Banking Interpretations

Gen. Municipal Law Section 10
State Finance Law Section 105

Rosanne Notaro
11/06/2007

Subject:  Requirements to become an authorized custodian for collateral pledged to public fund deposits

Dear Ms. [—],

With respect to your question below concerning whether [—] Bank could serve as custodian for collateral pledged to secure public funds, we think it is best that you check with the New York State Comptroller's office, as the statutory provisions concerning eligible depositories, etc, are found in the NY General Municipal Law (section 10) and the NY State Finance Law (section 105).  As the Banking Department is not involved in interpreting those statutes, we hesitate to offer an opinion on the eligibility of an out-of-state bank.

I apologize for the delay in responding, and I hope your questions can quickly be resolved.

Sincerely,

Rosanne Notaro
Deputy Counsel

[—]

[—] Bank is located in Kansas City, Missouri. We have a fairly large number of banks in a number of states who use our custodial services for pledging collateral to public funds. We also have several bank customers in New York State who have inquired whether we could be the custodian for the collateral they pledge to public deposits.

We would like to provide this service for our customers. Are there specific requirements for banks acting as custodians for public deposits in the State of New York? Any information you can provide is greatly appreciated.

Thank you.

[—]