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Senate committee holds 'Special Deposits' bill after Uniform Law Commission testimony
Summary
S 384, the proposed Rhode Island Special Deposits Act drawn from a Uniform Law Commission model, drew expert testimony and questions about consumer protections; the committee voted to hold the bill.
Senate Bill 384, a Uniform Law Commission model to create a statutory structure for "special deposits" (statutory, account-based protections for funds held by banks for specified beneficiaries), was discussed March 25 and held by the Senate Commerce Committee for additional consideration.
Sponsor Senator McKinney described the measure as a consumer- and market-friendly tool that would allow parties to create protected special accounts without the formalities of a trust. Patrick Guida, a Rhode Island attorney and Uniform Law Commission commissioner, testified at length about the drafting process and examples where special-deposit protection could preserve tenants’ security deposits, escrowed business deposits or settlement funds from claims in a third party’s bankruptcy.
Guida told the committee the act is opt-in: "No bank or depositor is required to use it," and he summarized endorsements from the American Bar Association and banking groups. He said the act is designed to be minimalist and to leave terms for the bank and depositor to negotiate. Senator Mack asked whether interest rates would be set by statute; Guida said rates and many terms would be negotiated between the bank and depositor.
Senator Bell raised concerns about consumer protections, questioned provisions that allow banks to pay funds to depositors if beneficiaries cannot be located, and asked why the draft includes a five-year termination default for unclaimed special deposits. Guida and supporters said the defaults were compromise language to address unclaimed funds and contractual certainty.
After discussion the committee moved and carried a motion to hold S 384 for further review. Committee members said they were open to changes but wanted to give stakeholders time to propose clarifying edits.
Votes at the committee session: motion to hold S 384 was made and recorded as carried; no numeric roll-call tally was announced in the hearing transcript.
