Current through Register Vol. 54, No. 25, June 22, 2024
Section 271.324 - Collateral bonds-certificates of depositCertificates of deposit submitted as collateral for collateral bonds are subject to the following conditions:
(1) The certificate of deposit shall be made payable to the operator and shall be assigned to the Department by the operator, in writing, containing terms and conditions required by the Department and on forms prepared and approved by the Department. The assignment shall be recorded upon the books of the bank issuing the certificate.(2) The certificate of deposit shall be issued by a federally-insured or equivalently protected state-chartered or National financial institution which is authorized to conduct the business of banking in the United States and examined by a state or Federal agency.(3) The Department will not accept certificates of deposit from a state-chartered or National financial institution when the accumulated total of certificates of deposit issued by the bank or banking institution for the operator is in excess of $100,000, or the maximum insurable amount as determined by the Federal Deposit Insurance Corporation if the state-chartered or National financial institution is insured by the Federal Deposit Insurance Corporation. If it is insured by an equivalent method administered by the Commonwealth, similar limits apply. If the operator is a political subdivision, the accumulated total of certificates of deposit for the operator may be in an amount secured by a pledge of assets by a depository institution under the act of August 6, 1971 (P. L. 281, No. 72) (72 P. S. §§ 3836-1-3836-8). The depository shall pledge the assets securing the amount of certificates of deposit offered under this subsection on a pooled basis in conformance with section 3 of the act of August 6, 1971 (P. L. 281, No. 72) (72 P. S. § 3836-3). A certificate of deposit will not be acceptable if there is an agreement between the operator, the depository and the custodian providing the custodian discretion to surrender the pledged assets in its possession to a receiver or other successor in interest of the depository.(4) The certificate of deposit shall state that the bank issuing it waives the rights of setoff or liens which it has or might have against the certificate.(5) The certificate of deposit shall be automatically renewable and fully assignable to the Department. Certificates of deposit shall state on the face that they are automatically renewable.(6) The operator shall submit certificates of deposit in amounts which will allow the Department to liquidate the certificates prior to maturity, for the full amount of the bond without penalty to the Department.(7) The Department will not accept certificates of deposit from banks which have failed or unduly delayed in making payment on certificates of deposit which have previously been submitted as collateral to the Department.(8) The operator is not entitled to interest accruing on the certificates of deposit after forfeiture is declared by the Department, until the forfeiture declaration is ruled invalid by a court having jurisdiction over the Department, and the ruling is final.The provisions of this § 271.324 adopted April 8, 1988, effective 4/9/1988, 18 Pa.B. 1681; amended September 13, 1991, effective 9/14/1991, 21 Pa.B. 4179. This section cited in 25 Pa. Code § 271.313 (relating to form, terms and conditions of the bond or trust); 25 Pa. Code § 284.641 (relating to bond requirement); and 25 Pa. Code § 285.341 (relating to bond requirement).