When the state treasurer determines that a default or insolvency has occurred, the state treasurer shall provide notice as required in § 9-4-513 and implement the following procedures:

(1) The state treasurer, in cooperation with the commissioner of financial institutions, the appropriate federal regulator, or the conservator or receiver of the qualified public depository in default, shall ascertain the amount of funds of each public depositor on deposit at such depository, the amount of deposit insurance applicable to such deposits and the amount of such deposits which will not be covered through the sale or use of eligible collateral pledged by the defaulting depository;

Terms Used In Tennessee Code 9-4-512

  • Deposit insurance: means the insurance provided by the federal deposit insurance corporation. See Tennessee Code 9-4-502
  • Eligible collateral: has the meaning set forth in §. See Tennessee Code 9-4-502
  • fund: means the fund created pursuant to §. See Tennessee Code 9-4-502
  • Loss: includes , but is not limited to:
    (A) The principal amount of the public deposit. See Tennessee Code 9-4-502
  • Public depositor: means the state of Tennessee, or any of its agencies, or any Tennessee county, Tennessee incorporated municipality and their political subdivisions, or any utility district organized under the laws of the state or any interstate compact to which the state is a party. See Tennessee Code 9-4-502
  • Public depository: means :
    (i) Any savings and loan association, or savings bank (collectively referred to as savings institutions), or any bank chartered by the state of Tennessee. See Tennessee Code 9-4-502
  • Qualified public depository: means any public depository that meets all of the requirements of this part and that has been authorized by the board to secure public deposits through the collateral pool. See Tennessee Code 9-4-502
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
(2) Upon ascertaining the amount of such deposits which will not be covered through any applicable deposit insurance or eligible collateral pledged by the defaulting depository, the state treasurer shall as promptly as possible provide coverage of the remaining loss by assessment against the other qualified public depositories. Such assessment shall be determined by multiplying the total amount of the loss to all public depositors by a percentage which represents the average share of public fund deposits held by that depository during the previous twelve (12) months divided by the average total public deposits held by all depositories during the same twelve-month period, excluding the public deposits of the defaulting depository;
(3) Each qualified public depository shall pay its assessment to the state treasurer within five (5) business days after it receives notice of the assessment. If a depository fails to pay its assessment when due, the state treasurer shall satisfy the assessment by selling or using the eligible collateral pledged by that depository; and
(4) Public depositors receiving payment under this section shall assign to the state treasurer any interest they may have in funds that may subsequently be made available to the qualified public depository in default. If the qualified public depository in default or its receiver provides the funds to the state treasurer, the state treasurer shall distribute the funds, plus all accrued interest which has accumulated from the investment of the funds, if any, to the depositories which paid assessments on the same pro rata basis as the assessments were paid.
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