Money Management Council, Administration

Rule R628-11

Maximum Amount of Uninsured Public Funds Allowed to Be Held by Any Qualified Depository

Notice of Proposed Rule

(Amendment)

DAR File No.: 34208
Filed: 11/01/2010 05:11:35 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this change is to allow the Council to have the option to reduce a qualified depository's uninsured public funds down to the amount that the institution is holding if there is a formal enforcement action against them by a regulator or if there is a material change in the depository's financial status.

Summary of the rule or change:

A subsection has been added that gives the Council an option to drop a qualified depository institution's public funds down to the amount they are holding at the time they receive a formal enforcement action or if there is a material change in the institution's financial condition, if the Council chooses to do so.

State statutory or constitutional authorization for this rule:

• Section 51-7-18.1

Anticipated cost or savings to:

the state budget:

If the Council chooses to use this option in the event of a formal enforcement action or a material change in the financial institution's financial status, it will be done in the context of a normal Council meeting. There would be minimal mailing costs associated with a notification of the action to public treasurers but would be covered under current budgets.

local governments:

There will be no cost or savings to local government because the amendment does not involve any action by local government.

small businesses:

The change does not involve any action by small businesses.

persons other than small businesses, businesses, or local governmental entities:

The change does not involve any additional action by local government entities. It would not affect businesses.

Compliance costs for affected persons:

The change does not affect any additional persons.

Comments by the department head on the fiscal impact the rule may have on businesses:

There is no fiscal impact on business.

William W. Wallace, Chair

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Money Management Council
Administration
350 N STATE ST
STE 180
SALT LAKE CITY, UT 84114

Direct questions regarding this rule to:

• Ann Pedroza at the above address, by phone at 801-538-1883, by FAX at 801-538-1465, or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

12/15/2010

This rule may become effective on:

12/22/2010

Authorized by:

William Wallace, Chair

R628. Money Management Council, Administration.

R628-11. Maximum Amount of Uninsured Public Funds Allowed to Be Held by Any Qualified Depository.

R628-11-4. Definitions.

For the purposes of this rule:

A. "Tier one capital" means:

(1) For a federally insured commercial bank, thrift institution, industrial loan corporation or a savings and loan association, the same as defined in the Federal Deposit Insurance Act in CFR Chapter III Section 325.2 or the Office of Thrift Supervision in CFR Chapter V Section 565.2;

(2) For a federally insured credit union, the sum of undivided earnings, regular reserves, appropriations of undivided earnings referred to as "other reserves", and net income not already included in undivided earnings.

B. "Deposits" means: balances due to persons having an account at the qualified depository institution whether in the form of a transaction account, savings account, share account, or certificate of deposit and repurchase agreements other than qualifying repurchase agreements.

C. "Out of State" means: in reference to a depository institution or depository institution holding company, an institution or company whose home state is not Utah.

D. "Maximum amount" means: the amount of deposits in excess of the federal deposit insurance limit.

E. "Qualified depository" means: a Utah depository institution as defined in Subsection 7-1-103(36) or a out of state depository institution as defined in Subsection 7-1-103(25) which may conduct business in this state under Section 7-1-702, whose deposits are insured by an agency of the Federal Government and which has been certified by the Commissioner of Financial Institutions as having met the requirements to receive uninsured public funds.

F. "Transaction account" means: a deposit, account, or other contractual arrangement in which a depositor, account holder, or other customer is permitted, directly or indirectly, to make withdrawals by check or other negotiable instrument, a payment order of withdrawal, a telephone transfer or other electronic transfer or by any other means or device to make payments or transfer to third persons. This term includes demand deposits, NOW accounts, savings deposits subject to automatic transfers, and share draft accounts.

G. "Utah depository institution" means: a depository institution which is organized under the laws of, and whose home office is located in, this state or which is organized under the laws of the United States and whose home office is located in this state.

 

R628-11-8. Frequency of Adjustment to the Uninsured Public Funds Allotment.

A. The uninsured public funds allotment for each qualified depository shall be established quarterly by the Council, based on the reports of condition filed with the Commissioner as of the close of the preceding quarter. The uninsured public funds allotments shall be established in accordance with the following:

 

TABLE 3

     Report of Condition       Effective Date

     As Of:                    of Allotment



     December    31            April     1

     March       31            July      1

     June        30            October   1

     September   30            January   1

 

B. The Money Management Council may make interim adjustments in a qualified depository's uninsured public funds allotment if material changes in a qualified depository's financial condition have occurred or if there is a formal enforcement action by the federal or state regulator. These interim adjustments may include but are not limited to :

(1) reducing a qualified depository's uninsured public funds allotment to the amount of public funds held by the institution at the time of the Council's review of either the formal enforcement action or the review of the material changes in the qualified depositories financial condition;

(2) reducing a qualified depository's uninsured public funds allotment to zero if there is not sufficient collateral to cover uninsured public funds.

C. Any qualified depository that becomes subject to a formal enforcement action by any federal regulator shall notify the Council within twenty-four hours of the publication of the action taken by a federal regulator. Failure of a qualified depository to comply with this requirement to notify the Council may result in action taken by the Council to require collateralization of uninsured public funds in accordance with Section 51-7-18.1(5) and Section R628-11-7.

D. When a formal enforcement action has been modified or terminated by a federal regulator, the qualified depository shall notify the Council within twenty-four hours of the publication of the modification or termination of any action.

 

KEY: financial institutions, banking law

Date of Enactment or Last Substantive Amendment: [April 27], 2010

Notice of Continuation: October 12, 2010

Authorizing, and Implemented or Interpreted Law: 51-7-18.1(2)