About the Public Deposit Protection Commission

Learn the history and background of how the state of Washington protects publicly banked funds

History of the Public Deposit Protection Commission

In 1969 the WA State Legislature passed the Public Deposit Protection Act, which created the Public Deposit Protection Commission. The Public Deposit Protection Commission (PDPC) is comprised of the State Treasurer, Governor, and Lieutenant Governor. PDPC ensures public funds deposited in approved financial institutions are protected if a financial institution becomes insolvent. 

The PDPC approves financial institutions to hold state and local government deposits (i.e., public depositories) and monitors collateral pledged by those institutions to secure uninsured public deposits. Requiring public depositaries to pledge securities or letters of credit as collateral secures public treasurers’ deposits when they exceed the federally insured limits. It also minimizes participating public depositaries’ 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.

Under state law, the commission can request a public depositary to furnish information on its financial condition, public deposits, and the exact status of its net worth. The commission is empowered to take any action deemed advisable for the protection of public funds, including establishing 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 daily and maintain adequate collateral accordingly.

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 to reduce the risk a failed bank could trigger an assessment on other public depositaries to recover uninsured public deposits. These new rules, policies, and procedures strengthen protections on public deposits and reduce liabilities for participating financial institutions by making public deposits safer, promoting economic recovery, and making the banking system stronger.


  • Public Deposits - Public Funds on deposit with a public depositary
  • Public Funds - Moneys under the control of a treasurer, the state treasurer, or custodian belonging to, or held for the benefit of, the state or any of its political subdivisions, public corporations, municipal corporations, agencies, courts, boards, commissions, or committees, including moneys held as trustee, agent, or bailee belonging to, or held for the benefit of, the state or any of its political subdivisions, public corporations, municipal corporations, agencies, courts, boards, commissions, or committees
  • Collateralization - Public depositaries are required to pledge eligible collateral on public deposits above federally insured limits. For additional information, see the PDPC Frequently Asked Questions page.