Section 16523 Of Article 2. Security For Deposits From California Government Code >> Division 4. >> Title 2. >> Part 2. >> Chapter 4. >> Article 2.

. If it appears to him necessary for the security of the State, the Treasurer shall require as a condition of eligibility that a bank furnish an indemnity bond approved by the Treasurer, conditioned against loss by any depreciation in value that may occur in securities deposited as security for the safekeeping and prompt payment of deposits. The sureties shall not be stockholders of the principal.