Court Opinion

ID: 3462707
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:28:33.905646+00
Date Added: 2024-06-11T14:04:29.518045
License: Public Domain

Dear Representative Arnold:
Our office is in receipt of an opinion request in which you ask clarification as to whether banks of local depositing authorities may release collateral pursuant to the Transaction Account Guarantee Program (TAGP), which is a part of the Federal Deposit Insurance Company's (FDIC) Temporary Liquidity Guarantee Program.
You indicated that the TAGP provides FDIC insurance coverage until June 30, 2010 for all funds in a non-interest-bearing transaction deposit account, which is defined as a transaction account on which interest is neither accrued nor paid and on which the insured depository institution does not reserve the right to require advance notice of an intended withdrawal.
In Atty. Gen. Op. No. 09-0073, we were asked whether the TAGP meets the requirements of La.R.S. 6:319 such that banks may utilize that program to release collateral otherwise required by law. We determined that the TAGP does not meet the requirements of La.R.S. 6:319; however, we also stated that banks may not rely on the TAGP to release collateral otherwise required by law.
Under La.R.S. 39:1218 and La.R.S. 39:1225, local depositing authorities1 are required to give security for the safekeeping and payment of the deposits in the amount of one hundred percent of the collected funds on deposit to the credit of each depositing authority, except that portion of the deposits that is insured by any governmental agency insuring bank deposits which is organized under the laws of the United States.
Nevertheless, as we determined in Atty. Gen. Op. No. 83-9, La.R.S. 39:1218 and La.R.S. 39:1225 are applicable only to fiscal agent banks of local depositories other than cities with a population exceeding 150,000. *Page 2 
Cities with a population exceeding 150,000 are governed by La.R.S. 39:1242 and La.R.S. 33:2929(C), neither of which provides an exception for "that portion of the deposits insured by any governmental agency insuring bank deposits which is organized under the laws of the United States." Thus, a fiscal agent bank for a city with a population exceeding 150,000 must provide security in an amount equal to the total amount on deposit.
Because the TAGP provides FDIC insurance coverage for all funds in a non-interest-bearing transaction deposit account until June 30, 2010, fiscal agent banks of local depositories other than those for cities with a population exceeding 150,000 are not required to provide security for funds on deposit in such accounts on or prior to that date.
Conversely, fiscal agent banks of local depositories for cities with a population exceeding 150,000 must provide security for the entire amount of funds on deposit in a non-interest transaction deposit account, notwithstanding the fact that the entire amount is federally insured under the TAGP.
Finally, out of an abundance of caution, we believe that it would be prudent for cities with a population not exceeding 150,000 to confirm that their fiscal agent banks will be in a position to provide sufficient security for all funds in a non-interest-bearing transaction deposit account after June 30, 2010.
We trust this adequately responds to your request. However, if our office can be of further assistance, please do not hesitate to contact us.
Yours very truly,
JAMES D. "BUDDY" CALDWELL Attorney General
By: __________________________ BENJAMIN A. HUXEN II Assistant Attorney General
JDC/BAH II
1 La.R.S. 39:1211 provides that "[t]he term, "local depositing authorities", includes all parishes, municipalities, boards, commissions, sheriffs and tax collectors, judges, clerks of court, and any other public bodies or officers of any parish, municipality or township, but it does not include the state and its elected officials, and state commissions, boards, and other state agencies." *Page 1