In the event of a default or insolvency of a public depository, the State Treasurer shall implement the following procedures:

1. In cooperation with the State Department of Banking and other regulatory officials, the State Treasurer shall ascertain the amount of public funds on deposit at the defaulting institution and the amount of deposit insurance applicable to such deposit.

2. The potential loss to the state shall be calculated by the State Treasurer. The loss to the state shall be satisfied, insofar as possible, first through any applicable deposit insurance and then through the sale of securities pledged, or through the proceeds of collateral instruments pledged, by the defaulting depository institution. Such sales shall be conducted by the State Treasurer.

3. The securities, bonds or other forms of collateral shall become forfeited to and become the property of the state. If the securities, bonds or other forms of collateral are valued at less than the amount of principal and interest due to the state plus the cost of the ensuing sale, the securities, bonds and other forms of collateral shall be sold by the State Treasurer, and the State Treasurer shall be entitled to recover from the financial institution such balances with costs and attorney's fees. If the market value of the securities, bonds or other forms of collateral exceeds the principal and interest due to the state plus the cost of the ensuing sale, the securities, bonds and other forms of collateral may be sold by the State Treasurer and the excess of the proceeds shall be returned to the pledging financial institution or its receiver, without further process of law.

Added by Laws 1987, c. 194, § 10, operative July 1, 1987. Amended by Laws 1998, c. 85, § 9, eff. July 1, 1998.