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90_HB3233
New Act
Creates the Public Deposits Insurance Act. Creates the
Board for Depositories to insure the safekeeping and prompt
payment of all public funds deposited in any depository to
the extent they are not covered by insurance of any federal
deposit insurance agency, by maintaining and operating in its
own name the Public Deposits Insurance Fund, which is created
outside of the State treasury. Provides the powers, duties,
and membership of the Board. Provides for deposits into the
Fund by each depository in which public funds are held.
Provides for payments out of the Fund when a depository
closes.
LRB9010785KDdv
LRB9010785KDdv
1 AN ACT to create the Public Deposits Insurance Act.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the
5 Public Deposits Insurance Act.
6 Section 5. Creation of Board.
7 (a) There is created an independent body, politic and
8 corporate, constituting an instrumentality of the State for
9 the public purposes set out in this Act, to be known as the
10 Board for Depositories (the Board). The Board is separate
11 from the State in its corporate and sovereign capacity. The
12 purpose of the Board is to insure the safekeeping and prompt
13 payment of all public funds deposited into any depository, to
14 the extent they are not covered by insurance of any federal
15 deposit insurance agency, by maintaining and operating in its
16 own name the Public Deposits Insurance Fund (the Fund), which
17 is created outside of the State treasury.
18 (b) Every depository that accepts public funds that are
19 secured by the Fund shall pay into the Fund the assessments
20 provided in this Act and comply with all lawful requirements
21 of the Board for Depositories.
22 The Fund shall be maintained by the assessments payable
23 by the depositories and by the receipt of all interest and
24 other earnings of the Fund from any source.
25 (c) All property in the Fund, the interest or income
26 derived from it or through its use, and all property
27 otherwise held by the Board under this Act is exempt from all
28 taxes imposed by the State or any political subdivision.
29 Section 10. Membership of the Board.
30 (a) The Board shall consist of the Governor, the State
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1 Treasurer, the Auditor General, the Commissioner of Banks and
2 Real Estate, or their designees, and 5 public members
3 appointed by the Governor, all of whom must be residents of
4 Illinois and have had substantial expertise in commercial
5 lending with depositories. At least 3 of the appointees must
6 represent the 2 banking and thrift trade associations in the
7 State. No more than 3 of the 5 appointees may identify with
8 the same political party. The terms of the appointed members
9 extend for 4-year periods. Each appointed member holds office
10 for the term of this appointment and serves after the
11 expiration of that appointment until the member's successor
12 is appointed and qualified.
13 (b) The officers of the Board consist of a chairman, a
14 secretary-investment manager, a vice chairman, and other
15 officers the Board determines to be necessary. The Governor
16 shall name a member of the Board to serve as its chairman.
17 The Board, by majority vote, shall elect the other officers.
18 Officers, except the secretary-investment manager, shall be
19 named or elected for one year terms in January of each year.
20 The members and officers of the Board are not entitled to any
21 compensation for their services but are entitled to
22 reimbursement for actual and necessary expenses on the same
23 basis as State employees.
24 (c) Five members of the Board constitute a quorum for
25 the transaction of business, and all actions of the Board
26 must be approved by at least 5 members. The Board may adopt,
27 amend, or repeal bylaws and rules for the conduct of its
28 meetings and for the number and times of its meetings, and
29 shall hold regular and special meetings as prescribed in its
30 rules. All meetings of the Board are open to the public and
31 all records of the Board are subject to public inspection.
32 (d) Ten days notice of the time and place of all
33 meetings to determine and fix the assessment rate to be paid
34 by depositories on account of insurance on public funds or
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1 the establishment or redetermination of the reserve for
2 losses of the fund shall be given by a publication in a
3 newspaper of general circulation printed and published in
4 Springfield and a publication in a newspaper of general
5 circulation printed and published in Chicago. The time,
6 place, notice, and waiver requirements for the members of the
7 Board for all meetings shall be determined by its rules. The
8 secretary-investment manager of the Board shall enter its
9 proceedings at length in a record provided for that purpose,
10 and the records of the proceedings shall be approved and
11 signed respectively by the chairman or vice chairman and
12 attested by the secretary-investment manager.
