H. B. 4294
(By Delegate Moore, Walters, Reynolds and Azinger)
(Requested by the Division of Banking)
[Introduced February 2, 2010; referred to the
Committee on Banking and Insurance then the Judiciary.]
A BILL to amend and reenact §7-6-2 of the Code of West Virginia,
1931, as amended
,
relating to the need for a county depository
to execute a bond only for public funds deposited in amounts
exceeding the amount that is insured by an agency of the
federal government.
Be it enacted by the Legislature of West Virginia:
That §7-6-2 of the Code of West Virginia, 1931, as amended, be
amended and reenacted to read as follows:
ARTICLE 6. COUNTY DEPOSITORIES.
§7-6-2. BOND OF DEPOSITORIES.
No designation is binding on any county, nor shall any public
money be deposited thereunder in excess of the amount insured by an
agency of the federal government, until the banking institution
designated executes a bond with good and sufficient sureties, to be accepted and approved by the county commission, payable to the
State of West Virginia, in a sum as the county commission shall
direct, and which may not be less than the maximum sum that is
deposited in the depository at any one time. The bond shall be
executed by at least four resident freeholders as sureties owning
in the aggregate unencumbered real estate having an assessed
valuation thereon equal to the penalty of the bond, or by a
fidelity or indemnity company authorized to do business within the
state, satisfactory to, and acceptable by the county commission,
and having not less than $600,000 capital; and the bond shall be
conditioned for the receipt, safekeeping and payment over of all
money which may be deposited in or come under the custody of the
banking institution designated a county depository under the
provisions hereof, together with the interest thereon at the rate
specified by this article; and the bond shall be further
conditioned for the faithful performance, by the banking
institution so designated, of all the duties imposed by this
article upon a depository of public moneys:
Provided, That the
clerk of the county commission shall keep a record of each surety
on all personal bonds given as hereinbefore provided and the clerk
shall notify the county commission of every recorded conveyance of
real estate made by any surety on said personal bond.
An action shall lie on the bond at the instance of the county
commission, or the sheriff, for the recovery of any money deposited
in the depository, upon failure or default of the depository to fully and faithfully account for and pay over any and all public
moneys deposited by the sheriff and of all interests earned and
accrued thereon as required by this article. A bond may not be
accepted by the county commission until it has been submitted to
the prosecuting attorney, and certified by him or her to be in due
and legal form, and conformable to the provisions of this article,
which certificate shall be endorsed thereon
: Provided, That the
county commission may, in lieu of the bond provided hereinbefore,
accept as security for money deposited as aforesaid, interest-
bearing securities of the United States, or of a state, county,
district or municipal corporation, or of the federal land banks, or
endorsed county and district warrants of the county in which the
depository is located, or letters of credit of the federal land
banks, or federal home loan banks, or any other letters of credit
approved by the treasurer; the face value of which securities may
not be less than the sum hereinbefore specified as the amount to be
named in the bond in lieu of which the securities are accepted; or
the county commission may accept the securities as partial security
to the extent of their face value for the money so deposited, and
require bond for the remainder of the full amount hereinbefore
specified, to be named in the bond, and in the bond so required,
the acceptance of securities as partial security, and the extent
thereof, shall be set forth
: Provided, however, That a banking
institution is not required to provide a bond or security in lieu
of bond if the deposits accepted are placed in certificates of deposit meeting the following requirements: (1) The funds are
invested through a designated state depository selected by the
county; (2) the selected depository arranges for the deposit of the
funds in certificates of deposit in one or more banks or savings
and loan associations wherever located in the United States, for
the account of the county; (3) the full amount of principal and
accrued interest of each certificate of deposit is insured by the
Federal Deposit Insurance Corporation; (4) the selected depository
acts as custodian for the county with respect to such certificates
of deposit issued for the county's account; and (5) at the same
time that the county's funds are deposited and the certificates of
deposit are issued, the selected depository receives an amount of
deposits from customers of other financial institutions wherever
located in the United States equal to or greater than the amount of
the funds invested by the county through the selected depository.
The hypothecation of the securities shall be by proper legal
transfer as collateral security to protect and indemnify by trust
any and all loss in case of any default on the part of the banking
institution in its capacity as depository as aforesaid. All the
securities shall be delivered to or deposited for the account of
the county commission, and withdrawal or substitution thereof may
be permitted from time to time upon approval by the county
commission by order of record, but the collateral security shall be
released only by order of record of the county commission when
satisfied that full and faithful accounting and payment of all the moneys has been made under the provisions hereof. In the event
actual possession of the hypothecated securities are delivered to
the county commission, it shall make ample provision for the
safekeeping thereof and the interest thereon when paid shall be
turned over to the banking institution, so long as it is not in
default as aforesaid. The county commission may permit the deposit
under proper receipt of the securities with one or more banking
institutions within or without the State of West Virginia and may
contract with any institution for safekeeping and exchange of any
hypothecated securities, and may prescribe the rules for handling
and protecting the same.
NOTE: The purpose of this bill is to require banks to provide
a bond or pledge assets to secure county deposits only where the
amount of the deposits exceeds federal deposit insurance limits.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.