)(c), and (23)(a); 255.502(4)(h); 331.309(1) and
   35         (2); 373.553(2); 420.0005(1); 420.5087(7);
   36         420.5088(4); 420.5089(1); 420.525(1); 631.221;
   37         655.057(5)(e); 723.06115(3)(c); 895.09(4); and
   38         1009.971(5)(d), F.S., to incorporate the amendment
   39         made to s. 280.02, F.S., in references thereto;
   40         providing an effective date.
   42  Be It Enacted by the Legislature of the State of Florida:
   44         Section 1. Subsections (6), (10), (21), (23), and (26) of
   45  section 280.02, Florida Statutes, are amended to read:
   46         280.02 Definitions.—As used in this chapter, the term:
   47         (6) “Capital account” or “tangible equity capital” means
   48  total equity capital, as defined on the balance-sheet portion of
   49  the Consolidated Reports of Condition and Income (call report),
   50  or net worth, as described in the National Credit Union
   51  Administration 5300 Call Report, less intangible assets, as
   52  submitted to the regulatory financial banking authority.
   53         (10) “Custodian” means the Chief Financial Officer or a
   54  bank, credit union, savings association, or trust company that:
   55         (a) Is organized and existing under the laws of this state,
   56  any other state, or the United States;
   57         (b) Has executed all forms required under this chapter or
   58  any rule adopted hereunder;
   59         (c) Agrees to be subject to the jurisdiction of the courts
   60  of this state, or of the courts of the United States which are
   61  located within this state, for the purpose of any litigation
   62  arising out of this chapter; and
   63         (d) Has been approved by the Chief Financial Officer to act
   64  as a custodian.
   65         (21) “Pool figure” means the total average monthly balances
   66  of public deposits held by all banks, savings banks, or savings
   67  associations, or held separately by all credit unions, qualified
   68  public depositories during the immediately preceding 12-month
   69  period.
   70         (23) “Public deposit” means the moneys of the state or of
   71  any state university, county, school district, community college
   72  district, special district, metropolitan government, or
   73  municipality, including agencies, boards, bureaus, commissions,
   74  and institutions of any of the foregoing, or of any court, and
   75  includes the moneys of all county officers, including
   76  constitutional officers, which are placed on deposit in a bank,
   77  credit union, savings bank, or savings association. This
   78  includes, but is not limited to, time deposit accounts, demand
   79  deposit accounts, and nonnegotiable certificates of deposit.
   80  Moneys in deposit notes and in other nondeposit accounts such as
   81  repurchase or reverse repurchase operations are not public
   82  deposits. Securities, mutual funds, and similar types of
   83  investments are not public deposits and are not subject to this
   84  chapter.
   85         (26) “Qualified public depository” means a bank, credit
   86  union, savings bank, or savings association that:
   87         (a) Is organized and exists under the laws of the United
   88  States, or the laws of this state, or the laws of any other
   89  state or territory of the United States.
   90         (b) Has its principal place of business in this state or
   91  has a branch office in this state which is authorized under the
   92  laws of this state or of the United States to receive deposits
   93  in this state.
   94         (c) Is insured by the Federal Deposit Insurance Corporation
   95  or the National Credit Union Share Insurance Fund Has deposit
   96  insurance pursuant to the Federal Deposit Insurance Act, as
   97  amended, 12 U.S.C. ss. 1811 et seq.
   98         (d) Has procedures and practices for accurate
   99  identification, classification, reporting, and collateralization
  100  of public deposits.
  101         (e) Meets all the requirements of this chapter.
  102         (f) Has been designated by the Chief Financial Officer as a
  103  qualified public depository.
  104         Section 2. Paragraph (a) of subsection (3) of section
  105  280.03, Florida Statutes, is amended to read:
  106         280.03 Public deposits to be secured; prohibitions;
  107  exemptions.—
  108         (3) The following are exempt from the requirements of, and
  109  protection under, this chapter:
  110         (a) Public deposits deposited in a bank, credit union, or
  111  savings association by a trust department or trust company which
  112  are fully secured under trust business laws.
