Bill H.3675

HOUSE DOCKET, NO. 2411 FILED ON: 1/17/2019

HOUSE . . . . . . . . . . . . . . . No. 3675

By Mr. Kafka of Stoughton, a petition (subject to Joint Rule 9) of Louis L. Kafka, Steven S. Howitt and James K. Hawkins that the Massachusetts Credit Union Share Insurance Corporation be authorized to create and maintain a fund for the insurance of shares and deposits of members of the Central Credit Union Fund, Inc. Financial Services.

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-First General Court
(2019-2020)

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An Act relative to interstate branching of a credit union and the Massachusetts Credit Union Insurance Corporation.

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 1 of chapter 171 of the General Laws, as appearing in the 2016 Official Edition, is hereby amended by striking out, in lines 43 and 44, the words “, having a usual place of business within the commonwealth and.

SECTION 2. Said chapter 294 of the acts of 1961 is hereby amended by striking out section 1, as appearing in section 1 of chapter 278 of the acts of 1982, and inserting in place thereof the following section:-

Section 1. There is hereby constituted a corporation under the name of Massachusetts Credit Union Share Insurance Corporation, hereinafter referred to as the corporation, for the purpose of creating and maintaining a fund for the insurance of shares and deposits of members of the Central Credit Union Fund, Inc. and of credit unions which are established under the laws of (1) the commonwealth, (2) the states of Maine, New Hampshire, Vermont, New York, Connecticut or Rhode Island, or (3) the United States, provided the credit union so established under the laws of the United States has its principal place of business in of the commonwealth, or the states of Maine, New Hampshire, Vermont, New York, Connecticut or Rhode Island.

In addition to any regulatory powers conferred pursuant to this act, the commissioner of banks may promulgate regulations or other regulatory guidance relating to regular or excess members of the corporation including, but not limited to, required information on applicants to become regular or excess members in order to determine the potential impact on the risk to and adequacy of the share insurance fund, and criteria upon which to base said determination.

SECTION 3. Section 1A of chapter 294 of the Acts of 1961 is hereby amended by striking out the definition of “Excess Member”, inserted by section 1 of chapter 115 of the acts of 1996, and inserting in place thereof the following definition:-

“Excess member”, an inactive member, a federally chartered credit union, or a state chartered credit union whose excess shares and deposits, as hereinafter defined, shall become insured by the corporation pursuant to this chapter.

SECTION 4. Said section 1A of said chapter 294 is hereby further amended by striking out, the definition of “Federally chartered credit union”, inserted by said section 1 of said chapter 115, and inserting in place thereof the following definition:-

“Federally chartered credit union”, a credit union chartered under the laws of the United States whose main office is located in the commonwealth, or the states of Maine, New Hampshire, Vermont, New York, Connecticut or Rhode Island.

SECTION 5. Said section 1A of said chapter 294 is hereby further amended by striking out, the definition of “State chartered credit union”, inserted by section 2 of said chapter 115, and inserting in place thereof the following definition:-

“State chartered credit union”, a credit union chartered under the laws of the commonwealth, or the states of Maine, New Hampshire, Vermont, New York, Connecticut or Rhode Island.

SECTION 6. The first sentence of the first paragraph of section 6D of said chapter 294, as appearing in section 4 of said chapter 115, is hereby amended by striking out the words “located within the commonwealth”.

SECTION 7. Said section 6D of said chapter 294, as so appearing, is hereby amended by striking out paragraph (b) and inserting in place thereof the following paragraph:-

(b) An excess member may have its excess shares and deposits insured only to the same extent as is permitted for an excess member which is a credit union chartered under the laws of the commonwealth subject to the maximum share and deposit limitations applicable to Massachusetts state chartered credit unions under section 30 of chapter 171 of the General Laws.

SECTION 8. Said section 6D of said chapter 294, as so appearing, is hereby further amended by striking out paragraphs (e) to (h), inclusive, and inserting in place thereof the following 4 paragraphs:-

(e) Unless prohibited by applicable law or regulations, an excess member 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 banking regulatory authority.

(f) An excess member shall be subject, and shall agree, to supervision and examination by the commissioner and shall be subject to section 2 of chapter 167 of the General Laws. The commissioner, in his or her sole discretion, periodically may examine the affairs of an excess member 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 credit union and shall be determined annually by the secretary of administration and finance under section 3B of chapter 7 of the General Laws. Upon examination, the commissioner may take such directions, recommendations and orders to an excess member as he or she deems expedient to the same extent as provided by section 3 of said chapter 167. 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 General Credit Union Act, or applicable rules and regulations promulgated thereunder, or pursuant to other applicable federal laws and regulations, or for a State Chartered Credit Union under the laws or regulations of the chartering jurisdiction.

(g) An excess member 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 1 of chapter 167A of the General Laws or a credit union charted 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 6B.

(h) An excess member 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 6B.

The commissioner may consider all information relative to the assessment of potential risk to the share insurance fund, including but not limited to the following information:

(1) Information submitted in accordance with all provisions of this section, including but not limited to the examination reports and information as set forth in paragraph (e) and a valid agreement to be subject to supervision and examination by the commissioner as set forth in paragraph (f);

(2) The existence of satisfactory agreements with the primary insurer and other regulators regarding information sharing, confidentiality, and supervision coordination, and related matters;

(3) The existence of satisfactory agreements with other relevant entities; and

(4) Any additional information the commissioner requires upon which to base a determination regarding potential risk to the share insurance fund that an applicant may present.

SECTION 9. Clause (iii) of the first paragraph of section 16 of said chapter 294, as appearing in chapter 253 of the acts of 2014, is hereby amended by striking out the word “and” the last time it appears.

SECTION 10. Clause (iv) of said first paragraph of said section 16 of said chapter 294, as so appearing, is hereby amended by striking out the words “single A.” and inserting in place thereof the following words:- single A; and

SECTION 11. Said first paragraph of said section 16 of said chapter 294, as so appearing, is hereby amended by adding the following clause:-

(v) Upon a 2/3 vote of its board of directors and having established that such activity will not adversely affect its safety and soundness and having adequate policies and procedures to ensure such investments governing the performance of the corporation and its employees, to minimize any credit, market, liquidity, operations, legal and reputation risks to the corporation, the corporation may apply to the commissioner to make investments as follows:

(1) In investments not specifically enumerated in section 12 or this section . The corporation may invest up to 15 per cent of its assets in these investments at the time of purchase with the investment in any 1 issuer not exceeding 5 per cent of the corporation’s total assets at the time of purchase.

(2) The corporation may authorize investment advisers registered under the Investment Advisers Act of 1940 to acquire or dispose of investments for the corporation.

Any such approval granted by the commissioner shall be subject to such conditions and limitations as the commissioner may impose. The corporation may apply to invest up to 15 per cent of its assets under the authority granted in this paragraph. The percentage of such assets authorized shall be determined by the commissioner. The commissioner may increase, modify, curtail or rescind or otherwise limit the corporation's authority to make such investments.

Name:	District/Address:	Date Added:
Louis L. Kafka	8th Norfolk	1/8/2019
Steven S. Howitt	4th Bristol	1/30/2019
James K. Hawkins	2nd Bristol	2/1/2019