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Industry Letters

Surety Bond/Pledge of Assets

March 24, 2005

To The Chief Executive Officer of the Institution Addressed:


The Superintendent’s Regulations Part 402.5 and 402.6 permits the Superintendent to exercise her authority to accept a surety bond/pledge of assets in an amount of $250,000, or such larger or smaller amount as required. The Department has set the bonding/asset pledge requirement to be, at a minimum, an amount equal to the highest daily balance in the New York Trust account in the preceding quarter. Licensed budget planners may now make written application to the Superintendent for consideration to change the criteria used for setting the bonding/asset pledge requirement from the highest daily balance to the average balance in the New York trust account. The change will result in a lower bonding/asset pledge requirement. The Department recommends that each licensed budget planner evaluate its growth projections for the coming year and plan accordingly.

In order to employ the average balance criteria rather than the highest balance the licensee must possess a Fidelity and Dishonesty insurance policy that is commensurate with the amount of money held on behalf of all debtors across the country. For guidance purposes, the principal amount of the policy should cover at least ten percent of the balance in the primary trust account. Please include a copy of the declarations page from your insurance policy with your written application. The Superintendent will also consider financial condition and other relevant factors.

You should expect to receive a response from the Department within 45 days of submission.

If you have any questions you may call Mr. Dominick Modafferi at (212) 709-5499 or Mr. Richard Donohue at (212) 709-5518.

Very truly yours,

Regina A. Stone
Deputy Superintendent of Banks

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