  113         Section 3. Section 280.042, Florida Statutes, is created to
  114  read:
  115         280.042Credit union designations as qualified public
  116  depositories; withdrawal by the Chief Financial Officer from
  117  collateral agreements; limits on public deposits.—
  118         (1)The Chief Financial Officer may not designate a credit
  119  union as a qualified public depository unless, at the time the
  120  credit union submits its agreement of contingent liability and
  121  its collateral agreement, all of the following requirements are
  122  met:
  123         (a)The credit union submits a signed statement from a
  124  public depositor indicating that if the credit union is
  125  designated as a qualified public depository, the public
  126  depositor intends to deposit public funds with the credit union.
  127         (b)At least four other credit unions have each submitted
  128  an agreement of contingent liability, a collateral agreement,
  129  and a signed statement from a public depositor indicating that
  130  if the credit union is designated as a qualified public
  131  depository, the public depositor intends to deposit public funds
  132  with the credit union.
  133         (2)The Chief Financial Officer must withdraw from a
  134  collateral agreement previously entered into with a credit union
  135  if, during any 90 calendar days, the combined total of the
  136  number of credit unions designated as qualified public
  137  depositories and the number of eligible credit unions applying
  138  to be designated as qualified public depositories is less than
  139  five.
  140         (3)A credit union that is a party to a collateral
  141  agreement from which the Chief Financial Officer withdraws in
  142  accordance with subsection (2) may no longer be designated as a
  143  qualified public depository. Within 10 business days after the
  144  Chief Financial Officer notifies the credit union that the Chief
  145  Financial Officer has withdrawn from the collateral agreement,
  146  the credit union must return all public deposits that the credit
  147  union holds to the public depositor who deposited the funds. The
  148  notice provided for in this subsection may be sent to a credit
  149  union by regular mail or by e-mail.
  150         (4)The Chief Financial Officer may limit the amount of
  151  public deposits that a credit union may hold in order to make
  152  sure that no single credit union holds an amount of public
  153  deposits that might adversely affect the integrity of the public
  154  deposits program.
  155         Section 4. Subsection (11) of section 280.05, Florida
  156  Statutes, is amended to read:
  157         280.05 Powers and duties of the Chief Financial Officer.—In
  158  fulfilling the requirements of this act, the Chief Financial
  159  Officer has the power to take the following actions he or she
  160  deems necessary to protect the integrity of the public deposits
  161  program:
  162         (11) Sell securities for the purpose of paying losses to
  163  public depositors not covered by deposit or share insurance.
  164         Section 5. Subsection (1) of section 280.052, Florida
  165  Statutes, is amended to read:
  166         280.052 Order of suspension or disqualification;
  167  procedure.—
  168         (1) The suspension or disqualification of a bank, credit
  169  union, or savings association as a qualified public depository
  170  must be by order of the Chief Financial Officer and must be
  171  mailed to the qualified public depository by registered or
  172  certified mail.
  173         Section 6. Paragraph (c) of subsection (1) and paragraph
  174  (c) of subsection (2) of section 280.053, Florida Statutes, are
  175  amended to read:
  176         280.053 Period of suspension or disqualification;
  177  obligations during period; reinstatement.—
  178         (1)
  179         (c) Upon expiration of the suspension period, the bank,
  180  credit union, or savings association may, by order of the Chief
  181  Financial Officer, be reinstated as a qualified public
  182  depository, unless the cause of the suspension has not been
  183  corrected or the bank, credit union, or savings association is
  184  otherwise not in compliance with this chapter or any rule
  185  adopted pursuant to this chapter.
  186         (2)
  187         (c) Upon expiration of the disqualification period, the
  188  bank, credit union, or savings association may reapply for
  189  qualification as a qualified public depository. If a
  190  disqualified bank, credit union, or savings association is
  191  purchased or otherwise acquired by new owners, it may reapply to
  192  the Chief Financial Officer to be a qualified public depository
  193  before prior to the expiration date of the disqualification
  194  period. Redesignation as a qualified public depository may occur
  195  only after the Chief Financial Officer has determined that all
  196  requirements for holding public deposits under the law have been
  197  met.
