Notice of Intent to Amend Regulations
Text of Proposed Regulations:
Section 1. Section 36a-332-1 of the Regulations of Connecticut State Agencies is amended to read as follows:
[As used in sections 36a-332-1 to 36a-332-8, inclusive, and sections 36a-333-1 and 36a-333-2 of the Regulations of Connecticut State Agencies:
(1) “Commissioner” means the commissioner of banking. With respect to any function of the commissioner, “commissioner” includes any person authorized or designated by the commissioner to carry out that function.
(2) “Eligible collateral” means (A) United States treasury bills, notes and bonds, (B) United States government agency securities, (C) United States agency variable-rate securities, (D) mortgage pass-through or participation certificates or similar securities, (E) performing one-to-four family residential mortgage loans that meet the following criteria: (i) The mortgage loan has a loan-to-value ratio which is less than or equal to eighty per cent for loans without private mortgage insurance, or a loan-to-value ratio which is less than or equal to ninety-five per cent for loans with private mortgage insurance; and (ii) the mortgage loan has a payment history of not more than one payment over thirty days in arrears during the past twelve consecutive months or, if the loan has a payment history of less than twelve months in duration, the loan meets the documentation requirements of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation; provided, in the case of a subsequent default under any such mortgage loan that continues uncured for more than sixty days, such loan shall no longer qualify as eligible collateral and shall be replaced by a performing mortgage loan that meets the criteria set forth in this subsection, and (F) state and municipal bonds.
(3) “Financial institution” means a bank, Connecticut credit union, federal credit union or an out-of-state bank that maintains in this state a branch as defined in section 36a-410 of the Connecticut General Statutes.
(4) “Public deposit” means (A) moneys of this state or of any governmental subdivision of this state or any commission, committee, board or officer thereof, any housing authority or any court of this state and (B) moneys held by the judicial department in a fiduciary capacity.
(5) “Qualified public depository” or “depository” means a bank, Connecticut credit union, federal credit union or an out-of-state bank that maintains in this state a branch as defined in section 36a-410 of the Connecticut General Statutes, which receives or holds public deposits and segregates eligible collateral for public deposits as described in section 36a-333 of the Connecticut General Statutes.]
AS USED IN SECTIONS 36a-332-2 TO 36a-332-8, INCLUSIVE, AND SECTIONS 36a-333-1 AND 36a-333-2 OF THE REGULATIONS OF CONNECTICUT STATE AGENCIES:
(1) “COMMISSIONER” MEANS “COMMISSIONER” AS DEFINED IN SECTION 36a-2 OF THE CONNECTICUT GENERAL STATUTES;
(2) “ELIGIBLE COLLATERAL” MEANS “ELIGIBLE COLLATERAL” AS DEFINED IN SECTION 36a-330 OF THE CONNECTICUT GENERAL STATUTES;
(3) “FINANCIAL INSTITUTION” MEANS “FINANCIAL INSTITUTION” AS DEFINED IN SECTION 36a-330 OF THE CONNECTICUT GENERAL STATUTES;
(4) “NET WORTH” MEANS, IN THE CASE OF A CONNECTICUT CREDIT UNION, “NET WORTH” AS DEFINED IN SECTION 36a-441a OF THE CONNECTICUT GENERAL STATUTES AND, IN THE CASE OF A FEDERAL CREDIT UNION, “NET WORTH” AS DEFINED IN 12 CFR 702.2;
(5) “PUBLIC DEPOSIT” MEANS “PUBLIC DEPOSIT” AS DEFINED IN SECTION 36a-330 OF THE CONNECTICUT GENERAL STATUTES;
(6) “QUALIFIED PUBLIC DEPOSITORY” OR “DEPOSITORY” MEANS “QUALIFIED PUBLIC DEPOSITORY” OR “DEPOSITORY” AS DEFINED IN SECTION 36a-330 OF THE CONNECTICUT GENERAL STATUTES; AND
(7) “TOTAL ASSETS” MEANS “TOTAL ASSETS” AS DEFINED IN 12 CFR 702.2.
Sec. 2. Section 36a-332-2 of the Regulations of Connecticut State Agencies is amended to read as follows:
In order to qualify as a qualified public depository, a financial institution shall:
(1) Have its principal office in Connecticut, except in the case of an out-of-state bank that maintains in this state a branch as defined in section 36a-410 of the Connecticut General Statutes.
(2) In the case of a Connecticut credit union, comply with the [reserve requirements] NET WORTH REQUIREMENT of section [36a-458] 36a-441a of the Connecticut General Statutes.
(3) In the case of a federal credit union, comply with the [reserve requirements] NET WORTH REQUIREMENT of [12 C.F.R. Sections 700.1, 702.2 and 702.3] 12 CFR 702.
(4) Have assets which shall at all times exceed its liabilities.
