HOUSE DOCKET, NO. 1714        FILED ON: 1/15/2015

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 921


The Commonwealth of Massachusetts



David M. Nangle


To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act enhancing fair competition among financial institutions.






Date Added:

David M. Nangle

17th Middlesex


HOUSE DOCKET, NO. 1714        FILED ON: 1/15/2015

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 921

By Mr. Nangle of Lowell, a petition (accompanied by bill, House, No. 921) of David M. Nangle relative to further regulating credit unions and competition among financial institutions.  Financial Services.


The Commonwealth of Massachusetts



In the One Hundred and Eighty-Ninth General Court



An Act enhancing fair competition among financial institutions.


Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Chapter 171 of the general Laws is hereby amended by striking out Section 10, as appearing in the 2012 Official Edition, and inserting in place thereof the following four sections:–

Section 10.  The by-laws may be amended at any annual meeting, or at a special meeting called for the purpose, by a majority vote of all of the members present and entitled to vote; provided, however, that the notice of the meeting and of the proposed amendment is given each member in the manner prescribed in said by-laws. No amendment or amendments containing a change in the location, or change in name shall become operative until approved in writing by the commissioner.

The by-laws containing the conditions of residence, occupation, or association that qualify persons for membership may be amended by a three-fourths vote of all of the members present and entitled to vote.  The membership vote may only be held at the annual meeting; provided, that it may be held at a special meeting called for the purpose of a merger if the membership by-law amendment is a necessary component of the merger. No such amendment shall become operative until an application is submitted to and approved in writing by the commissioner. The vote of the credit union’s members must occur prior to the submission of an application and a certified copy of the vote shall be submitted with the application. If the commissioner approves the membership by-law amendment it shall become effective 90 days after such approval.

Section 10A. The application to amend a credit union membership by-law shall include the following information:

(1)a detailed statement as to why the credit union is seeking the membership by-law amendment, the extent it has been discussed by the board and discussed with the membership;

(2)the complete existing membership by-law;

(3)the complete membership by-law as proposed to be amended with all amendments and wording changes printed in bold letters;

(4)the total current membership of the credit union and projections on how the by-law amendment will change the number of members over the next three and five years;

(5)an estimated budget for the next three and five years to implement the membership by-law amendment, including but not limited to, marketing and advertizing, staffing levels, operation expenses and other costs related to increased membership;

(6)a copy of the credit union’s membership qualification verification policy required by section 10B; and

(7)such other relevant information that the commissioner may require.

Upon a determination that a membership by-law amendment application is complete, the commissioner shall require the credit union to publish and post a notice of the application as follows. Such notice shall include the credit union’s complete membership by-law with all amendments and wording changes printed in bold letters. The notice shall be:

(1)published twice in a newspaper determined by the commissioner;

(2)posted in a conspicuous place in the lobby of each office of the credit union upon receipt from the commissioner and through the end of the public comment period, and

(3)posted on the credit union’s website for the designated comment period.

The commissioner shall post any such application on its website on a monthly basis. The posting shall include the credit union’s complete membership by-law with all amendments and wording changes printed in bold letters. The commissioner shall establish a public comment period on the application. Such comment period shall at a minimum be for 60 days after the first newspaper publication, unless circumstances warrant a shorter period, as determined by the commissioner, but in no event less than 50 days. The commissioner shall hold a public hearing on the application if a written or electronic request for a hearing is received prior to the close of the public comment period.

In deciding whether or not to approve an application, the commissioner shall determine whether or not competition among financial institutions will be unreasonably affected and whether public convenience and advantage will be promoted. In making such determination, the commissioner shall consider, but not be limited to, the impact a membership by-law expansion, if approved, will have on the successful operation and financial stability of existing community banks and credit unions that may be affected by the expansion, as determined by the commissioner.

Section 10B. A credit union shall establish a written policy that the credit union will follow to verify that a person meets the qualifications for membership. The policy must identify the specific documents the credit union will accept for verification of residency, occupation, association, work location, family relationship or other membership criteria specified in the by-law. The policy shall be posted on the credit union’s website and made available for public inspection at each office of the credit union. For each new member, a credit union shall retain a copy of the document used to verify a person’s qualification for membership. Such documentation shall be maintained and segregated on a calendar quarter and annual basis for review by examiners.

At each examination of a credit union for safety and soundness, community reinvestment, or compliance the examiners shall review the most recent quarterly or annual files since the most recent examination documenting new members and adherence to policy. If any individual is determined by examiners to fail to meet membership qualification the credit union shall terminate any deposit or share account relationship and sell any loan made to such an individual. The time period for such termination and sale, if any, shall be determined by the commissioner.

If the commissioner finds during any examination that three or more individuals did not meet membership eligibility such finding shall adversely impact the examination ratings of the management of the credit union and its sensitivity to risk. The commissioner shall immediately rate the credit union as in Substantial Noncompliance under community reinvestment. The Commissioner may take such other action as he deems necessary.

Section 10C. Annually by January 31, a credit union that has had a membership qualification by-law amendment approved during the prior year shall file a report to the commissioner. The report shall include the total membership increase, if any, resulting from the expanded membership by-law. The form of the report and the information to be reported therein shall be proscribed by the commissioner. A report shall be filed for the five calendar years after the most recent membership by-law approval.

Annually, on or before March 31, the commissioner shall file a written report to the General Court relative to credit union membership applications received in the previous year. The report shall include the record of membership by-law amendment applications received; the number approved, disapproved or pending; and the number of applications changed in response to the commissioner’s review and the nature of the changes. The commissioner shall include an analysis of the amendments as to the nature of the qualifications applied for, including but not limited to geographical, occupational, association or family relationship; the activity for the year as well as any trends observed by the commissioner. The report shall comment on the number of responses the commissioner received during the public comment periods. A copy of each notice of a membership by-law application with all amendments and wording changes in bold letters shall be included with the report. The commissioner shall also include an analysis of the information provided in the reports required by the first paragraph on increased membership resulting from an amended membership by-law.    

The commissioner shall include a section in the report to the General Court on enforcement actions taken under section 10B.  This section of the report shall specify the actions taken in number and remedy but need not identify the credit union if the regulatory action was taken as part of a confidential report of examination. The report shall provide the number of individuals determined by the commissioner not to have been eligible for membership on a case-by-case basis as well as on an aggregate basis for the review period. If necessary, the commissioner may provide an estimate of the number of ineligible individuals for reporting purposes.

The report shall be filed with the clerk of the House and the clerk of the Senate. Copies shall be delivered to the House Chairman and the Senate Chairman of the Joint Committee on Financial Services. The filing of the report with the General Court shall be posted for a minimum of 60 days on the Division of Banks’ website.