  198         Section 7. Section 280.055, Florida Statutes, is amended to
  199  read:
  200         280.055 Cease and desist order; corrective order;
  201  administrative penalty.—
  202         (1) The Chief Financial Officer may issue a cease and
  203  desist order and a corrective order upon determining that:
  204         (a) A qualified public depository has requested and
  205  obtained a release of pledged collateral without approval of the
  206  Chief Financial Officer;
  207         (b) A bank, credit union, savings association, or other
  208  financial institution is holding public deposits without a
  209  certificate of qualification issued by the Chief Financial
  210  Officer;
  211         (c) A qualified public depository pledges, deposits, or
  212  arranges for the issuance of unacceptable collateral;
  213         (d) A custodian has released pledged collateral without
  214  approval of the Chief Financial Officer;
  215         (e) A qualified public depository or a custodian has not
  216  furnished to the Chief Financial Officer, when the Chief
  217  Financial Officer requested, a power of attorney or bond power
  218  or bond assignment form required by the bond agent or bond
  219  trustee for each issue of registered certificated securities
  220  pledged and registered in the name, or nominee name, of the
  221  qualified public depository or custodian; or
  222         (f) A qualified public depository; a bank, credit union,
  223  savings association, or other financial institution; or a
  224  custodian has committed any other violation of this chapter or
  225  any rule adopted pursuant to this chapter that the Chief
  226  Financial Officer determines may be remedied by a cease and
  227  desist order or corrective order.
  228         (2) Any qualified public depository or other bank, credit
  229  union, savings association, or financial institution or
  230  custodian that violates a cease and desist order or corrective
  231  order of the Chief Financial Officer is subject to an
  232  administrative penalty not exceeding $1,000 for each violation
  233  of the order. Each day the violation of the order continues
  234  constitutes a separate violation.
  235         Section 8. Section 280.07, Florida Statutes, is amended to
  236  read:
  237         280.07 Mutual responsibility and contingent liability.—
  238         (1)A Any bank, savings bank, or savings association that
  239  is designated as a qualified public depository and that is not
  240  insolvent shall guarantee public depositors against loss caused
  241  by the default or insolvency of other banks, savings banks, or
  242  savings associations that are designated as qualified public
  243  depositories.
  244         (2)A credit union that is designated as a qualified public
  245  depository and that is not insolvent shall guarantee public
  246  depositors against loss caused by the default or insolvency of
  247  other credit unions that are designated as qualified public
  248  depositories.
  250  Each qualified public depository shall execute a form prescribed
  251  by the Chief Financial Officer for such guarantee which must
  252  shall be approved by the board of directors and must shall
  253  become an official record of the institution.
  254         Section 9. Subsections (1) and (3) of section 280.08,
  255  Florida Statutes, are amended to read:
  256         280.08 Procedure for payment of losses.—When the Chief
  257  Financial Officer determines that a default or insolvency has
  258  occurred, he or she shall provide notice as required in s.
  259  280.085 and implement the following procedures:
  260         (1) The Division of Treasury, in cooperation with the
  261  Office of Financial Regulation of the Financial Services
  262  Commission or the receiver of the qualified public depository in
  263  default, shall ascertain the amount of funds of each public
  264  depositor on deposit at such depository and the amount of
  265  deposit or share insurance applicable to such deposits.
  266         (3)(a) The loss to public depositors shall be satisfied,
  267  insofar as possible, first through any applicable deposit or
  268  share insurance and then through demanding payment under letters
  269  of credit or the sale of collateral pledged or deposited by the
  270  defaulting depository. The Chief Financial Officer may assess
  271  qualified public depositories as provided in paragraph (b),
  272  subject to the segregation of contingent liability in s. 280.07,
  273  for the total loss if the demand for payment or sale of
  274  collateral cannot be accomplished within 7 business days.
  275         (b) The Chief Financial Officer shall provide coverage of
  276  any remaining loss by assessment against the other qualified
  277  public depositories. The Chief Financial Officer shall determine
  278  such assessment for each qualified public depository by
  279  multiplying the total amount of any remaining loss to all public
  280  depositors by a percentage which represents the average monthly
  281  balance of public deposits held by each qualified public
  282  depository during the previous 12 months divided by the total
  283  average monthly balances of public deposits held by all
  284  qualified public depositories, excluding the defaulting
  285  depository, during the same period. The assessment calculation
  286  must shall be computed to six decimal places.
