State Law Restraining Concentration of Public Deposits Designed to Spread Risks

American Banker, July 30, 1985 | Go to article overview

State Law Restraining Concentration of Public Deposits Designed to Spread Risks


ST. PETERSBURG, Fla. -- In mid-June, the government of Pinellas County, Fla., decided it would limit its deposits in Freedom Savings & Loan, even though the Tampa thrift offered by far the highest rate of return. The county commissioners said they did not want to funds overly concentrated in one institution. At the time, Freedom held 80% of the county's investments.

"It's just a gamble versus the potential gain in interest," explained county Commission Chairman Bruce Tyndall.

The mid-Florida county's actions were part of a growing concern in the state. Earlier in the year, the Florida Legislature passed legislation limiting the concentration of public funds.

"We saw that several institutions were getting fairly large in public deposits, said Bruce Gillander, chief of the Florida State treasury's banking division. "The basic concept of the Florida Security for Public Deposits Act is that deposits should be spread around, risks should be spread around."

The state originally developed a public deposit security program in 1980, but officials had problems enforcing it, and the Legislature this past session enacted several amendments to strengthen it. State officials now have the power to increase collateral requirements up to 125% for specific institutions and the power to find those failing to comply with reporting requirements.

State Imposes Concentration Limits

The most significant change, however, is the imposition of concentration limits. The new law, which takes effect later this year, will prohibit financial institutions from having more than 10% of their deposits in public funds. Also, the law states that a bank may hold only 10% of the public funds held in all banks in the state, which is about $1.7 billion, and a savings & Loan may hold only 10% of public funds held in the state's S&Ls, which is about $2.2 billion.

Concentration has not really occurred among the more than 350 banks participating in the public funds program. But among thrifts, five out of a total of about 90 in the state hold more than half the pool. Freedom has the largest chunk with $358 million. Other S&Ls that may have to reduce their deposits because of the new law are Florida Federal in St. Petersburg ($278 million) and Citicorp Savings in Miami ($246 million).

Limits are needed, according to Herbert Conley, director of the Florida Comptroller's treasury division, not only because concentration inherently increases risk, but because public funds tend to drift toward less profitable institutions.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

State Law Restraining Concentration of Public Deposits Designed to Spread Risks
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.