13 Section 15. Powers of the Board; public access to
14 records.
15 (a) The Board exercises essential public functions, and
16 has a perpetual existence. The Board has all powers
17 necessary, convenient, or appropriate to carry out and
18 effectuate its public and corporate purposes, including but
19 not limited to the following:
20 (1) Adopt, amend, and repeal bylaws and rules
21 consistent with this Act to regulate its affairs and to
22 effect the powers and purposes of the Board.
23 (2) Adopt its budget on a calendar year or fiscal
24 year as it shall determine.
25 (3) Sue and be sued in its own name.
26 (4) Have an official seal and alter it at will.
27 (5) Maintain an office or offices at a place or
28 places within Springfield or Chicago as it may designate.
29 (6) Make and execute contracts and all other
30 instruments with either public or private entities.
31 (7) Communicate with the employees of the Illinois
32 Development Finance Authority to the extent reasonably
33 desirable in working on a guarantee of an industrial
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1 development obligation or credit enhancement obligation.
2 (8) Deposit all uninvested funds of the Fund in a
3 separate account or accounts in financial institutions
4 that are designated as depositories to receive State
5 funds. The money in these accounts shall be paid out of
6 checks signed by the chairman or other officers or
7 employees of the Board as it shall authorize.
8 (9) Take any other act necessary or convenient for
9 the performance of its duties and the exercise of its
10 powers and functions under this Act.
11 (b) In enforcing any obligation of the borrower or any
12 other person under the documents evidencing a guarantee, the
13 Board may (i) renegotiate the guarantee, (ii) modify the rate
14 of interest, term of the industrial development obligation or
15 credit enhancement obligation, payment of any installment of
16 principal or interest, or any other term of any documents,
17 (iii) settle any obligation on the security or receipt of
18 property or the other terms as in its discretion it deems
19 advantageous to the Fund, and (iv) take any other action
20 necessary or convenient to such enforcement.
21 Section 20. The secretary-investment manager.
22 (a) The secretary-investment manager shall administer,
23 manage, and direct the affairs and activities of the Board
24 under the policies and under the control and direction of the
25 Board. In carrying out these duties, the secretary-investment
26 manager has the power to do the following:
27 (1) Approve all accounts for salaries and allowable
28 expenses of the Board, including, but not limited to:
29 (A) the employment of general or special
30 attorneys, consultants, and employees and agents as
31 may be necessary to assist the secretary-investment
32 manager in carrying out the duties of that office
33 and to assist the Board in its consideration of
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1 applications for a guarantee of an industrial
2 development obligation or credit enhancement
3 obligation guarantee; and
4 (B) the setting of compensation of persons
5 employed under paragraph (A).
6 (2) Approve all expenses incidental to the
7 operation of the Fund.
8 (3) Perform other duties and functions that may be
9 delegated to the secretary-investment manager by the
10 Board or that are necessary to carry out the duties of
11 the secretary-investment manager under this Act.
12 (b) The secretary-investment manager shall keep a record
13 of the proceedings of the Board, and shall maintain and be
14 custodian of all books, documents, and papers filed with the
15 Board, and its official seal. The secretary-investment
16 manager may make copies of all minutes and other records and
17 documents of the Board, and may give certificates under seal
18 of the Board to the effect that the copies are true copies.
19 All persons dealing with the Board may rely upon the
20 certificates.
21 Section 25. Assessment rate; determination and fixing.
22 (a) Subject to the limitations prescribed in this Act,
23 the Board may fix the assessment rate to provide assets in
24 the Fund sufficient to equal the reserve for losses of the
25 Fund for the insurance of public funds on deposit in
26 depositories. Effective on July 1, and January 1, of each
27 year, the Board shall determine and fix the fair and
28 reasonable assessment rate for each classification of
29 deposit, if any, to be used by depositories in determining
30 the assessments payable during the succeeding 6-month period.
