Whereas, The deferred operation of this act would tend to defeat its purpose, which is to immediately provide excess insurance of shares and deposits in federally chartered credit unions whose main office is located in the commonwealth, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.
Be it enacted by the Senate and House of Representatives
in General Court assembled, and by the authority of the same,
SECTION 1. Section 1A of chapter 294 of the acts of 1961, inserted by section 1 of chapter 278 of the acts of 1982, is hereby amended by striking out the definitions of "Excess member" and "Excess shares and deposits" and inserting in place thereof the following five definitions:-
"Commissioner", the commissioner of banks.
"Corporation", the Massachusetts Credit Union Share Insurance Corporation established by chapter two hundred and ninety-four of the acts of nineteen hundred and sixty-one.
"Excess member", an inactive member or a federally chartered credit union whose excess shares and deposits, as hereinafter defined, shall become insured by the corporation pursuant to this chapter.
"Excess shares and deposits", the portion of the shares and deposits in any insured credit union in excess of those sums insured by the National Credit Union Share Insurance Fund or any successor thereto.
"Federally chartered credit union", a credit union chartered under the laws of the United States whose main office is located in the commonwealth.
SECTION 2. Said section 1A of said chapter 294 is hereby further amended by adding the following definition:-
"State chartered credit union", a credit union chartered under the laws of the commonwealth.
SECTION 3. Said chapter 294 is hereby further amended by striking out section 6B, as most recently amended by section 5 of chapter 237 of the acts of 1987, and inserting in place thereof the following section:-
Section 6B. Termination of Membership.- Insurance of a member by the corporation may be terminated by the directors of the corporation, with the approval of the commissioner, after a hearing to be held before the commissioner and a committee of said directors upon at least fifteen days prior notice, in the following circumstances:
(a) if a regular or excess member shall have failed to pay any assessment lawfully required under this act within fifteen days after notice from the treasurer of the corporation that such payment is overdue;
(b) if a regular or excess member has conducted its business in an unsafe or unsound manner, or has knowingly or negligently permitted any of its officers or agents to violate any provision of any law or regulation to which such member is subject;
(c) if the primary insurance coverage of an excess member has been terminated for cause by the National Credit Union Share Insurance Fund;
(d) if an excess member fails to cure a breach of the terms of its contract of insurance with the corporation;
(e) if an excess member fails to provide examination or financial reports to the corporation pursuant to paragraphs (d) and (e) of section six D or if an excess member fails to submit to examination by the commissioner pursuant to paragraph (f) of said section six D; or
(f) as otherwise provided in said section six D.
After termination of insurance pursuant to the provisions of this section, insurance for excess shares and deposits, other than term shares and deposits, to the extent insured on the date of termination, less any amounts thereafter withdrawn which reduce the amount of excess shares and deposits covered by the corporation on the date of termination, shall continue for a period of one year commencing with the date of termination. After such termination of insurance, term shares and deposits, to the extent insured on the date of termination, less any amounts thereafter withdrawn which reduce the amount of excess shares and deposits covered by the corporation on the date of termination, shall continue to be insured for the duration of their term. No shares issued by or deposits received by the excess member after the date of termination shall be insured to any extent by the corporation. Subsequent to the date of termination, the excess member shall in all other respects, including, without limitation, the payment of required assessments or fees, be subject to the duties and obligations of an excess member under the provisions of this chapter, applicable laws and regulations or the contract of insurance between the excess member and the corporation for the duration of such continuing insurance coverage period. If the excess member is liquidated or dissolved during the period such continuing insurance is provided by the corporation, the corporation shall have the same rights, remedies and powers with respect to the excess member, its members and the National Credit Union Administration, as if the excess member's insurance had not been terminated prior to such liquidation or dissolution.
In the event of termination of insurance as a result of the provisions of paragraph (c), the provisions of the preceding paragraph relating to shares and deposits other than term shares and deposits shall apply to an excess member and its excess shares and deposits only if, and to the same extent that, similar coverage is provided by the excess member's primary insurer.
In the event of termination of insurance of a regular or excess member, the commissioner may order such member to give such notice to its shareholders and depositors as he may require. In the event of the failure to give such required notice, the commissioner is authorized to give such notice in such manner as he may determine and, for such purpose, such member shall provide a list of all names and addresses of its depositors and shareholders to the commissioner.
SECTION 4. Said chapter 294 is hereby further amended by striking out section 6D, as most recently amended by section 7 of said chapter 237, and inserting in place thereof the following section:-
Section 6D. Excess Insurance of Excess Members.- The excess shares and deposits of excess members deposited in the main office or any branch office thereof located within the commonwealth shall be insured in full by the corporation, subject to the following conditions and limitations:
(a) Any applicant for excess membership shall first give notice in writing to the corporation of its intention to become such member and shall submit such financial statements and other information concerning its assets, liabilities and affairs as the commissioner and the corporation may require. Applications for excess membership shall be governed by the provisions of section six A. Any such application must be approved by the directors of the corporation and the commissioner; provided, however, that if the applicant is then insured by the National Credit Union Share Insurance Fund, the National Credit Union Administration's certification of its sound and safe condition may be submitted in lieu of approval by the commissioner.
