§ 16523 Bank Deposit Security Bonds

• •The state treasurer can ask banks to provide a special promise (bond) to protect the state's money.
• •This promise covers losses if the bank's deposited securities lose value.
• •The people guaranteeing this promise cannot own shares in the bank.

A bank holds the state's money and uses some stocks as security. If those stocks lose value, the state could lose money.

The treasurer can make the bank get a bond (like a safety net) to cover any losses. The people backing this bond can't own part of the bank to avoid conflicts.