Senate Bill No. 211

(By Senators Helmick, Ross, Minard, Fanning, Sharpe,

Schoonover and Sprouse)

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[Introduced January 26, 1999;

referred to the Committee on Banking and Insurance.]

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A BILL to amend and reenact section five, article six, chapter five of the code of West Virginia, one thousand nine hundred thirty-one, as amended; to amend and reenact section two, article six, chapter seven of said code; and to amend and reenact section four, article one, chapter twelve of said code, all relating to the inclusion of letters of credit issued by federal land banks, or federal loan banks, or such letters of credit approved by the state treasurer as permissible collateral security for bonds to be given by depositories of public funds.

Be it enacted by the Legislature of West Virginia:
That section five, article six, chapter five of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; that section two, article six, chapter seven of said code be amended and reenacted; and that section four, article one, chapter twelve of said code be amended and reenacted, all to read as follows:
CHAPTER 5. GENERAL POWERS AND AUTHORITY OF THE GOVERNOR,

SECRETARY OF STATE AND ATTORNEY GENERAL; BOARD

OF PUBLIC WORKS; MISCELLANEOUS AGENCIES, COMMISSIONS,

OFFICES, PROGRAMS, ETC.

ARTICLE 6. STATE BUILDING COMMISSION.
§5-6-5. Deposit and disbursement of funds of commission; security for deposits; audits.

Except as provided in sections five-a and eleven-a of this article, all moneys of the commission from whatever source derived shall be paid to the treasurer of the state of West Virginia who shall not commingle the moneys, but shall deposit them to a special revenue fund to be known as the "state building commission fund.". The moneys in the account shall be impressed with and subject to the lien or liens on the moneys in favor of the bondholders provided in the proceedings for issuance of bonds pursuant to this article. The moneys in the account shall be paid out on check of the treasurer on requisition of the chairman of the commission, or of such other person as the commission may authorize to make the requisition. All deposits of the moneys shall, if required by the treasurer or the commission, be secured by obligations of the United States, of the state of West Virginia, or of the commission, of a market value equal at all times to the amount of the deposit, or letters of credit of the federal land banks, or federal home loan banks, or other letters of credit approved by the treasurer, and all banking institutions are authorized to give such security for the deposits. The legislative auditor and his or her legally authorized representatives are hereby authorized and empowered from time to time to examine the accounts and books of the commission, including its receipts, disbursements, contracts, leases, sinking funds, investments and any other matters relating to its financial standing.
CHAPTER 7. COUNTY COMMISSIONS AND OFFICERS.

ARTICLE 6. COUNTY DEPOSITORIES.

§7-6-2. Bond of depositories.

No such designation shall be binding on such any county, nor shall any public money be deposited thereunder, until the banking institution designated shall execute bond with good and sufficient sureties, to be accepted and approved by the county court commission, payable to the state of West Virginia, in such a sum as the county court commission shall direct, and which shall not be less than the maximum sum that shall be deposited in the depository at any one time. Such 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 such business within the state, satisfactory to, and acceptable by the county court commission, and having not less than six hundred thousand dollars capital; and such 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 such 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, however, That the clerk of the county court commission shall keep a record of each surety on all personal bonds given as hereinbefore provided for, and the clerk shall notify the county court commission of every recorded conveyance of real estate made by any surety on said personal bond.
An action shall lie on such the bond at the instance of the county court 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. Such A bond shall not be accepted by the county court commission until it shall have 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 indorsed thereon: Provided, however, That the county court commission may, in lieu of the bond provided for 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 indorsed 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 such other letters of credit approved by the treasurer; the face value of which securities shall not be less than the sum hereinbefore specified as the amount to be named in the bond in lieu of which such the securities are accepted; or the county court commission may accept such 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, such the acceptance of securities as partial security, and the extent thereof, shall be set forth. The hypothecation of such 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 such the securities shall be delivered to or deposited for the account of the county court commission, and withdrawal or substitution thereof may be permitted from time to time upon approval by the county court commission by order or record, but such the collateral security shall be released only by order of record of the county court 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 such the hypothecated securities are delivered to the county court 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 court commission may permit the deposit under proper receipt of such the securities with one or more banking institutions within or without the state of West Virginia and may contract with any such institution for safekeeping and exchange of any such hypothecated securities, and may prescribe the rules and regulations for handling and protecting the same.
CHAPTER 12. PUBLIC MONEYS AND SECURITIES.

ARTICLE 1. STATE DEPOSITORIES.

§12-1-4. Bonds to be given by depositories.
Before allowing any money to be deposited with any eligible depository in excess of the amount insured by an agency of the federal government, the state treasurer shall require the depository to give a collaterally secured bond, in the amount of not less than ten thousand dollars, payable to the state of West Virginia, conditioned upon the prompt payment, whenever lawfully required, of any state money, or part thereof, that may be deposited with that depository, or of any accrued interest on deposits. The bond shall be a continuous bond but may be increased or decreased in amount or replaced by a new bond with the approval of the state treasurer. The collateral security for the bond shall consist of bonds of the United States, or bonds or letters of credit of the federal land banks, of the federal home loan banks, or bonds of the state of West Virginia or of any county, district or municipality of this state, or other bonds, letters of credit, or securities approved by the treasurer. All bonds so secured are here designated as collaterally secured bonds. Withdrawal or substitution of any collateral pledged as security for the performance of the conditions of such the bond may be permitted with the approval in writing of the treasurer. All depository bonds shall be recorded by the treasurer in a book kept in his or her office for the purpose, and a copy of the record, certified by the treasurer, shall be prima facie evidence of the execution and contents of the bond in any suit or legal proceeding. All collateral securities shall be delivered to or deposited for the account of the treasurer of the state of West Virginia, and in the event said securities are delivered to the treasurer, he or she shall furnish a receipt therefor to the owner thereof. The treasurer and his or her bondsmen shall be liable to any person for any loss by reason of the embezzlement or misapplication of the securities by the treasurer or any of his or her employees, and for the loss thereof due to his or her negligence or the negligence of his or her employees; and the securities shall be delivered to the owner thereof when liability under the bond which they are pledged to secure has terminated. The treasurer may permit the deposit under proper receipt of the securities with one or more banking institutions within or outside the state of West Virginia and may contract with any such institution for safekeeping and exchange of any such collateral securities, and may prescribe the rules and regulations for handling and protecting the collateral securities.
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(NOTE: The purpose of this bill is to provide for the expansion of the types of collateral security to be given by depositories of public funds.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.)