(b) An excess member which is a federally chartered credit union may have its excess shares and deposits insured only to the same extent as is permitted for an excess member which is a state chartered credit union subject to the maximum share and deposit limitations applicable to state chartered credit unions under section thirty of chapter one hundred and seventy-one of the General Laws.
(c) An excess member shall enter into a contract of insurance with the corporation which shall be approved by the commissioner. Such contract of insurance shall contain provisions regarding the terms, conditions and fee and assessment structure under which excess insurance coverage may be issued, maintained, renewed or terminated. Upon the withdrawal of a regular member to excess membership, the corporation shall retain all assessments theretofore paid to it pursuant to sections seven and eight. Excess members which have withdrawn from regular membership shall be entitled to receive a proportionate share of any dividends declared pursuant to the provisions of paragraph (d) of said section seven. Fees and assessments shall be determined by the directors with the approval of the commissioner, shall be added to and become part of the Share Insurance Fund and shall be available for distribution in the event of dissolution or liquidation of the corporation, in the manner and to the extent provided in section ten.
(d) An excess member shall, at least semi-annually, file with the corporation financial reports in such form and containing such information as the corporation and the commissioner may require. The corporation may also require such further information and reports from excess members as it deems necessary. Financial reports shall contain a certification by the president, treasurer or other officer designated by the board of directors of the reporting excess member, that the reports are true and correct to the best of the certifier's knowledge and belief.
(e) Unless prohibited by applicable law or regulations, a member which is a federally chartered credit union shall, in addition to paragraph (d), be required and shall agree, to provide to the corporation copies of examination reports and other reports and information regarding such credit union made by and for any appropriate federal banking regulatory authority.
(f) An excess member which is a federally chartered credit union shall be subject, and shall agree, to supervision and examination by the commissioner and shall be subject to the provisions of section two of chapter one hundred and sixty-seven of the General Laws. The commissioner, in his sole discretion, periodically shall examine the affairs of an excess member which is a federally chartered credit union to evaluate the level of risk of loss such excess member's financial condition may pose to the corporation. The costs of such examination shall be borne by such federally chartered credit union and shall be determined annually by the commissioner of administration under the provision of section three B of chapter seven of the General Laws. Upon examination, the commissioner may take such directions, recommendations and orders to an excess member which is a federally chartered credit union as he deems expedient to the same extent as provided by section three of said chapter one hundred and sixty-seven. Nothing contained herein shall limit an excess member which is a federally chartered credit union from the exercise of any powers authorized for a federally chartered credit union pursuant to and in conformance with the Federal Credit Union Act, or applicable rules and regulations promulgated thereunder, or pursuant to other applicable federal laws and regulations.
(g) An excess member which is a federally chartered credit union shall obtain the approval of the corporation and the commissioner prior to its merger or consolidation with, or the purchase of the assets and the assumption of the share and deposit liabilities of a banking institution as defined by section one of chapter one hundred and sixty-seven A of the General Laws or a credit union chartered by the commonwealth, the United States or another state. Failure to obtain such approvals shall result in an automatic termination of excess insurance under section six B.
(h) An excess member which is a federally chartered credit union shall obtain the approval of the corporation and the commissioner prior to its establishment of a branch office in any other state other than the commonwealth. Failure to obtain such approvals shall result in an automatic termination of excess insurance under said section six B.
(i) Upon payment by the corporation of any excess share or deposit insured by the corporation in any excess member, the corporation shall be subrogated to the rights of the person to whom such insurance was so paid to receive the same distribution from the proceeds of assets and claims of such excess member as would have been payable to such person on a claim for the portion of such person's share or deposit so paid by the corporation, subject to the rights of the National Credit Union Administration.
(j) Notwithstanding any other provisions hereof, if the National Credit Union Administration is at any time a depositor in any excess member, either directly or through any other governmental agency, the amounts deposited, directly or indirectly, by the National Credit Union Administration shall not be deemed insured to any extent by the corporation.
(k) Excess members of the corporation shall not have any of the rights and privileges of regular members except as expressly provided otherwise herein.
SECTION 5. Said chapter 294 is hereby further amended by adding the following section:-
Section 15. The directors of the corporation may make such rules and regulations, subject to the approval of the commissioner, as they deem necessary in order to carry out the provisions of this chapter, and for purposes of this chapter the commissioner may confer and advise with the directors and may furnish them such information, records, statements and reports of examination or copies thereof, relating to any regular or excess member, as the directors may request.
SECTION 6. It is hereby declared that the Massachusetts Credit Union Share Insurance Corporation, established by chapter two hundred and ninety-four of the acts of nineteen hundred and sixty-one, is not an agency of the commonwealth. Nothing contained in said chapter two hundred and ninety-four, and nothing contained in this act, shall be construed to pledge the credit of the commonwealth for any of the past, current or future operations, obligations or liabilities of said Massachusetts Credit Union Share Insurance Corporation.