Bill H.509

HOUSE DOCKET, NO. 672 FILED ON: 1/17/2017

HOUSE . . . . . . . . . . . . . . . No. 509

By Mr. Coppinger of Boston, a petition (accompanied by bill, House, No. 509) of Edward F. Coppinger relative to certain changes in the banking laws. Financial Services.

[SIMILAR MATTER FILED IN PREVIOUS SESSION
SEE HOUSE, NO. 4778 OF 2015-2016.]

The Commonwealth of Massachusetts

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In the One Hundred and Ninetieth General Court
(2017-2018)

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An Act relative to banking law.

Whereas, The deferred operation of this act would tend to defeat its purpose, which is to make certain changes in the banking laws of 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, as follows:

SECTION 1. Section 83 of chapter 62C of the General Laws, as appearing in the 2014 Official Edition, is hereby amended by striking out, in lines 8 to 11, the words “section twenty-six of chapter one hundred and sixty-eight or section eighteen of chapter one hundred and seventy or section twenty-two of chapter one hundred and seventy-two” and inserting in place thereof the following words:- section 9 of chapter 167J.

SECTION 2. Section 1 of chapter 63 of the General Laws, as so appearing, is hereby amended by striking out, in line 93, the words “section 38 of chapter 167” and inserting in place thereof the following words:- section 15 of chapter 167C.

SECTION 3. Section 4-406 of chapter 106 of the General Laws, as so appearing, is hereby amended by striking out, in line 56, the figure “27” and inserting in place thereof the following figure:- 7.

SECTION 4. Section 3 of chapter 110F of the General Laws, as so appearing, is hereby amended by striking out, in lines 92 to 96, inclusive, the words “ a savings bank in stock form to which certain provisions of said chapter 172 apply pursuant to section 34C of chapter 168, or a cooperative bank in stock form to which certain provisions of said chapter 172 apply pursuant to section 26C of chapter 170” and inserting in place thereof the following words:- a savings bank in stock form or a cooperative bank in stock form.

SECTION 5. Subsection (a) of section 183 of chapter 149 of the General Laws, as so appearing, is hereby amended by striking out, in lines 21 to 24, the words “a savings bank to which certain provisions of said chapter 172 apply pursuant to section 34C of chapter 168, a cooperative bank in stock form to which certain provisions of chapter 172 apply pursuant to section 26C of chapter 170” and inserting in place thereof the following words:- a savings bank in stock form, a cooperative bank in stock form.

SECTION 6. Section 2A of chapter 167 of the General Laws, as so appearing, is hereby amended by striking out, in line 42 and lines 48 and 49, the words “banks and banking” and inserting in place thereof, in each instance, the following words:- financial services.

SECTION 7. Section 14 of said chapter 167, as so appearing, is hereby amended by striking out, in line 41, the words “banks and banking” and inserting in place thereof the following words:- financial services.

SECTION 8. Section 37 of said chapter 167, as so appearing, is hereby amended by striking out, in lines 22 to 24, inclusive the words “one hundred and sixty-seven C to one hundred and sixty-seven G, inclusive, and chapters one hundred and sixty-eight to one hundred and seventy-two A, inclusive,” and inserting in place thereof the following words:- 167C to 167J, inclusive, and chapters 168, 170, 171 and 172.

SECTION 9. Section 3 of chapter 167A of the General Laws, as so appearing, is hereby amended by striking out, in lines 22 to 24, the words “Section 2 shall not apply to the acquisition by a bank holding company, or a company or a banking institution which would become a bank holding company if” and inserting in place thereof the following words:- If the commissioner determines that the reciprocity, age of institution and deposit cap requirements of section 2 have been met then the other provisions of section 2 shall not apply to the acquisition by a bank holding company, or a company or a banking institution which would become a bank holding company; provided, that.

SECTION 10. Section 3 of chapter 167B of the General Laws, as so appearing, is hereby amended by striking out the fourth paragraph.

SECTION 11. Section 12 of chapter 167C of the General Laws, as so appearing, is hereby amended by striking out the fourth paragraph.

SECTION 12. Section 16 of chapter 167D of the General Laws, as so appearing, is hereby amended by striking out, in lines 6 to 9, the words “no such transfer shall be made if the debt is the result of consumer credit granted under the federal Truth in Lending Act, 15 U.S.C. section 1601 et. seq.” and inserting in place thereof the following words:- if the debt is the result of consumer credit granted under the federal Truth in Lending Act, 15 U.S.C. section 1601 et. seq. then notice, if any, shall be made in compliance with the federal act and the regulations promulgated thereunder.

