§ 1463 Bank Asset Hypothecation Rules

• •Banks can pledge assets to secure deposits of the U.S., postal savings, bankruptcy estates, California, and local public bodies.
• •The bank must get prior approval from the commissioner to secure money payable to other states.
• •The rule applies only to assets that are allowed by law to be pledged.

A bank wants to use its buildings and loans as collateral to guarantee that customers' savings are safe if the bank fails.

The bank can pledge its assets to back up deposits of the state or other public entities, and with approval it can also secure money owed to other states.