81R528 JJT-F
By: Nichols S.B. No. 638
A BILL TO BE ENTITLED
AN ACT
relating to the collateralization of certain public funds;
providing administrative penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 2257, Government Code, is amended by
adding Subchapter F to read as follows:
SUBCHAPTER F. POOLED COLLATERAL TO SECURE
DEPOSITS OF CERTAIN PUBLIC FUNDS
Sec. 2257.101. DEFINITION. In this subchapter,
"participating institution" means a financial institution that
holds one or more deposits of public funds and that participates in
the pooled collateral program under this subchapter.
Sec. 2257.102. POOLED COLLATERAL PROGRAM. (a) As an
alternative to collateralization under Subchapter B, the
comptroller by rule shall establish a program for centralized
pooled collateralization of deposits of public funds and for
monitoring collateral maintained by participating institutions.
The rules must provide that deposits of public funds of a county are
not eligible for collateralization under the program. The
comptroller shall provide for a separate collateral pool for any
single participating institution's deposits of public funds.
(b) Under the program, the collateral of a participating
institution pledged for a public deposit may not be combined with,
cross-collateralized with, aggregated with, or pledged to another
participating institution's collateral pools for pledging
purposes.
(c) A participating institution may pledge its pooled
securities to more than one participating depositor under contract
with that participating institution.
(d) The pooled collateral program must provide for:
(1) participation in the program by a participating
institution and each affected public entity to be voluntary;
(2) uniform procedures for processing all collateral
transactions that are subject to an approved security agreement
described by Section 2257.103; and
(3) the pledging of a participating institution's
collateral securities using a single custodial account instead of
an account for each depositor of public funds.
Sec. 2257.103. PARTICIPATION IN POOLED COLLATERAL PROGRAM.
A financial institution may participate in the pooled collateral
program only if:
(1) the institution has entered into a binding
collateral security agreement with a public agency for a deposit of
public funds and the agreement permits the institution's
participation in the program;
(2) the comptroller has approved the institution's
participation in the program; and
(3) the comptroller has approved or provided the
collateral security agreement form used.
Sec. 2257.104. COLLATERAL REQUIRED; CUSTODIAN TRUSTEE. (a)
Each participating institution shall secure its deposits of public
funds with eligible securities the total value of which equals at
least 102 percent of the amount of the deposits of public funds
covered by a security agreement described by Section 2257.103 and
deposited with the participating institution, reduced to the extent
that the United States or an instrumentality of the United States
insures the deposits. For purposes of determining whether
collateral is sufficient to secure a deposit of public funds,
Section 2257.022(b) does not apply to a deposit of public funds held
by the participating institution and collateralized under this
subchapter.
(b) A participating institution shall provide for the
collateral securities to be held by a custodian trustee, on behalf
of the participating institution, in trust for the benefit of the
pooled collateral program. A custodian trustee must qualify as a
custodian under Section 2257.041.
(c) The comptroller by rule shall regulate a custodian
trustee under the pooled collateral program in the manner provided
by Subchapter C to the extent practicable. The rules must ensure
that a custodian trustee depository does not own, is not owned by,
and is independent of the financial institution or institutions for
which it holds the securities in trust, except that the rules must
allow the following to be a custodian trustee:
(1) a federal reserve bank;
(2) a banker's bank, as defined by Section 34.105,
Finance Code; and
(3) a federal home loan bank.
Sec. 2257.105. MONITORING COLLATERAL. (a) Each
participating institution shall file the following reports with the
comptroller electronically and as prescribed by rules of the
comptroller:
(1) a daily report of the aggregate ledger balance of
deposits of public agencies participating in the pooled collateral
program that are held by the institution, with each public entity's
funds held itemized;
(2) a weekly summary report of the total market value
of securities held by a custodian trustee on behalf of the
participating institution;
(3) a monthly report listing the collateral securities
held by a custodian trustee on behalf of the participating
institution together with the value of the securities; and
(4) as applicable, a participating institution's
annual report that includes the participating institution's
financial statements.
(b) The comptroller shall provide the participating
institution an acknowledgment of each report received.
(c) The comptroller shall provide a daily report of the
market value of the securities held in each pool.