SECTION 13. Section 1 of chapter 167E of the General Laws, as so appearing, is hereby amended by striking out, in line 10, the word “muform” and inserting in place thereof the words:- mutual form.

SECTION 14. Section 2 of chapter 167H of the General Laws, as so appearing, is hereby amended by inserting after the word “to,”, in line 9, the following words:- the organization of an interim bank or.

SECTION 15. Said section 2 of said chapter 167H, as so appearing, is hereby further amended by striking out, in line 14, the word “mutual”.

SECTION 16. Said section 2 of said chapter 167H, as so appearing, is hereby further amended by inserting after the word “to,”, in line 32, the following words:- ,the organization of an interim bank or.

SECTION 17. Said section 2 of said chapter 167H, as so appearing, is hereby further amended by adding the following subsection:-

(d) The certificate of authority and a copy of the articles of organization for a subsidiary banking institution established pursuant to a reorganization pursuant to clause (2) of subsection (a) or clause (2) of subsection (b) shall be filed with the secretary of state.

SECTION 18. Section 6 of said chapter 167H, as so appearing, is hereby amended by striking out, in lines 9 and 10, the words “procedures of the General Laws” and inserting in place thereof the following words:- provisions of chapter 156D.

SECTION 19. Section 7 of said chapter 167H, as so appearing, is hereby amended by striking out, in line 11, the words “form and” and inserting in place thereof the words:- form, an out–of-state-bank, as defined in section 1 of chapter 167 in mutual form, and.

SECTION 20. Section 1 of chapter 167I of the General Laws, as so appearing, is hereby amended by striking out, in line 40, the words “chapter 168 or 170” and inserting in place thereof the words:- chapter 167H or section 9 of this chapter.

SECTION 21. The first paragraph of section 2 of said chapter 167I, as so appearing, is hereby amended by inserting after the first sentence the following two sentences:- One or more mutual banks, one or more thrift institutions and a subsidiary banking institution may merge or consolidate into the single subsidiary banking institution, upon terms approved by a vote of at least 2/3 of the board of each mutual bank, by the board of each thrift institution in accordance with the laws pursuant to which each such thrift institution is organized, and the board of the subsidiary banking institution and approved in writing by the commissioner. For the remaining provisions of this section references to a mutual bank or mutual banks shall also mean a subsidiary banking institution.

SECTION 22. Said section 2 of said chapter 167I, as so appearing, is hereby further amended by inserting after the word “body”, in line 11, the following words:- present and voting thereon.

SECTION 23. Section 3 of said chapter 167I, as so appearing, is hereby amended by inserting after the word “ bank”, in line 13, the following words:- present and voting thereon.

SECTION 24. Said section 3 of said chapter 167I, as so appearing, is hereby further amended by inserting after the word “bank”, in line 36, the following words:- present and voting.

SECTION 25. Said section 3 of said chapter 167I, as so appearing, is hereby further amended by inserting after the word “ascertained”, in line 64, the following words:- and paid.

SECTION 26. Section 11 of said chapter 167I, as so appearing, is hereby amended by inserting after the word “body”, in line 2, the following words:- present and voting.

SECTION 27. Section 13 of said chapter 167I, as so appearing, is hereby amended by striking out, in lines 29 and 30, the words “stockholders owning at least 2/3 of the stock of such corporation” and inserting in place thereof the following words:- 2/3 of the stockholders present and voting thereon.

SECTION 28. Section 15 of said chapter 167I, as so appearing, is hereby amended by inserting after the word “bank”, in line 4, the following words:- present and voting thereon.

SECTION 29. Section 8 of chapter 167J of the General Laws, as so appearing, is hereby amended by striking out, in line 3, the words “state or federally chartered” and inserting in place thereof the following words:- federal savings bank or federal.

SECTION 30. Section 11 of said chapter 167J, as so appearing, is hereby amended by inserting after the word “submitted”, in lines 7 and 8, the following words:- or as of the close of the last business day of the preceding month or as of the close of a business day not more than ten days prior to the date of the meeting.

SECTION 31. Section 21 of said chapter 167J, as so appearing, is hereby amended by striking out, in line 4, the word “procedures” and inserting in place thereof the following word:- provisions.

SECTION 32. Section 17 of chapter 168 of the General Laws, as so appearing, is hereby amended by inserting after the word “bank”, in line 26, the following words:- , federal savings bank.

SECTION 33. Section 19 of said chapter 168, as so appearing, is hereby amended by striking out the third sentence and inserting in place thereof the following sentence:- Within 60 days after the annual meeting, the clerk shall file with the records of the corporation a list containing the names of the corporators , which indicates those who are trustees.

