HB 1209 — Concerning municipal access to local financial services.

H-1412.2SUBSTITUTEH-0508.1HOUSE HOUSE BILL 1209State of Washington65th Legislature2017 Regular SessionBy House Business & Financial Services (originally sponsored by Representatives Bergquist, Vick, Kirby, J.

Walsh, and Blake)READBlakeRead FIRSTfirst TIMEtime 02/03/17.AN01/13/17. ACT Relating to municipal access to local financial services;

amendingReferred RCWto 39.58.010Committee andon 39.58.105;Business & Financial Services.AN ACT Relating to municipal access to local financial services;

amending RCW 39.58.010, 39.58.060, and 39.58.108;

or(b) Such other sum or measure as the commission may from time to time set by resolution according to criteria established by rule, consistent with the commission's broad administrative discretion to achieve the objective of RCW 39.58.020.As long as the uninsured public deposits of a public depositary are one hundred percent collateralized by eligible collateral as provided for in RCW 39.58.050, the "maximum liability" of a public depositary that has not incurred a loss may not exceed the amount set forth in (a) of this subsection.This definition of "maximum liability" does not limit the authority of the commission to adjust the collateral requirements of public depositaries pursuant to RCW 39.58.040;(13) "Net worth" of a public depositary means (a) the equity capital as reported to its primary regulatory authority on the quarterly report of condition or statement of condition, or other required report required by its primary regulatory authority or federal deposit insurer, and may include capital notes and debentures which are subordinate to the interests of depositors, or (b) equity capital adjusted by rule or resolution of the commission after consultation with the director of the department of financial institutions;(14) "Public deposit" means public funds on deposit with a public depositary;(15) "Public depositary" means a financial institution that has been approved by the commission to hold public deposits, and has segregated, for the benefit of the commission, eligible collateral having a value of not less than its maximum liability((,liability, and, unless otherwise provided for in this chapter, does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state));(16)state;(16) "Public funds" means moneys under the control of a treasurer, the state treasurer, or custodian belonging to, or held for the benefit of, the state or any of its political subdivisions, public corporations, municipal corporations, agencies, courts, boards, commissions, or committees, including moneys held as trustee, agent, or bailee belonging to, or held for the benefit of, the state or any of its political subdivisions, public corporations, municipal corporations, agencies, courts, boards, commissions, or committees;(17) "Public funds available for investment" means such public funds as are in excess of the anticipated cash needs throughout the duration of the contemplated investment period;(18) "State public depositary" means a Washington state-chartered financial institution that is authorized as a public depositary under this chapter;(19) "State treasurer" means the treasurer of the state of Washington;(20) "Treasurer" means a county treasurer, a city treasurer, a treasurer of any other municipal corporation, and any other custodian of public funds, except the state treasurer;(21) "Trustee" means a third-party safekeeping agent which has completed a depositary pledge agreement with a public depositary and the commission.

Such third-party safekeeping agent may be a federal home loan bank, or such other third-party safekeeping agent approved by the commission.Sec. 2.  RCW 39.58.10539.58.060 and 20162009 c 1529 s 35 are each amended to read as follows:(1)follows:When Thethe commission maydetermines requirethat a loss has occurred in a public depositary, it shall as soon as possible make payment to the stateproper auditorpublic orofficers of all funds subject to such loss, pursuant to the following procedures:(1) For the purposes of determining the sums to be paid, the director of the department of financial institutions,institutions toor the extentreceiver shall, within twenty days after issuance of theira respectiverestraining authorityorder underor applicabletaking federalpossession of any public depositary, ascertain the amount of public funds on deposit therein as disclosed by its records and Washingtonthe stateamount law,thereof tocovered thoroughlyby investigatedeposit insurance and reportprovide towritten itverification concerningof the conditionamounts thereof to the commission and each public depositor;(2) Within ten days after receipt of anywritten financialverification, institutioneach whichpublic makesdepositor applicationshall furnish to becomethe acommission verified statements of its deposits in the public depositary, including the uninsured and mayuncollateralized alsostatus asof oftenthe public deposits, as itdisclosed deemsby necessaryits requirerecords;(3) theUpon statereceipt auditorof orwritten verification and statements, the directorcommission ofshall ascertain and fix the departmentamount of financialthe institutions,public todeposits, thenet extentafter deduction of theirany respectiveamount authorityreceived underfrom applicabledeposit federalinsurance and Washingtonheld statecollateral, law,and, toafter makedetermining suchand investigationdeclaring andthe reportapparent concerningnet loss, assess the conditionsame ofagainst anyall financialpublic institutiondepositaries, as follows:(a) If the public depositary in which hasthe beenloss designatedhas asoccurred is a bank, trust company, savings bank, or savings association, first, against the public depositary.depositary in which the loss occurred, to the extent of the full value of collateral segregated pursuant to this chapter;

