SECTIONS 16610-16622 - California Statutes

GOVERNMENT CODE

SECTION 16610-16622

16610. Security shall not be required for that portion of any
deposit that is insured under any law of the United States.

16611. To be eligible to receive and retain deposits, a savings and
loan association and credit union shall deposit with the Treasurer
as security for deposits, securities specified in Section 16612, and
approved by the Treasurer, in an amount in value at least 10 percent
in excess of the amount deposited with the savings and loan
association or credit union.

16612. The following securities may be received as security for
deposits:
(a) Bonds, notes, or other obligations of the United States, or
those for which the faith and credit of the United States are pledged
for the payment of principal and interest, including the guaranteed
portions of small business administration loans, so long as such
loans are obligations for which the faith and credit of the United
States are pledged for the payment of principal and interest.
(b) Notes or bonds or any obligations of a local public agency (as
defined in the United States Housing Act of 1949 (42 U.S.C. Sec.
1452 et seq.)) or any obligations of a public housing agency (as
defined in the United States Housing Act of 1937) for which the faith
and credit of the United States are pledged for the payment of
principal and interest.
(c) Bonds of this state or of any county, city, town, metropolitan
water district, municipal utility district, municipal water
district, bridge and highway district, flood control district, school
district, water district, water conservation district or irrigation
district within this state, and, in addition, revenue on tax
anticipation notes, and revenue bonds payable solely out of the
revenues from a revenue-producing property owned, controlled or
operated by this state, or such local agency or district, or by a
department, board, agency, or authority thereof.
(d) Registered warrants of this state.
(e) Bonds, consolidated bonds, collateral trust debentures,
consolidated debentures, or other obligations issued by the United
States Postal Service, federal land banks or federal intermediate
credit banks established under the Federal Farm Loan Act, as amended,
debentures and consolidated debentures issued by the Central Bank
for Cooperatives and banks for cooperatives established under the
Farm Credit Act of 1933, as amended, consolidated obligations of the
Federal Home Loan Banks established under the Federal Home Loan Bank
Act, bonds, debentures and other obligations of the Federal National
Mortgage Association and of the Government National Mortgage
Association established under the National Housing Act as amended, in
the bonds of any federal home loan bank established under said act,
bonds, debentures, and other obligations of the Federal Home Loan
Mortgage Corporation established under the Emergency Home Finance Act
of 1970, and in bonds, notes, and other obligations issued by the
Tennessee Valley Authority under the Tennessee Valley Authority Act,
as amended.
(f) Bonds and notes of the California Housing Finance Agency
issued pursuant to Chapter 7 (commencing with Section 41700) of Part
3 of Division 31 of the Health and Safety Code.
(g) Promissory notes secured by first mortgages and first trust
deeds upon residential real property located in California, provided
that:
(1) Notwithstanding Section 16611, the promissory notes shall at
all times be in an amount in value at least 50 percent in excess of
the amount deposited with the savings and loan association;
(2) The State Treasurer issues regulations, establishes procedures
for determining the value of the promissory notes and develops
standards necessary to protect the security of the deposits so
collateralized;
(3) The depository may exercise, enforce, or waive any right or
power granted to it by promissory note, mortgage, or deed of trust;
and
(4) The following may not be used as security for deposits:
(i) Any promissory note on which any payment is more than 90 days
past due,
(ii) Any promissory note secured by a mortgage or deed of trust as
to which there is a lien prior to the mortgage or deed of trust, or
(iii) Any promissory note secured by a mortgage or deed of trust
as to which a notice of default has been recorded pursuant to Section
2924 of the Civil Code or an action has been commenced pursuant to
Section 725a of the Code of Civil Procedure.
(h) Bonds issued by the State of Israel.
(i) Letters of credit issued by the Federal Home Loan Bank of San
Francisco, which shall be in the form and shall contain provisions as
the Treasurer may prescribe, and shall include the following terms:
(1) The Treasurer shall be the beneficiary of the letter of
credit.
(2) The letter of credit shall be clean and irrevocable, and shall
provide that the Treasurer may draw upon it up to the total amount
in the event of the failure of the savings and loan association or
credit union or if the savings and loan association or credit union
refuses to permit the withdrawal of funds by the Treasurer or any
other authorized state officer or employee.

16613. If it appears to him or her necessary for the security of
the state, the Treasurer shall require as a condition of eligibility
that a savings and loan association or credit union furnish an
indemnity bond approved by the Treasurer, conditioned against loss by
any depreciation in value that may occur in securities deposited as
security for the safekeeping and prompt payment of deposits. The
sureties shall not be stockholders of the principal.

16614. In lieu of deposits of securities, any otherwise eligible
savings and loan association or credit union may deposit with the
Treasurer bonds of admitted surety insurers as security for demand
and time deposits.

16615. An admitted surety insurer is not eligible as surety for
deposits in any one savings and loan association or credit union in
amounts in excess of 10 percent of the capital and surplus of the
surety as shown in the preceding report issued by the United States
Treasury Department.

16616. On demand of the Treasurer, the Insurance Commissioner shall
issue a certificate showing the qualifications of any admitted
surety insurer as surety for deposits.

16617. The bond of an admitted surety insurer shall not be accepted
as security for deposits unless it has been certified by the
Insurance Commissioner as meeting the requirements of this chapter
and unless it also holds a certificate of authority from the United
States Treasury Department under which it is eligible as surety on
federal bonds.

16618. The form of bonds required under this chapter shall be
prescribed by the Attorney General.

16619. A surety upon any bond to secure deposits may terminate the
bond as to future liability by giving 10 days' written notice of
termination to the Treasurer. Such notice of termination shall not
affect any liability accruing prior to the expiration of the 10-day
period.
Within 10 days after receipt of such a notice of termination, the
Treasurer shall require other acceptable security or withdraw the
deposits secured by the bond to be terminated.

16620. That portion of any security for deposit that is in excess
of the requirements of this article may be withdrawn or released on
the written consent of the Treasurer.

16621. If any savings and loan association or credit union fails to
pay all or any part of deposits on demand of the Treasurer, pursuant
to the terms and conditions of the contract relating to the deposit
that is to be withdrawn in whole or in part, the Treasurer shall
forthwith recover upon or convert the security therefor into money
and disburse it according to law.

16622. If at any time the security deposited with the Treasurer is
not deemed satisfactory by the Treasurer, he may require such
additional security as is satisfactory to him.