31 This determination shall be made by the Board before or as
32 soon as practicable after the applicable July 1, or January
33 1. In fixing the rate, if any, the Board shall consider the
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1 amount of public funds currently on deposit, the liabilities
2 of the Fund, contingent and accrued, and the determination of
3 the Board on the amount of the reserve for losses of the Fund
4 as set out in subsection (b) of Section 35 of this Act. For
5 any 6-month period the maximum assessment rate that may be
6 fixed by the Board is 2%. The Board may lower or waive the
7 assessment on any or all classifications of deposit if in its
8 discretion it determines that a lower rate or waiver will not
9 prevent the Fund from attaining sufficient assets to equal
10 the reserve for losses. If, at the beginning of any 6-month
11 period, no action has been taken by the Board fixing the
12 assessment rate, if any, on public funds for the succeeding
13 6-month period, the assessment rate is the same rate, if any,
14 in effect during the preceding 6-month period. Whenever as of
15 July 1 or January 1, the value of the assets in the Fund
16 equals or exceeds the reserve for losses, the Board shall
17 eliminate the assessment requirement for the succeeding
18 6-month period for each classification of deposit.
19 (b) During any period when an assessment rate is in
20 effect, the assessment base for each depository of public
21 funds shall be determined monthly. The assessment base must
22 be equal to the sum total of all the minimum balances of each
23 classification of public funds on deposit in each and all
24 accounts during the month, the minimum balance of each
25 account being taken respectively as of the date on which it
26 occurs. On or before the second day of each month in which an
27 assessment rate is in effect, each depository shall compute
28 the amount of the assessment due from it to the Fund on
29 account of public funds on deposit with it during the
30 preceding month. The amount of the monthly assessment, if
31 any, is the product obtained by multiplying 1/12 times the
32 assessment base for the month for which the assessment is
33 being computed.
34 (c) During any time the assessment rate on public funds
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1 has been waived or eliminated by the Board, the respective
2 depositories are not obligated to pay any assessment but
3 shall continue to prepare and file the reports that would
4 otherwise be required to be prepared and filed under this
5 Act.
6 Section 30. Monthly reports.
7 (a) On or before the fifth day of each month, every
8 depository that had public funds on deposit with it during
9 the preceding month shall:
10 (1) file with the Board a certified report under
11 oath showing for the preceding month the amount of the
12 assessment base and the amount of the monthly assessment
13 due the Fund, as determined under Section 25; and
14 (2) pay the Fund the amount of the monthly
15 assessment it is required to certify.
16 The Board may waive all or part of the reporting
17 requirement under this Section during any period when the
18 Board does not levy an assessment.
19 (b) If any depository fails to pay the Fund on or before
20 the fifth day of each monthly period the full assessment due
21 from it for the preceding monthly period on account of public
22 funds deposited with it, the depository is liable for double
23 the assessment. This amount may be recovered in any court of
24 competent jurisdiction in a civil action by the State on the
25 relation of the Board.
26 (c) The State Treasurer, with the approval of the
27 attorney general, shall prepare and prescribe the forms of
28 reports required by this Section.
29 Section 40. The Public Deposit Insurance Fund.
30 (a) The Board shall manage and operate the Fund. All
31 expenses incident to the administration of the Fund shall be
32 paid out of the money accumulated in it subject to the
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1 direction of the Board.
2 (b) Before January 1 and July 1 of each year, the Board
3 shall redetermine the amount of the reserve to be maintained
4 by the Fund. The establishment or any change in the reserve
5 for losses shall be determined by the Board based on a study
6 to be made or updated by actuaries, economists, or other
7 consultants based on the history of losses, earnings on the
8 funds, conditions of the depositories, economic conditions
9 affecting particular depositories or depositories in general,
10 and any other factors that the Board considers relevant in
11 making its determination. The reserve determined by the Board
12 must be sufficient to ensure the safekeeping and prompt
13 payment of public funds to the extent they are not covered by
14 insurance of any federal deposit insurance agency.
