Bill > H958

This bill establishes new rules for how public money is deposited and secured in banks, aiming to protect these funds. It defines "public depositor" as any state or local government official responsible for public money and "qualified depository bank" as an FDIC-insured bank that meets specific financial health criteria. The bill mandates that "uninsured public deposits" (amounts exceeding FDIC insurance limits) must be secured, primarily through collateral pledged by the bank to a "custodian" (an independent third party or a Federal Reserve bank) under a "depository pledge agreement." This agreement ensures that if a bank fails, the public depositor can access the collateral to recover uninsured funds. The bill also outlines alternative security methods, such as letters of credit from Federal Home Loan Banks or membership in specific insurance funds, and allows the State Treasurer to approve other forms of security. It sets limits on how much public money can be deposited in a single bank, generally 55% of the bank's capital and surplus for state funds and 60% for municipal funds. The bill also clarifies that public officials are not personally liable for losses from bank defaults if they acted in good faith and followed these security rules, and it imposes penalties, including disqualification from future contracts, for both banks and public officials who violate these provisions.