SECTION 34. Section 8A of chapter 171 of the General Laws is hereby amended by striking out section 8A, inserted by section 56 of chapter 482 of the acts of 2014, and inserting in place thereof the following section:-

Section 8G. For the purposes of this section, the following words shall, unless the context clearly requires otherwise, have the following meanings:-

“Electronic branch”, an electronic device, other than a telephone operated by a consumer, through which a consumer may initiate an electronic fund transfer. Such term includes, but is not limited to automated teller machines and cash dispensing machines. Such term does not include a teller machine or similar device located on the premises of and operated solely by an employee of a financial institution or a point-of-sale terminal.

“Organization”, any person, corporation, association or partnership which assists or provides services to a financial institution or merchant in order to make available electronic fund transfers; provided, however, that a financial institution or merchant shall not be considered an organization.

“Point-of-sale terminal”, an electronic terminal located on the premises of a merchant when such terminal is used with the assistance of an employee of a merchant for a customer's purchase or lease of goods or services sold or leased by such merchant or adjustments thereto or the receipt of cash by the customer which is ancillary to the customer's purchase or lease of goods or services from such merchant; provided, however, that such terminal shall be deemed an electronic branch for the purposes of this chapter whenever it is used for any other electronic fund transfer, or for an electronic fund transfer involving a customer's account held by an organization, or for an electronic fund transfer solely for customers of a single financial institution or bank holding company subject to chapter 167A or the federal Bank Holding Company Act of 1956, 12 U.S.C. section 1841 et seq.

A credit union shall comply with the federal Electronic Fund Transfer Act, 15 U.S.C. section 1693 et seq. and the regulations promulgated thereunder; provided, however, the maximum liability of a consumer under 15 U.S.C. section 1693g shall be limited to $50.00.

After a vote of its board of directors, a credit union, except as otherwise provided in this section, may purchase, establish, install, operate, lease or use individually or with any other financial institution or organization or share with any other financial institution or organization any number of manned or unmanned electronic branches at which a customer may make deposits, withdrawals, transfers of funds, obtain advances against preauthorized lines of credit, cash checks or pay obligations, and any number of point-of-sale terminals; provided, however, that withdrawals from such electronic branches, other than those located at an office of a credit union, shall be made only from a demand deposit account, negotiable withdrawal order account, or statement account or against a preauthorized line of credit; and provided, further that the credit union shall have applied for and obtained the approval of the commissioner for such electronic branch except that a credit union at whose office such electronic branch is located need not have applied for or obtained such approval. The commissioner shall approve such application if, in the commissioner’s opinion, such action will promote a sound banking system which provides for the needs of the people and business, encourages competition, discourages monopolies and does not ignore legislative policies.

There shall be no geographical limitation on the location of electronic branches which a credit union may purchase, establish, install, operate, lease or use individually or with any other financial institution or organization or share with any other financial institution or organization; provided, however, that the site location for such electronic branches, other than an electronic branch located at an office of a financial institution or in another state, shall be subject to approval by, and regulation of, the commissioner. An electronic branch may be located in a mobile unit under such conditions and limitations as the commissioner, by regulation, shall establish.

A credit union shall adopt and maintain safeguards to insure the safety of a customer using the electronic branch, to insure the safety of the funds, items and other information at the electronic branch and to assist in the identification of criminals. The commissioner may promulgate rules and regulations establishing minimum standards for such safeguards. Such safeguards shall be in place and operational at the time such electronic branch begins to transact business; provided, however, that such safeguards shall not apply to an electronic branch located at an office of a credit union.

SECTION 35. Section 9A of chapter 172 of the General Laws, as so appearing, is hereby amended by striking out, in line 78, the figure “ 167G” and inserting in place thereof the following figure:- 167J.

SECTION 36. Section 2 of chapter 183C of the General Laws, as so appearing, is hereby amended by striking out the definition of “High cost home mortgage loan” and inserting in place thereof the following definition:– “High cost home mortgage loan”, a consumer credit transaction that is secured by the borrower’s principal dwelling, except a reverse mortgage transaction, with an annual percentage rate or fees which exceed the limitations set pursuant to regulations issued by the commissioner of banks which shall be no less protective than limitations of 12 CFR 1026.32(a)(1).

SECTION 37. Said chapter 183C is hereby further amended by striking out section 3, as so appearing, and inserting in place thereof the following section:–

Section 3. A creditor may not make a high-cost home mortgage loan without first receiving certification from a counselor, in accordance with the requirements of 209 CMR 32.34(1) or 12 CFR 1026.34(a)(5). A high cost home mortgage loan originated by a lender in violation of this section shall not be enforceable.

