§ 35-10.1-3 - Securing of deposits. - Rhode Island Statutes

SECTION 35-10.1-3

   § 35-10.1-3  Securing of deposits. –(a) Every qualified public depository shall, at a minimum insure or pledgeeligible collateral equal to one hundred percent (100%) of public depositswhich are time deposits with maturities greater than sixty (60) days, and whichwere maintained with that depository institution as of October 1, 1991;provided, that any qualified depository institution which does not meet itsminimum capital standard as prescribed by its federal regulator shall insure orpledge eligible collateral equal to one hundred percent (100%) of all publicdeposits maintained with that depository institution as of October 1, 1991. Theamount of eligible collateral required shall be determined when funds aredeposited for time deposits, and at the end of each month for demand deposits.The amount of required insurance shall be determined in accordance with §35-10.1-8.

   (b) All eligible collateral shall be designated as securityfor public deposits under this chapter and shall be segregated from thedepository institution's other assets, by:

   (1) Depositing the collateral in a custodial account at thefederal reserve bank or federal home loan bank for the district in which thequalified depository institution is located;

   (2) Depositing the collateral in a custodial account in thequalified depository institution's trust department or in the trust departmentof another qualified depository institution; provided, that the terms underwhich the collateral is to be held are set forth in a written custodialagreement; and provided, further, that no creditor of the depositoryinstitution that pledged the collateral may have or obtain rights in thecollateral that are superior to the rights of the public depositor; or

   (3) When the collateral is held in book entry form, notifyingthe custodian of the collateral that it has been pledged as collateral for apublic deposit.

   (c) If eligible collateral has been designated and segregatedas provided in this section, the public depositor shall be deemed to have aperfected security interest therein.

   (d) The qualified depository institution shall deliver to thegeneral treasurer, municipal finance officer, or chief financial officer apower of attorney authorizing the general treasurer, municipal finance officer,or chief financial officer to transfer or liquidate these securities in theevent of default, financial failure, or insolvency of a depository institution.