Bill Expands Types of Deposits Eligible for Local Agencies
September 12, 2013
Local government agencies are now eligible to place surplus funds with banks in a reciprocal “deposit” service beyond just certificates of deposit as currently permitted.AB 279 was enacted in recognition that more deposit products have become available in the market that have the same characteristics as the CDARS program.In addition to existing legal criteria, the bill requires that a depository institution accepting such deposits must meet regulatory capital standards related to brokered deposits.The bill also places a 10% limit on deposits placed with any one private sector placement service, but the existing 30% surplus funds limit in CDARS is left unchanged. AB 279 is effective January 1, 2014 and sunsets on January 1, 2017. See CBA’s Regulatory Bulletin for more information.