SECTION 38. Section 4 of said chapter 183C, as so appearing, is hereby amended by striking out the second paragraph and inserting in place thereof the following paragraph:-

There shall be a presumption that the borrower is able to make the scheduled payments if, at the time the loan is made, the lender complied with 209 CMR 32.43 or 12 CFR 1026.43 to determine the borrower’s ability to repay.

SECTION 39. Section 6 of said chapter 183C, as so appearing, is hereby amended by striking out, in lines 2 and 3, the words- “greater than 5 per cent of the total loan amount or $800, whichever is greater”.

SECTION 40. Section 2 of chapter 45 of the acts of 1932, as most recently amended by sections 6 and 7 of chapter 235 of the acts of 2012, is hereby further amended by striking out the seventh sentence and inserting in place thereof the following words:- The board of directors shall adopt such rules and regulations as they may deem necessary to effect the purposes of this act, and of section 17 of chapter 167I of the General Laws.

SECTION 41. The first paragraph of section 1A of chapter 43 of the acts of 1934, as amended by section 167 of chapter 189 of the acts of 1984, is hereby further amended by striking out the last sentence and inserting in place thereof the following sentence:- Every member bank shall furnish to the treasurer of the corporation one copy of any report of examination and audit filed with the commissioner by such bank or caused by the commissioner to be made with respect to such bank, in each case within fifteen days after such report is filed with or otherwise furnished to the commissioner.

SECTION 42. Section 3 of said chapter 43, as most recently amended by section 33 of chapter 238 of the acts of 1996, is hereby further amended by striking out the fourth and fifth sentences and inserting in place thereof the following 2 sentences:- In case of the liquidation of any member bank, the corporation shall, provided that the directors are satisfied that such bank has paid or will be able to pay its depositors in full, return the unexpended portion, as determined by said directors, of all assessments paid by such bank into the Deposit Insurance Fund, after deducting as a charge for insurance of its deposits during the period from October 1, 1939, to the date of the vote authorizing such liquidation, an amount equal to the sum of the annual assessments due and payable on October 1, 1939 and on October 1 of each year thereafter while a member bank as provided in sections 1 and 17. In the case of a merger or consolidation of a savings bank with 1 or more other savings banks pursuant to chapter 167I of the General laws or in the case of a sale of assets of such bank to and the assumption of liabilities by 1 or more savings banks pursuant to said chapter 167I, the continuing bank shall succeed to any of the rights of the discontinuing bank in the assessments theretofore paid by the discontinuing bank; provided, however, that if the continuing bank is, and the discontinuing bank is not, a member of the federal deposit insurance agency section 15 shall apply to such assessments of the discontinuing bank as though such bank had become a member of a federal deposit insurance agency as provided in sections 12 to 15, inclusive.

SECTION 43. The fourth paragraph of section 3A of said chapter 43, added by chapter 534 of the acts of 1952, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- Notwithstanding the provisions of the General Laws relative to voluntary dissolution and liquidation of a savings bank, in order to give effect to the purpose of this section and subject to the approval of the commissioner and of the corporation, such member bank may be dissolved and liquidate its affairs if authorized by vote of at least 2/3 of its trustees; provided, that another savings bank shall have assumed and agreed to pay the whole of the deposits of such member bank pursuant to chapter 167I of the General Laws.

SECTION 44. Section 7 of said chapter 43, as amended by section 87 of chapter 371 of the acts of 1983, is hereby further amended by striking out the first sentence and inserting in place thereof the following sentence:- For the purpose of carrying out the provisions of this act, the corporation may exercise all the powers, rights and franchises of any bank the control, possession and operation of which has been taken over by it under this act, and may exercise all the powers and rights of the corporators of such bank relative to a merger or consolidation conferred upon them by purchase of assets and assumption of liabilities under chapter 167I.

SECTION 45. Section 12 of said chapter 43 is hereby amended by striking out the first sentence, as amended by section 26 of chapter 64 of the acts of 1999, and inserting in place thereof the following sentence:- Any member bank which shall apply for membership in a federal deposit insurance agency shall forthwith give written notice thereof to the Depositors Insurance Fund, and to the commissioner.

