Deposit of Securities in Lieu of Bond

  1. Law
  2. Georgia Code
  3. State Government
  4. State Debt, Investment, and Depositories
  5. State Depositories
  6. Deposit of Securities in Lieu of Bond

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  1. The state treasurer cannot have on deposit at any one time in any of the depositories for a time longer than ten days a sum of money belonging to the state under a contract with the depository providing for the payment of interest by a depository which has not given a bond to the state in the amount as determined by the board.The bond to be given by the state depositories, when such bonds are required and whether the depositories are state or national banks, shall be a surety bond in a sum as required signed by a surety company duly qualified and authorized to transact business within this state.In lieu of such a surety bond the state depository may deposit with the state treasurer to secure state funds on deposit in state depositories:
    1. Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or of this state;
    2. Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities of this state;
    3. Bonds of any public authority created by the laws of this state, if the statute creating such authority provides that the bonds of the authority may be used for this purpose and the bonds have been duly validated as provided by law, and as to which there has been no default in payment, either of principal or interest;
    4. Industrial revenue bonds or bonds of development authorities created by the laws of this state, which bonds have been duly validated as provided by law and as to which there has been no default in payment, either of principal or interest; or
    5. Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Corporation, or the Federal National Mortgage Association.
  2. The state treasurer may accept letters of credit issued by a Federal Home Loan Bank to secure state funds on deposit in state depositories.
  3. The state treasurer shall also accept the guarantee or insurance of accounts of the Federal Deposit Insurance Corporation to secure state funds on deposit in state depositories, to the extent authorized by federal law governing the Federal Deposit Insurance Corporation.
  4. Upon approval by the state treasurer, a state depository may secure deposits made with it in part by surety bond, in part by deposit of any or all of the bonds mentioned in subsection (a) of this Code section, whether these bonds are owned by the depository or by another bank, and in part by letters of credit pursuant to subsection (b) of this Code section, or by any such method. The board may determine, however, that such security will be required only in the case of time deposits under a contract providing for the payment of interest.
  5. The state treasurer is authorized to contract with any bank, other than the state depository offering the security, for the purpose of safekeeping the securities deposited with the state treasurer under this provision.

(Ga. L. 1893, p. 135, § 1; Civil Code 1895, § 989; Civil Code 1910, § 1256; Ga. L. 1931, p. 120, § 1; Code 1933, § 100-108; Ga. L. 1935, p. 106, § 1; Ga. L. 1953, Nov.-Dec. Sess., p. 483, § 1; Ga. L. 1968, p. 485, § 1; Ga. L. 1970, p. 467, § 1; Ga. L. 1971, p. 553, § 6; Ga. L. 1973, p. 149, § 6; Ga. L. 1975, p. 917, § 1; Ga. L. 1976, p. 769, § 1; Ga. L. 1979, p. 399, § 1; Ga. L. 1991, p. 94, § 50; Ga. L. 1993, p. 929, § 4; Ga. L. 1994, p. 499, § 2; Ga. L. 2007, p. 162, § 1/HB 96; Ga. L. 2010, p. 863, § 4/SB 296.)

Law reviews.

- For article, "Tax-exempt Financing of Private Business: Structural Approaches," see 16 Ga. St. B.J. 8 (1979).

OPINIONS OF THE ATTORNEY GENERAL

Procedure when deposit exceeds bond amount.

- Former Code 1933, § 100-108 (see O.C.G.A. § 50-17-59) did not in any way authorize the treasurer (now director of the Office of Treasury and Fiscal Services) to make a deposit in excess of the bond or other authorized security for a ten-day period; it instead provided for a grace period of ten days within which the treasurer (now director of the Office of Treasury and Fiscal Services) whenever a deposit through accumulation of interest or otherwise grew beyond the amount of the bond, must either withdraw the excess or obtain additional bond (or authorized security) from the depository; this applied to all state funds, including former Code 1933, §§ 100-104 and 100-111 and Ga. L. 1960, p. 1144, § 4 (see O.C.G.A. §§ 50-17-58,50-17-62, and50-17-63). 1971 Op. Att'y Gen. No. 71-65.

Pledges of notes also accepted in lieu of surety bonds.

- This section, authorizing state depositories to deposit with the treasurer (now director of the Office of Treasury and Fiscal Services) "notes or other obligations of the United States or of this state," in lieu of surety bonds, is to be construed to include pledges of notes guaranteed and reinsured according to the provisions of the 1970 amendment to that section (Ga. L. 1970, p. 467). 1971 Op. Att'y Gen. No. 71-69.

State depositors may pledge or assign to the treasurer (now director of the Office of Treasury and Fiscal Services) in lieu of surety bonds, notes fully guaranteed by the Georgia Higher Education Assistance Corporation to the extent that the notes are reinsured by the United States government in accordance with the 1970 amendment to this section by Ga. L. 1970, p. 467. 1971 Op. Att'y Gen. No. 71-69.

State depositories must provide security in the form of a bond or a bond and certain enumerated securities in a sum equal to the amount of money to be deposited with such depository; however, the guarantee of the Federal Deposit Insurance Corporation shall be accepted as collateral to the extent authorized by federal law. 1968 Op. Att'y Gen. No. 68-61.

Obligations of government corporations.

- Guarantee as to principal and interest accepted as security since there exist government corporations whose obligations are specifically guaranteed as to principal and interest, the statutory rule of construction that words are to be given their ordinary signification would require the conclusion that it was to the obligations of these corporations that the General Assembly was referring to in this section. 1975 Op. Att'y Gen. No. 75-6.

Warrants may be used as security.

- This section specifically provides that Western & Atlantic Railroad warrants may be used to secure bank deposits. 1979 Op. Att'y Gen. No. 79-12.

Tax anticipation notes are not acceptable as collateral.

- Tax anticipation notes used to cover temporary loans for expenses to Georgia's cities and counties during the current year would not be proper collateral for state deposits since tax anticipation notes are not included in this section as proper collateral. 1968 Op. Att'y Gen. No. 68-3.

Assets of bank other than depository bank are not acceptable. 1979 Op. Att'y Gen. No. 79-12.

Standby letters of credit issued by a Federal Home Loan Bank.

- Standby letters of credit issued by a Federal Home Loan Bank do not meet the statutory criteria for collateral for deposits of public funds. 1999 Op. Att'y Gen. No. 99-2.

RESEARCH REFERENCES

Am. Jur. 2d.

- 63C Am. Jur. 2d, Public Funds, § 30.

ALR.

- Liability upon public depository bond as affected by excess of deposit over legal limit, 90 A.L.R. 679.

Depository's bond as covering deposits made before its execution, 98 A.L.R. 1312.


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