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Subd. 4. A depository may make withdrawals of excess collateral <br />or substitute other collateral, as defined in subdivision 1, on receipt by <br />the municipality of written notice from the depository. Authority is <br />vested in the treasurer to return the collateral to the depository. All <br />interest on the collateral so deposited shall be paid to the depository so <br />long as it is not in default. <br />Subd. 5. The closing of a depository shall be deemed a default on <br />the part of the depository and no demand on the part of the municipality <br />shall be necessary to establish the default. If a depository closes, any <br />deposit placed therein shall immediately become due and payable. <br />Subd. 6. All collateral shall be deposited with the treasurer or chief <br />financial officer of the municipality or placed in safekeeping for the <br />municipality in a financial institution approved by the governing body of <br />the municipality or the treasurer or chief financial officer, if approval <br />authority is designated to the treasurer or chief financial officer. The <br />collateral shall not be redeposited in the bank, trust company or thrift <br />institution furnishing it. <br />RECOMMENDATION: <br />We recommend that the City implement procedures to ensure compliance with MS <br />118.01. <br />CITY'S RESPONSE: <br />In 1995, all excess deposits are transferred into repurchase agreements at the end <br />of each business day. <br />