Public Deposit Protection Information
Overview
The Colorado Division of Financial Services regulates 11 savings and loan associations and savings banks that are designated to hold Colorado public deposits. Public deposits in commercial banks are regulated under different, but similar, laws and regulations. Please contact the Colorado Division of Banking at (303) 894-7575 for information concerning commercial bank public deposit protection. If you are not sure which agency oversees your particular institution, feel free to call on either of us to answer that question for you.
The purpose of the Savings and Loan Association Public Deposit Protection Act ("PDPA") is to ensure that public funds held on deposit in savings and loan associations are protected in the event that the institution holding the public deposits becomes insolvent.
How public deposits are protected
Federal deposit insurance provides protection for public deposits under U. S. Code Section 330.15. In very general terms, the official custodian of a public unit is insured at least up to $250,000 per institution. The PDPA then requires institutions to deliver eligible assets (usually mortgage loans or securities) to a third party to be held in safekeeping, and such assets are pledged to the Colorado Division of Financial Services. In the event that an institution becomes insolvent, the Commissioner of Financial Services will seize and sell the pledged assets and distribute the proceeds to the public entities for the amount of their deposits not covered by federal deposit insurance.
How the Division of Financial Services ensures compliance with the PDPA
1. Eligible public depositories are required to report to the Division of Financial Services their total level of public deposits held, the amount of these deposits that are covered by federal deposit insurance, and the amount of uninsured public deposits. They are also required to report the market value of assets pledged to cover these uninsured deposits. These reports are normally required to be filed with us quarterly, although we reserve the right to obtain them more frequently if we feel it is necessary.
2. We also conduct periodic examinations of the eligible public depositories to review their source records and procedures to ensure that their reports to the Division are being prepared accurately. During these examinations, the collateral that is pledged to cover uninsured deposits is also reviewed to ensure that it complies with all applicable laws and regulations.
If you have any questions on the PDPA for savings and loan associations, please call: Dave Francis, Supervisory Examiner at (303) 894-2336.
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