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Public Deposit Protection Commission (PDPC)

The Public Deposit Protection Commission (PDPC) is comprised of the State Treasurer, Governor, and Lieutenant Governor. The PDPC makes and enforces regulations and administers a program to ensure public funds deposited in banks are protected if a financial institution becomes insolvent.

The PDPC approves which banks can hold state and local government deposits (i.e., public depositories) and monitors collateral pledged to secure uninsured public deposits. This secures public treasurers' deposits when they exceed the amount insured by the FDIC by requiring public depositaries to pledge securities or letters of credit as collateral. It also minimizes participating banks’ liability for defaulting financial institutions. No public funds on deposit in public depositaries have been lost since the Public Deposit Protection Act was created in 1969.

Washington state and federally chartered credit unions may also accept public deposits within limitations set forth in RCW 39.58.240. State law allows deposits up to the maximum amount insured by the National Credit Union Share Insurance Fund (NCUSIF) for any one depositor (i.e., state or local government) of public funds in any one credit union. Collateral is not required since limits ensure deposits are fully insured by NCUA.

Under state law, the Commission can request a public depositary to furnish information on its financial condition, public deposits, and on the exact status of its net worth. The Commission is empowered to take any action deemed advisable for the protection of public funds and to establish procedures for collection or settlement of claims arising from the failure of a public depositary.

Each public depositary reports monthly and quarterly to the PDPC Administrator on the amount of its insured and uninsured public deposits, the amount of collateral pledged, as well as other financial information. Those public depositaries with excess deposits or that do not meet minimum financial standards set by the Commission must monitor public deposits on a daily basis and maintain adequate collateral accordingly. Credit unions report the amount of their insured public deposits monthly.

Under the Act, all public treasurers and other custodians of public funds are relieved of the responsibility of executing tri-party agreements, reviewing pledged collateral, and authorizing additions, withdrawals, and exchanges of collateral. Similarly, financial institutions no longer need to review the status of each public fund balance and the collateral pledged under numerous tri-party agreements.

Reforms enacted since 2009 to modernize PDPC statutes, rules and procedures added important new safeguards for public funds that reduce the risk that a failed bank could trigger an assessment on other public depositaries to recover uninsured public deposits. These new rules, policies and practices strengthen protections on public deposits and reduce the liabilities for participating financial institutions by helping make the banking system stronger, public deposits safer, and promoting economic recovery.

Currently, 63 banks and 15 credit unions operating in Washington state are authorized to accept public deposits.