  287         Section 10. Subsection (4) of section 280.085, Florida
  288  Statutes, is amended, and subsection (1) of that section is
  289  republished, to read:
  290         280.085 Notice to claimants.—
  291         (1) Upon determining the default or insolvency of a
  292  qualified public depository, the Chief Financial Officer shall
  293  notify, by first-class mail, all public depositors that have
  294  complied with s. 280.17 of such default or insolvency. The
  295  notice must direct all public depositors having claims or
  296  demands against the Public Deposits Trust Fund occasioned by the
  297  default or insolvency to file their claims with the Chief
  298  Financial Officer within 30 days after the date of the notice.
  299         (4) The notice required in subsection (1) is not required
  300  if the default or insolvency of a qualified public depository is
  301  resolved in a manner in which all Florida public deposits are
  302  acquired by another insured bank, credit union, savings bank, or
  303  savings association.
  304         Section 11. Section 280.09, Florida Statutes, is amended to
  305  read:
  306         280.09 Public Deposits Trust Fund.—
  307         (1) In order to facilitate the administration of this
  308  chapter, there is created the Public Deposits Trust Fund,
  309  hereafter in this section designated “the fund.” The proceeds
  310  from the sale of securities or draw on letters of credit held as
  311  collateral or from any assessment pursuant to s. 280.08 must
  312  shall be deposited into the fund. The Chief Financial Officer
  313  shall segregate and separately account for any collateral
  314  proceeds, assessments, or administrative penalties attributable
  315  to a credit union from any collateral proceeds, assessments, or
  316  administrative penalties attributable to any bank, savings bank,
  317  or savings association. Any administrative penalty collected
  318  pursuant to this chapter shall be deposited into the Treasury
  319  Administrative and Investment Trust Fund.
  320         (2) The Chief Financial Officer is authorized to pay any
  321  losses to public depositors from the fund, subject to the
  322  limitations provided in subsection (1), and there are hereby
  323  appropriated from the fund such sums as may be necessary from
  324  time to time to pay the losses. The term “losses,” for purposes
  325  of this chapter, must shall also include losses of interest or
  326  other accumulations to the public depositor as a result of
  327  penalties for early withdrawal required by Depository
  328  Institution Deregulatory Commission Regulations or applicable
  329  successor federal laws or regulations because of suspension or
  330  disqualification of a qualified public depository by the Chief
  331  Financial Officer pursuant to s. 280.05 or because of withdrawal
  332  from the public deposits program pursuant to s. 280.11. In that
  333  event, the Chief Financial Officer is authorized to assess
  334  against the suspended, disqualified, or withdrawing public
  335  depository, in addition to any amount authorized by any other
  336  provision of this chapter, an administrative penalty equal to
  337  the amount of the early withdrawal penalty and to pay that
  338  amount over to the public depositor as reimbursement for such
  339  loss. Any money in the fund estimated not to be needed for
  340  immediate cash requirements shall be invested pursuant to s.
  341  17.61.
  342         Section 12. Subsections (1) and (3) of section 280.10,
  343  Florida Statutes, are amended to read:
  344         280.10 Effect of merger, acquisition, or consolidation;
  345  change of name or address.—
  346         (1) When a qualified public depository is merged into,
  347  acquired by, or consolidated with a bank, credit union, savings
  348  bank, or savings association that is not a qualified public
  349  depository:
  350         (a) The resulting institution shall automatically become a
  351  qualified public depository subject to the requirements of the
  352  public deposits program.
  353         (b) The contingent liability of the former institution
  354  shall be a liability of the resulting institution.
  355         (c) The public deposits and associated collateral of the
  356  former institution shall be public deposits and collateral of
  357  the resulting institution.
  358         (d) The resulting institution shall, within 90 calendar
  359  days after the effective date of the merger, acquisition, or
  360  consolidation, deliver to the Chief Financial Officer:
  361         1. Documentation in its name as required for participation
  362  in the public deposits program; or
  363         2. Written notice of intent to withdraw from the program as
  364  provided in s. 280.11 and a proposed effective date of
  365  withdrawal which shall be within 180 days after the effective
  366  date of the acquisition, merger, or consolidation of the former
  367  institution.