15 (c) At the end of each biennial period during which
16 depositories have had public funds on deposit under this Act
17 and paid the assessments levied by the Board, the Board shall
18 compute its receipts from assessments and all other sources
19 and its expenses and losses and determine the profit derived
20 from the operation of the Fund for the period. Until the
21 amount of the reserve for losses has been accumulated, all
22 assessments levied for a biennial period shall be retained by
23 the Fund. The amount of the assessments, if any, levied by
24 the Board shall, to the extent the Fund exceeds the reserve
25 for losses at the end of a biennial period commencing July 1
26 of each odd year, be distributed to the depositories that had
27 public funds on deposit during the biennial period in which
28 the assessments were paid. The distribution shall be made to
29 the respective depositories in the proportion that the total
30 assessments paid by each depository during that period bears
31 to the total assessments then paid by all depositories. A
32 distribution to which any closed depository would otherwise
33 be entitled shall be set off against any claim that the Fund
34 may have against the closed depository.
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1 (d) The Board may invest, reinvest, and exchange
2 investments of the Fund in excess of the cash working balance
3 in authorized investments as prescribed in Section 2 of the
4 Public Funds Investment Act except that the Board may not
5 invest, reinvest, or exchange investments of the Fund in a
6 Public Treasurers' Investment Pool.
7 Section 45. Illinois Development Finance Authority. With
8 regard to direct obligations of the Illinois Development
9 Finance Authority that have been issued in conjunction with
10 an industrial development project undertaken by the
11 Authority, including those obligations that are guaranteed by
12 the Board under this Act, the Board may upon the request of
13 the Authority permit a subordination of any valid security
14 agreement, mortgage, combinations thereof, or other
15 appropriate document securing the direct obligations, if the
16 Board in its discretion determines that the subordination is
17 reasonably necessary to accomplish the objectives of the
18 industrial development project.
19 Section 50. Closed depository; payments to public
20 officers of public funds deposited.
21 (a) Whenever any depository becomes a closed depository,
22 the Board shall, as soon as possible and upon the conditions
23 prescribed in this Section, make payment from the Fund to the
24 proper public officers of all public funds that were
25 deposited in the closed depository in the manner required by
26 this Act. These payments shall be made only to the extent the
27 public funds are not covered by insurance of any federal
28 deposit insurance agency.
29 (b) For the purpose of determining the sums to be paid
30 on account of public funds in any closed depository, the
31 Department of Financial Institutions shall ascertain the
32 amount of public funds on deposit in any closed depository as
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1 disclosed by the records, and certify the amounts to the
2 Attorney General, Auditor General, the several public
3 officers who have public funds on deposit, and the Board,
4 which then constitutes a claim on the Fund. The certification
5 shall be made within 20 days after its special representative
6 has taken charge of the business and property of any closed
7 depository, or the receiver of any national banking
8 association or State chartered banks within 20 days after
9 appointment.
10 (c) Within 10 days after the receipt of a certification
11 under subsection (b), the several public officers who have
12 public funds on deposit in the closed depository shall
13 furnish to the Attorney General and the Auditor General:
14 (1) verified statements of the amount of the public
15 funds on deposit in the closed depository, as disclosed
16 by their records;
17 (2) certified copies of the resolution or
18 resolutions under which the deposits were made; and
19 (3) any other information requested.
20 Section 55. Amount of public funds in closed depository.
21 (a) After the receipt of the certificate and statements
22 required by Section 50, the Attorney general and the Auditor
23 General shall ascertain and fix the amount of public funds in
24 the closed depository deposited in the manner required by
25 this Act. The amount of public funds deposited contrary to
26 the requirements of this Act are not insured by this Act.
27 (b) The Attorney General and the Auditor General shall,
28 within 60 days after the receipt of the certificate and
29 statements, send a copy of their decision by registered mail
30 to the several public officers who have filed statements and
31 to the Department of Financial Institutions, or to the
32 receiver if the closed depository is a national banking
33 association.
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1 (c) The Department of Financial Institutions or the
2 receiver shall cause notice of the decision to be published
3 by one publication in a newspaper of general circulation in
4 the county where the closed depository is situated. This
5 notice must be under the heading "Notice to Depositors of
6 _______" (inserting the name of the closed depository). The
7 costs of the publication shall be charged to the liquidation
8 expense of the closed depository.