(d) The comptroller shall post each report on the
comptroller's Internet website.
Sec. 2257.106. ANNUAL ASSESSMENT. (a) Once each state
fiscal year, the comptroller shall impose against each
participating institution an assessment in an amount sufficient to
pay the costs of administering this subchapter. The amount of an
assessment must be based on factors that include the number of
public entity accounts a participating institution maintains, the
number of transactions a participating institution conducts, and
the aggregate average weekly deposit amounts during that state
fiscal year of each participating institution's deposits of public
funds collateralized under this subchapter. The comptroller by
rule shall establish the formula for determining the amount of the
assessments imposed under this subsection.
(b) The comptroller shall provide to each participating
institution a notice of the amount of the assessment against the
institution.
(c) A participating institution shall remit to the
comptroller the amount assessed against it under this section not
later than the 45th day after the date the institution receives the
notice under Subsection (b).
(d) Money remitted to the comptroller under this section may
be appropriated only for the purposes of administering this
subchapter.
Sec. 2257.107. PENALTY FOR REPORTING VIOLATION. The
comptroller may impose an administrative penalty against a
participating institution that does not timely file a report
required by Section 2257.105.
Sec. 2257.108. NOTICE OF COLLATERAL VIOLATION;
ADMINISTRATIVE PENALTY. (a) The comptroller may issue a notice to
a participating institution that the institution appears to be in
violation of collateral requirements under Section 2257.104 and
rules of the comptroller.
(b) The comptroller may impose an administrative penalty
against a participating institution that does not maintain
collateral in an amount and in the manner required by Section
2257.104 and rules of the comptroller if the participating
institution has not remedied the violation before the third
business day after the date a notice is issued under Subsection (a).
Sec. 2257.109. PENALTY FOR FAILURE TO PAY ASSESSMENT. The
comptroller may impose an administrative penalty against a
participating institution that does not pay an assessment against
it in the time provided by Section 2257.106(c).
Sec. 2257.110. PENALTY AMOUNT; PENALTIES NOT EXCLUSIVE.
(a) The comptroller by rule shall adopt a formula for determining
the amount of a penalty under this subchapter. For each violation
and for each day of a continuing violation, a penalty must be at
least $100 per day and not more than $1,000 per day. The penalty
must be based on factors that include:
(1) the aggregate average weekly deposit amounts
during the state fiscal year of the institution's deposits of
public funds;
(2) the number of violations by the institution during
the state fiscal year;
(3) the number of days of a continuing violation; and
(4) the average asset base of the institution as
reported on the institution's year-end report of condition.
(b) The penalties provided by Sections 2257.107-2257.109
are in addition to those provided by Subchapter D or other law.
Sec. 2257.111. PENALTY PROCEEDING CONTESTED CASE. A
proceeding to impose a penalty under Section 2257.107, 2257.108, or
2257.109 is a contested case under Chapter 2001.
Sec. 2257.112. SUIT TO COLLECT PENALTY. The attorney
general may sue to collect a penalty imposed under Section
2257.107, 2257.108, or 2257.109.
Sec. 2257.113. ENFORCEMENT STAYED PENDING REVIEW.
Enforcement of a penalty imposed under Section 2257.107, 2257.108,
or 2257.109 may be stayed during the time the order is under
judicial review if the participating institution pays the penalty
to the clerk of the court or files a supersedeas bond with the court
in the amount of the penalty. A participating institution that
cannot afford to pay the penalty or file the bond may stay the
enforcement by filing an affidavit in the manner required by the
Texas Rules of Civil Procedure for a party who cannot afford to file
security for costs, subject to the right of the comptroller to
contest the affidavit as provided by those rules.
Sec. 2257.114. USE OF COLLECTED PENALTIES. Money collected
as penalties under this subchapter may be appropriated only for the
purposes of administering this subchapter.
SECTION 2. The comptroller of public accounts shall adopt
rules as necessary to implement Subchapter F, Chapter 2257,
Government Code, as added by this Act, so that the pooled collateral
program established under that subchapter may begin operating not
later than the first business day of April 2010.
SECTION 3. This Act takes effect September 1, 2009.