| (a) A participating depository institution must enter into a binding collateral security agreement with each public entity to secure public deposits. (b) A participating depository institution is responsible for pledging sufficient collateral when public deposits are received, and for maintaining sufficient collateral at all times. A depository institution must use its best efforts to pledge collateral at the same time it receives a deposit of public funds, but no later than the close of business on the same day of the deposit. Collateral is not required for deposits to the extent that the deposits are insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund. The comptroller will apply the full amount of federal deposit insurance coverage for a public entity to determine the amount of collateral required to secure the deposit of public funds in the program. (c) A participating depository institution is required to pledge acceptable collateral with a custodian trustee qualified to act under Government Code, §2257.104(c) or §2257.041(d) to secure the deposits of public funds. The custodian trustee shall properly identify and hold the pledged collateral in trust for the benefit of the public entities participating in the depository institution's specific pooled custodian account in the pooled collateral program. (d) A participating depository institution may pledge its pooled collateral to more than one participating public entity under contract with the participating depository institution. The collateral security may be pledged using a single custodial account instead of an account for each public entity. (e) Each participating depository institution's collateral may not be combined, cross-collateralized with, or aggregated with, or pledged to any other depository institution's collateral pools. (f) The custodian trustee may either keep all collateral pledged for the benefit of the program in one identifiable pooled collateral account or in an account in the name of the participating depository institution where the collateral is clearly pledged and identified for the pooled collateral program using a unique code reporting system. (g) The security interest for a participating depository institution's pledge of collateral is created, attaches, and is perfected when the custodian trustee records the pledge on its books and records and issues a trust receipt. (h) The custodian trustee is for all purposes the bailee or agent of the public entity depositing the public funds as part of the pooled collateral program. |