9 (d) Except as otherwise provided in this Act, the
10 decision of the Attorney General and the Auditor General, if
11 they agree, is final, and has the same force as a final
12 judgment of a court. However, if any depositor of the closed
13 depository, within 10 days after the publication of the
14 notice required by this Section, files objections to that
15 decision in writing in any court competent to determine
16 matters concerning the closed depository, the Auditor General
17 shall withhold payment of the claim until the objections are
18 determined by the court.
19 (e) If the Attorney General and Auditor General do not
20 send a copy of their decision to the Department of Financial
21 Institutions or to the receiver of the national banking
22 association within the time required by this Section, or if
23 objections in writing are made as provided in this Section,
24 the Department of Financial Institutions or any receiver or
25 any treasurer or other person having funds on deposit in the
26 closed depository may petition any court competent to hear
27 and determine matters pertaining to the liquidation of the
28 closed depository and to determine the amount of public funds
29 deposited in the manner required by this Act. The court
30 shall, without delay, hear and determine the issues presented
31 by the petition and enter judgment accordingly.
32 Section 60. Payment of amount determined; subrogation of
33 Board.
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1 (a) Whenever the decision of the Attorney General and
2 Auditor General has become final, or whenever a court of
3 competent jurisdiction as provided in Section 55 has
4 determined the amount payable from the Fund on account of
5 public funds deposited in the closed depository, the Board
6 shall cause the amount to be paid to the Treasurer or public
7 officer out of the Fund.
8 (b) After payment is made under subsection (a), the
9 Board, on behalf of the Fund, is then subrogated to all of
10 the right, title, and interest of the depositor of the public
11 funds for the amount of the depository's claim against any
12 federal deposit insurance agency and against the closed
13 depository. The Board is subrogated to the extent that the
14 Fund has paid the loss not reimbursed by the insurance. The
15 Board is entitled to share in the distribution of the assets
16 of the closed depository on the basis ratably with other
17 depositories, but the Fund shall be paid in full before any
18 distribution is made on account of public funds not insured
19 under the terms of this Act. The Board shall pay any sum or
20 sums received from any distribution into the Fund.
21 Section 65. Anticipatory warrants; issuance; obligation
22 of Board.
23 (a) Whenever the assets in the Fund are not sufficient
24 to pay the claims of any kind that have been finally
25 determined and have become payable, the Board shall issue
26 anticipatory warrants for the purpose of raising money for
27 the immediate payment of the claims. The warrants outstanding
28 and unpaid must not at any time exceed the sum of $1,500,000.
29 Interest may be paid upon the warrants from the date the rate
30 was established by the Board. Interest is payable at the end
31 of each year or for a shorter period as the warrants remain
32 unpaid.
33 (b) The warrants are the obligation of the Board payable
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1 out of the Fund only and do not constitute a debt, liability,
2 or obligation of the State or a pledge of the faith and
3 credit of the State. Each warrant must have printed on its
4 face the words, "This warrant is an obligation of the Board
5 for Depositories payable solely out of the Public Deposits
6 Insurance Fund, and neither the faith and credit nor the
7 taxing power of the State is pledged to the payment of the
8 principal, the interest, or any other amount owed on the
9 warrants.".
10 (c) Subject to the limitations in subsections (a) and
11 (b), the warrants shall be issued in the individual and gross
12 amounts and in the form and at the rate of interest approved
13 by the Board.
14 Section 70. Anticipatory warrants; sale; proceeds.
15 (a) The secretary-investment manager on behalf of the
16 Board has the powers and duties set out in this Section and
17 Section 75 of this Act and shall sell all anticipatory
18 warrants issued under this Act at a price not less than par
19 plus accrued interest. The proceeds of the sale of the
20 warrants shall be paid into the Fund and shall be applied
21 exclusively to the payment of the claims on account of which
22 the warrants were issued.
23 (b) Any person may file an application with the
24 secretary-investment manager for an allotment of a definite
25 amount of the warrants. The secretary-investment manager
26 shall then apportion to the several applicants an amount of
27 warrants as the secretary-investment manager sees fit, but no
28 allotments shall be made in an amount less than $2,000.