Sec. 3. Section 36a-332-4 of the Regulations of Connecticut State Agencies is amended to read as follows:
No financial institution shall accept a transfer of eligible collateral from a qualified public depository pursuant to [section 36a-333(b)] SUBSECTION (b) OF SECTION 36a-333 of the Connecticut General Statutes unless such financial institution [(a)] (1) is authorized under law to exercise fiduciary powers in this state, [(b)] (2) meets the requirements of [Sections (a) through (d)] SECTION 36a-332-2 OF THE REGULATIONS OF CONNECTICUT STATE AGENCIES, as applicable, and [(c)] (3) is federally insured or receives the approval of the commissioner. If a financial institution ceases to meet such requirements, it shall give immediate notice to the qualified public depository and the commissioner [,] who shall thereupon instruct such institution with respect to the disposition of eligible collateral.
Sec. 4. Section 36a-332-5 of the Regulations of Connecticut State Agencies is amended to read as follows:
(a) Prior to the transfer of eligible collateral to a financial institution serving as trustee or the designation of collateral already in the custody of such financial institution as eligible collateral, the qualified public depository shall receive written confirmation in the form of a certified notice from such financial institution that it is in compliance with section 36a-332-4 of [these regulations] THE REGULATIONS OF CONNECTICUT STATE AGENCIES and forward a copy of the confirmation to the commissioner.
(b) Each qualified public depository shall enter into a written trust agreement with the financial institution, FEDERAL RESERVE BANK OR FEDERAL HOME LOAN BANK serving as trustee. Such agreement shall identify that the collateral to be transferred or designated is eligible collateral subject to the requirements of part III of chapter 665a of the Connecticut General Statutes, governing public deposits, and [these regulations] SECTIONS 36a-332-1 TO 36a-332-8, INCLUSIVE, AND SECTIONS 36a-333-1 AND 36a-333-2 OF THE REGULATIONS OF CONNECTICUT STATE AGENCIES.
(c) Each transfer or designation of eligible collateral shall be accompanied by a certified statement from the qualified public depository showing the par value or original face amount, current par value, description and interest rate, CUSIP number, maturity date, market value and security rating, where applicable, of the eligible collateral being transferred or designated and the name of the financial institution, FEDERAL RESERVE BANK OR FEDERAL HOME LOAN BANK serving as trustee receiving or holding such collateral. A copy of [said] THE certified statement shall be maintained on file with the qualified public depository.
Sec. 5. Section 36a-332-7 of the Regulations of Connecticut State Agencies is amended to read as follows:
Each qualified public depository shall file with the commissioner the following:
(a) Call reports for each of the quarters ending March [31] THIRTY-FIRST, June [30] THIRTIETH, September [30] THIRTIETH and December [31] THIRTY-FIRST. Each report shall be submitted to the commissioner [within 30] NOT LATER THAN THIRTY days after the date ending the quarter covered by the report.
(b) Written reports, certified under oath, for each of the quarters ending March [31] THIRTY-FIRST, June [30] THIRTIETH, September [30] THIRTIETH and December [31] THIRTY-FIRST, indicating its total capital, risk-based capital ratio, public deposits, the interest or other pecuniary consideration such depository allows for or upon such deposit or payment and the amount, nature and value of the eligible collateral segregated and designated therefor in accordance with part III of chapter 665a of the Connecticut General Statutes and [these regulations] SECTIONS 36a-332-1 TO 36a-332-8, INCLUSIVE, AND SECTIONS 36a-333-1 AND 36a-333-2 OF THE REGULATIONS OF CONNECTICUT STATE AGENCIES. Each report shall be filed [within 30] NOT LATER THAN THIRTY days after the date ending the quarter covered by the report. Each qualified public depository shall retain A COPY OF such reports for a period of seven years.
Sec. 6. Subsection (b) of section 36a-332-8 of the Regulations of Connecticut State Agencies is amended to read as follows:
(b) For purposes of sections 36a-332-1 to 36a-332-7, inclusive, [and sections 36a-333-1 and 36a-333-2] of the Regulations of Connecticut State Agencies, in the case of a Connecticut credit union [,] and A federal credit union, “total capital” [shall mean] MEANS the total of all reserves plus undivided earnings.
Sec. 7. Subsection (b) of section 36a-333-1 of the Regulations of Connecticut State Agencies is amended to read as follows:
(b) In the case of a Connecticut credit union [,] and a federal credit union, “risk-based capital ratio” [shall mean total capital divided by risk assets] MEANS NET WORTH DIVIDED BY TOTAL ASSETS.
Statement of Purpose: To update the procedures for the protection of public deposits and the requirements for qualified public depositories.
All interested persons who wish to submit data, views or arguments and to inspect and copy the fiscal note prepared in connection with the proposed amendments to the regulations may do so in writing within thirty (30) days of the publication of this notice in the Connecticut Law Journal. Comments may be submitted to the Banking Commissioner, Attention: Legal Division, Department of Banking, 260 Constitution Plaza, Hartford, Connecticut 06103-1800.