Theand expensesecond, ofagainst all suchother investigationsbank, ortrust reportscompany, shalland besavings bornebank bypublic thedepositaries financialpro institutionrata examined.(2)in Inproportion lieu of any such investigation or report, the commission may rely upon information made available to it or the directormaximum ofliability the department of financialeach institutions by the office of the comptroller of the currency, the national credit union administration, the federal deposit insurance corporation, the federal reserve board, any state financial institutions regulatory agency, or any successor state or federal financial institutions regulatory agency, and any such informationdepositary or data received by the commission shall be kept and maintained in the same manner and have the same protections as examinationit reportsexisted receivedon by the commissiondate from the director of theloss;(b) departmentIf of financial institutions pursuant to RCW 30A.04.075(2)(h) ((and)), 32.04.220(2)(h), and 31.12.565(2)(j).(3) The director of the departmentpublic ofdepositary financial institutions shall in additionwhich advise the commissionloss ofhas anyoccurred actionis hea orcredit sheunion, hasfirst, directedagainst anythe state public depositary toin take which willthe resultloss inoccurred, ato reductionthe ofextent greater than ten percent of the netfull worthvalue of suchcollateral depositarysegregated as shown on the most recent report it submitted pursuant to RCWthis 39.58.100.NEWchapter; SECTION.  Sec. 3.  RCW 39.58.240 (Credit union as public depositary—Conditions) and 2012 c 26 s 1 & 2010 c 36 s 1 are each repealed.--- END ---

and second, against all other credit union public depositaries pro rata in proportion to the maximum liability of each such depositary as it existed on the date of loss;(4) Assessments made by the commission shall be payable on the second business day following demand, and in case of the failure of any public depositary so to pay, the commission shall take possession of the securities segregated as collateral by the depositary pursuant to this chapter and liquidate the same for the purpose of paying such assessment;(5) Upon receipt of the assessment payments, the commission shall reimburse the public depositors of the public depositary in which the loss occurred to the extent of the depositary's net deposit liability to them;(6) Any owner of public deposits receiving assessment proceeds shall provide a receivership certificate to the commission.Sec. 3.  RCW 39.58.108 and 2016 c 152 s 4 are each amended to read as follows:(1) Except as provided in subsections (2) and (3) of this section, any financial institution may become, and thereafter operate as, a public depositary upon approval by the commission and segregation of collateral in the manner as set forth in this chapter, and subject to compliance with all rules and policies adopted by the commission.

A public depositary shall at all times pledge and segregate eligible collateral in an amount established by the commission by rule or noticed resolution.(2) Solely for the purpose of receiving public deposits that may total no more than the maximum deposit insured by the national credit union share insurance fund, a state-chartered credit union chartered under chapter 31.12 RCW or a credit union chartered under federal law is a public depositary subject to RCW 39.58.040 and 39.58.100.

The maximum deposit applies to all funds attributable to any one depositor of public funds in any one credit union.(3) A state or federal credit union that has satisfied the requirements of subsection (1) of this section is not authorized to receive public deposits that total more than the maximum deposit insured by the national credit union share insurance fund unless at least four other state or federal credit unions have satisfied the requirements of subsection (1) of this section.(4) At any time at which there are less than ten state or federal credit unions authorized under subsection (1) of this section to receive public deposits in excess of the maximum deposit insured by the national credit union share insurance fund, the maximum liability for each such credit union means:(a) A sum equal to twenty percent of:(i) All uninsured public deposits held by a public depositary that has not incurred a loss by the then most recent commission report date;

or(ii) The average of the balances of said uninsured public deposits on the last four immediately preceding reports required pursuant to RCW 39.58.100, whichever amount is greater;

or(b) Such other sum or measure as the commission may from time to time set by resolution according to criteria established by rule, consistent with the commission's broad administrative discretion to achieve the objective of RCW 39.58.020.NEW SECTION.  Sec. 4.  RCW 39.58.240 (Credit union as public depositary—Conditions) and 2012 c 26 s 1 & 2010 c 36 s 1 are each repealed.--- END ---