29 (c) The secretary-investment manager shall make and
30 retain in the secretary-investment manager's office a
31 complete record of all warrants sold to each purchaser and of
32 the post office address of the purchaser. Purchasers of
33 warrants may notify the secretary-investment manager of their
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1 post office addresses, or of any change in their addresses,
2 and of the warrants owned or held by them, and the
3 secretary-investment manager shall change the secretary-
4 investment manager's sale record accordingly.
5 Section 75. Anticipatory warrants; payment; unpaid
6 warrants.
7 (a) All anticipatory warrants and all interest on the
8 warrants shall be payable by the secretary-investment manager
9 solely from the money paid into the Fund and the money is,
10 except for the payment of expenses incident to the operation
11 of the Fund, exclusively and irrevocably pledged to the
12 payment of all warrants in the consecutive order in which
13 they were issued. The warrants, as to interest as well as
14 principal, shall be paid out of the money in the Fund before
15 the payment of any claims that may arise and be finally
16 determined subsequent to the issue and sale of any warrants
17 or series of warrants.
18 (b) When any warrant or series of warrants is
19 outstanding and unpaid, the secretary-investment manager
20 shall, when the secretary-investment manager has money in the
21 Fund sufficient to pay a reasonable amount of the outstanding
22 and unpaid warrants, notify the persons who, according to the
23 secretary-investment manager's record, hold the warrants or
24 warrants then payable. The secretary-investment manager shall
25 mail each notice to the post office address of the person as
26 shown by the records of sale. The notice must state that the
27 warrant or warrants will be paid on presentation, and that
28 interest will cease after the expiration of 10 days from the
29 mailing of the notice. At the expiration of the 10-day
30 period, interest ceases on the warrant or warrants.
31 Section 80. Shortage of assets in the Fund; substitution
32 of other security.
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1 (a) At any time when the Board determines that the
2 assets of the Fund are insufficient to pay its liabilities,
3 accrued or contingent, or determines that the assessments due
4 or to become due will not be sufficient to maintain the Fund
5 in a solvent condition and insure the safekeeping and prompt
6 payment of public funds, the Board may enter an order
7 requiring all then constituted depositories to substitute
8 other security to secure the safekeeping and prompt payment
9 of public funds.
10 (b) The Board may require all then constituted
11 depositories to deliver and pledge to the State Board of
12 Investments, under the conditions for joint control of the
13 collateral by the depositories as may be approved by the
14 Board, bonds or other obligations of like character as those
15 in which the Board is authorized to invest the excess funds
16 of the Fund. The market value of these securities, at the
17 time of delivery, must equal the amount of public funds then
18 on deposit with the respective depositories. The Board may
19 require depositories to pledge acceptable securities to such
20 an extent that the market value of the pledge will at all
21 times be substantially equal to the amount of public funds on
22 deposit in the respective depositories.
23 (c) Whenever an order is in force and the amount of
24 public funds on deposit is at least 10% less than the market
25 value of securities pledged to secure the payment, the
26 depository may withdraw the excess amount of pledged
27 collateral.
28 (d) Any order of the Board applies equally to all
29 depositories and becomes effective within the time fixed by
30 the Board. However, the time of effectiveness must not be
31 earlier than 30 days from the date of entry of the order by
32 the Board. The order shall continue in force until rescinded
33 by the Board. Upon the entry of any order by the Board, all
34 then constituted depositories shall comply with the order.
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1 Upon compliance, and full payment of all its liabilities by
2 the Fund, depositories shall not be required to pay any
3 further assessments for insurance under this Act until the
4 order requiring collateral has been revoked or rescinded and
5 the collateral returned to the respective depositories.
6 Section 85. Reopening or reorganization of closed
7 depositories.
8 (a) If in any closed depository there are public funds
9 of the State or of any political subdivision, the State
10 Treasurer may, if the public funds belong to the State, and
11 the public officer who has charge of the public funds of any
12 political subdivision may, join with other depositors of the
13 closed depository in a plan for reopening or the
14 reorganization of the closed depository.
15 (b) The State Treasurer may bind the State, or any
16 proper local officer may bind the political subdivision, as
17 the case may be, after being authorized, as provided in this
18 Act, in accordance with the terms of the plan for reopening
19 or reorganization.