SECTION 46. Paragraph (d) of section 17 of said chapter 43, as appearing in section 22 of chapter 405 of the acts of 1985, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- Upon payment by the Deposit Insurance Fund of all or any part of the portion of any deposit insured by the fund in any member bank, the fund 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 bank as would have been payable to him on a claim for the portion of his deposit so paid by the Deposit Insurance Fund, but he shall retain his right to receive distribution of so much of his claim against said assets to which he may be entitled after reimbursement pro rata of the claims for subrogation to the Deposit Insurance Fund as provided in this paragraph and to a federal deposit insurance agency..

SECTION 47. Paragraph (i) of section 19 of said chapter 43, as appearing in section 22A of said chapter 405, is hereby amended by striking out the first sentence and inserting in place there of the following sentence:- Upon payment by the Deposit Insurance Fund of all or any part of the portion of any deposit insured by the fund in such bank, the fund 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 bank as would have been payable to him on a claim for the portion of his deposit so paid by the Deposit Insurance Fund, but he shall retain his right to receive distribution of so much of his claim against said assets to which he may be entitled after reimbursement pro rata of the claims for subrogation to the Deposit Insurance Fund as provided in this paragraph and to the Federal Deposit Insurance Corporation.

SECTION 48. Section 1 of chapter 73 of the acts of 1934, as most recently amended by section 17 of chapter 235 of the acts of 2012, is hereby further amended by striking out the sixth sentence and inserting in place thereof the following sentence:- All assessments pursuant to this section and all payments pursuant to section 17 of chapter 167I of the General Laws shall be held as a fund to be known as the Share Insurance Fund and shall be in addition to all other payments to the central bank required pursuant to said chapter 45 and pursuant to said section 17 of chapter 167I.

SECTION 49. The first paragraph of section 1A of said chapter 73, as amended by section 18 of said chapter 235, is hereby further amended by striking out the last sentence and inserting in place thereof the following sentence:- Every member bank shall furnish to the treasurer of the central bank 1 copy of any report or audit filed with the commissioner by such bank or caused by the commissioner to be made with respect to such bank in each case within 15 days after such report is filed with or otherwise furnished to the commissioner.

SECTION 50. The second paragraph of section 3 of said chapter 73, is hereby amended by striking out the first sentence, as appearing in section 22 of said chapter 235, and inserting in place thereof the following sentence:- In the case of a merger or consolidation of a co-operative bank with 1 or more other co-operative banks pursuant to 167I of the General Laws, or in the case of a sale of assets of such bank to and the assumption of its liabilities by one or more co-operative banks pursuant to section 7 or pursuant to chapter 167I, the continuing bank shall succeed to any of the rights of the discontinuing bank in the assessments theretofore paid by the discontinuing bank; provided, however, that if the continuing bank is, and the discontinuing bank is not, a member of the federal deposit insurance agency section 14 shall apply to such assessments of the discontinuing bank as though such bank had become a member of a federal deposit insurance agency as provided in sections 11 to 14, inclusive.

SECTION 51. The fourth paragraph of section 3A of said chapter 73, as appearing in section 23 of said chapter 235, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- Notwithstanding the provisions of the General Laws relative to voluntary dissolution and liquidation of a co-operative bank, in order to give effect to the purpose of this section and subject to the approval of the commissioner and of the central bank, such member bank may be dissolved and liquidate its affairs if authorized by a vote of at least two thirds of its directors; provided that another depository institution, the deposits of which are insured by a federal deposit insurance agency, shall have assumed and agreed to pay the whole of the deposits of such member bank pursuant to chapter 167I.

SECTION 52. Section 7 of said chapter 73, as most recently amended by section 29 of said chapter 235, is hereby further amended by striking out the first sentence and inserting in place thereof the following sentence:- For the purpose of carrying out this act, the central bank may exercise all the powers, rights and franchises of any bank the control, possession and operation of which has been taken over by it under this act, and may exercise all the powers and rights of the depositors of such bank relative to a merger or consolidation conferred upon them by purchase of assets or assumption of liabilities pursuant to chapter 167I.

SECTION 53. Section 16 of said chapter 73, as most recently amended by section 35 of said chapter 235, is hereby further amended by striking out subsection (d) and inserting in place thereof the following subsection:-

(d) Upon payment by the Share Insurance Fund of all or any part of the portion of any deposit insured by the fund in any member bank, the fund 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 bank as would have been payable to said person on a claim for the portion of said person’s deposit so paid by the Share Insurance Fund, but said person shall retain the person’s right to receive distribution of so much of the person’s claim against said assets to which said person may be entitled after reimbursement pro rata of the claims for subrogation to the Share Insurance Fund as provided in this paragraph and to a federal deposit insurance agency.

Name:	District/Address:	Date Added:
Edward F. Coppinger	10th Suffolk	1/17/2017