  368         (e) If the resulting institution does not meet
  369  qualifications to become a qualified public depository or does
  370  not submit required documentation within 90 calendar days after
  371  the effective date of the merger, acquisition, or consolidation,
  372  the Chief Financial Officer shall initiate mandatory withdrawal
  373  actions as provided in s. 280.11 and shall set an effective date
  374  of withdrawal that is within 180 days after the effective date
  375  of the acquisition, merger, or consolidation of the former
  376  institution.
  377         (3) If the default or insolvency of a qualified public
  378  depository results in acquisition of all or part of its Florida
  379  public deposits by a bank, credit union, savings bank, or
  380  savings association that is not a qualified public depository,
  381  the bank, credit union, savings bank, or savings association
  382  acquiring the Florida public deposits is subject to subsection
  383  (1).
  384         Section 13. Subsection (1) of section 280.13, Florida
  385  Statutes, is amended to read:
  386         280.13 Eligible collateral.—
  387         (1) Securities eligible to be pledged as collateral by
  388  qualified public depositories banks and savings associations
  389  shall be limited to:
  390         (a) Direct obligations of the United States Government.
  391         (b) Obligations of any federal agency that are fully
  392  guaranteed as to payment of principal and interest by the United
  393  States Government.
  394         (c) Obligations of the following federal agencies:
  395         1. Farm credit banks.
  396         2. Federal land banks.
  397         3. The Federal Home Loan Bank and its district banks.
  398         4. Federal intermediate credit banks.
  399         5. The Federal Home Loan Mortgage Corporation.
  400         6. The Federal National Mortgage Association.
  401         7. Obligations guaranteed by the Government National
  402  Mortgage Association.
  403         (d) General obligations of a state of the United States, or
  404  of Puerto Rico, or of a political subdivision or municipality
  405  thereof.
  406         (e) Obligations issued by the Florida State Board of
  407  Education under authority of the State Constitution or
  408  applicable statutes.
  409         (f) Tax anticipation certificates or warrants of counties
  410  or municipalities having maturities not exceeding 1 year.
  411         (g) Public housing authority obligations.
  412         (h) Revenue bonds or certificates of a state of the United
  413  States or of a political subdivision or municipality thereof.
  414         (i) Corporate bonds of any corporation that is not an
  415  affiliate or subsidiary of the qualified public depository.
  416         Section 14. Paragraph (b) of subsection (4) of section
  417  280.17, Florida Statutes, is amended to read:
  418         280.17 Requirements for public depositors; notice to public
  419  depositors and governmental units; loss of protection.—In
  420  addition to any other requirement specified in this chapter,
  421  public depositors shall comply with the following:
  422         (4) If public deposits are in a qualified public depository
  423  that has been declared to be in default or insolvent, each
  424  public depositor shall:
  425         (b) Submit to the Chief Financial Officer for each public
  426  deposit, within 30 days after the date of official notification
  427  from the Chief Financial Officer, the following:
  428         1. A claim form and agreement, as prescribed by the Chief
  429  Financial Officer, executed under oath, accompanied by proof of
  430  authority to execute the form on behalf of the public depositor.
  431         2. A completed public deposit identification and
  432  acknowledgment form, as described in subsection (2).
  433         3. Evidence of the insurance afforded the deposit pursuant
  434  to the Federal Deposit Insurance Act or the Federal Credit Union
  435  Act, as appropriate.
  436         Section 15. For the purpose of incorporating the amendment
  437  made by this act to s. 280.02, Florida Statutes, in references
  438  thereto, ss. 17.57(1), (2), and (7)(a); 17.58(1) and (2); 17.62;
  439  17.68(4) and (5); 24.114(1); 125.901(3)(e) and (f); 136.01;
  440  159.608(11); 175.301; 175.401(8); 185.30; 185.50(8); 190.007(3);
  441  191.006(16); 215.322(4); 215.34(2); 218.415(16)(c), (17)(c), and
  442  (23)(a); 255.502(4)(h); 331.309(1) and (2); 373.553(2);
  443  420.0005(1); 420.5087(7); 420.5088(4); 420.5089(1); 420.525(1);
  444  631.221; 655.057(5)(e); 723.06115(3)(c); 895.09(4); and
  445  1009.971(5)(d), Florida Statutes, are reenacted.
  446         Section 16. This act shall take effect July 1, 2020.