Ariz. Admin. Code § 2-14-108

Current through Register Vol. 30, No. 42, October 18, 2024

Section R2-14-108 - Payment of Losses

A.The Administrator shall find that an eligible depository is in default if the eligible depository:

1. Fails to return to a public depositor public monies including earned interest in accordance with the terms of the depository agreement;

2. Is subject to a court order or formal action by a supervisory authority that has the effect of restraining the eligible depository from making payments of deposit liabilities; or

3. Has had a receiver appointed by a supervisory authority.

B.If the Administrator determines that an eligible depository is in default or insolvent, the Administrator shall provide notice of the default or insolvency to all public depositors that have deposited public monies with the defaulting or insolvent eligible depository.

C.If the Administrator determines that an eligible depository is in default or insolvent, the Administrator shall revoke authorization for the eligible depository to make substitutions of eligible collateral.

D.If the Administrator determines that an eligible depository is in default or insolvent, the Administrator, in cooperation with the Arizona Department of Financial Institutions and the receiver appointed for the eligible depository, if any, shall:

1. If the receiver has found a new eligible depository that agrees to accept the public monies deposited with the defaulting or insolvent eligible depository:

a. Transfer the required collateral from the defaulting or insolvent eligible depository to the new eligible depository, and

b. Provide notice of the transfer to the public depositors; or

2. If a new eligible depository is not found, take possession of the required collateral and do one or both of the following:

a. Liquidate the required collateral in an orderly fashion and distribute the proceeds on a pro-rata basis to the public depositors; or

b. Upon request from a public depositor and if it is possible to segregate and divide the required collateral, provide a pro-rata share of the segregated and divided collateral to the public depositor making the request.

3. If the Administrator determines that the default of an eligible depository is not due to the insolvency or receivership of the eligible depository, any transfer, distribution, or liquidation of required collateral under subsections (D)(1) or (D)(2) by the Administrator will allow the eligible depository to reduce account balances correspondingly for public fund deposits subject to the transfer, distribution, or liquidation.

Ariz. Admin. Code § R2-14-108

Adopted by final rulemaking at 21 A.A.R. 233, effective 4/4/2015.