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HOUSE DOCKET, NO. 1252         FILED ON: 1/20/2011

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 1202

 

The Commonwealth of Massachusetts

_________________

PRESENTED BY:

Ronald Mariano

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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 relative to co-operative banks.

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PETITION OF:

 

Name:

District/Address:

Ronald Mariano

3rd Norfolk


HOUSE DOCKET, NO. 1252        FILED ON: 1/20/2011

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 1202

By Mr. Mariano of Quincy, a petition (accompanied by bill, House, No. 1202) of Ronald Mariano relative to co-operative banks.  Financial Services. 


The Commonwealth of Massachusetts
 

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In the Year Two Thousand Eleven

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An Act relative to co-operative banks.
 

              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 26 of chapter 170 of the General Laws, as appearing in the 2008 Official Edition, is hereby amended by striking out, in line 5, the word “co-operative”.

              SECTION 2.              The first paragraph of section 29 of said chapter 170, as so appearing, is hereby amended by striking out, in line 1, the words “savings and loan association” and inserting in place thereof the following words:- thrift bank.

              SECTION 3.              The first paragraph of said section 29 of said chapter 170, as so appearing, is hereby further amended by striking out, in lines 4, 7 and 8, the words “such an association” and inserting in place thereof, in each instance, the following words:- a federal thrift bank.

              SECTION 4.              The first paragraph of said section 29 of said chapter 170, as so appearing, is hereby further amended by striking out, in lines 5 and 6, the words “federal home loan bank board or the federal home loan bank” and inserting in place thereof the following words:- appropriate federal supervising authority.

              SECTION 5.              The first paragraph of said section 29 of said chapter 170, as so appearing, is hereby further amended by striking out, in line 10, the words “board of bank incorporation” and inserting in place thereof the following word:- commissioner.

              SECTION 6.              The first paragraph of said section 29 of said chapter 170, as so appearing, is hereby further amended by inserting the following sentence:- For purposes of this section, a federal thrift bank is a federally chartered savings bank, savings and loan association or successor thrift institution chartered under the laws of the United States.

              SECTION 7.              The second paragraph of said section 29 of said chapter 170, as so appearing, is hereby amended by striking out, in lines 11, 17, 19 and 20, the word “association” and inserting in place thereof, in each instance, the following words:- federal thrift bank.

              SECTION 8.              The second paragraph of said section 29 of said chapter 170, as so appearing, is hereby further amended by striking out, in lines 11 and 12, the words “board of bank incorporation” and inserting in place thereof the following word:- commissioner.

              SECTION 9.              The second paragraph of said section 29 of said chapter 170, as so appearing, is hereby further amended by striking out, in lines 14 and 18, the words “said board” and inserting in place thereof, in each instance, the following words:- the commissioner.

              SECTION 10.              Said section 29 of said chapter 170, as so appearing, is hereby further amended by striking out the third paragraph and inserting in place thereof the following paragraph:-

              The commissioner may establish the procedure to be followed by any such federal thrift bank converting into a co-operative bank; provided, however, that no such conversion shall become effective unless approved in writing by the commissioner; and provided, further, that the commissioner shall not grant such approval until he has received notice from the share insurance fund of The Co-operative Central Bank, hereinafter called the central bank, that arrangements satisfactory to it have been made for such conversion.

              SECTION 11.              The fourth paragraph of said section 29 of said chapter 170, as so appearing, is hereby amended by striking out, in line 36, the words “such application is approved by said board” and inserting in place thereof the following words:- an application for conversion is approved by the commissioner.

              SECTION 12.              The fourth paragraph of said section 29 of said chapter 170, as so appearing, is hereby further amended by striking out, in lines 37 and 39, the word “association” and inserting in place thereof, in each instance, the following words:- federal thrift bank.

              SECTION 13.              The fifth paragraph of said section 29 of said chapter 170, as so appearing, is hereby amended by striking out, in line 42, the words “said board” and inserting in place thereof the following words:- the commissioner.

              SECTION 14.              The fifth paragraph of said section 29 of said chapter 170, as so appearing, is hereby further amended by striking out, in line 42, the word “it” and inserting in place thereof the following word:- him.

              SECTION 15.              The fifth paragraph of said section 29 of said chapter 170, as so appearing, is hereby further amended by striking out, in line 45, the words “said board” and inserting in place thereof the following word:- commissioner.

              SECTION 16.              The fifth paragraph of said section 29 of said chapter 170, as so appearing, is hereby further amended by striking out, in line 46, the word “its” and inserting in place thereof the following word:- his.

              SECTION 17.              The sixth paragraph of said section 29 of said chapter 170, as so appearing, is hereby amended by striking out, in line 55, the words “The Co-operative Central Bank, hereinafter called”.

              SECTION 18.              The sixth paragraph of said section 29 of said chapter 170, as so appearing, is hereby further amended by striking out, in line 56, the words “, referred to in section twenty-eight”.

              SECTION 19.              The sixth paragraph of said section 29 of said chapter 170, as so appearing, is hereby further amended by striking out, in line 58 and 59, the words “, referred to in said section twenty-eight”.

              SECTION 20.              Said section 29 of said chapter 170, as so appearing, is hereby further amended by striking out the seventh paragraph and inserting in place thereof the following paragraph:-

              In addition to the payment to said reserve fund, the succeeding corporation shall pay to said share insurance fund or make provision for payment thereto of such a sum as the directors of the central bank, with the approval of the commissioner, shall determine to be equitable; and provided, that the succeeding corporation shall pay to said share insurance fund such proportion of any current annual assessment as shall have accrued to the date of said certificate.

              SECTION 21.              Section 1 of chapter 45 of the acts of 1932 is hereby amended by striking out the first paragraph, as appearing in section 2 of chapter 323 of the acts of 1956, and inserting in place thereof the following paragraph:-

              All the co-operative banks established under the laws of the commonwealth and subject to the provisions of chapter one hundred and seventy of the General Laws, hereinafter referred to as member banks, are hereby constituted a corporation under the name of the Co-operative Central Bank, hereinafter referred to as the central bank to promote the elasticity and flexibility of the resources of the co-operative banks of the commonwealth by centralizing their reserve funds, to assist such member banks by providing financial or technical assistance, or holding investments which cannot readily be liquidated, by making loans to them secured by the pledge of mortgages or other securities legally held by such member banks. Any co-operative bank hereafter established under the authority of said chapter one hundred and seventy shall upon its organization become a member bank. The assets of the central bank shall be divided into two separate and distinct funds, as follows:  (a) the Reserve Fund, which shall consist of all assessments collected under section six, as amended, and all investments thereof and all income thereon; and (b) the Share Insurance Fund, established by chapter seventy-three of the acts of nineteen hundred and thirty-four, as amended.

              SECTION 22.              The second paragraph of said section 1 of said chapter 45, as appearing in section 10 of chapter 405 of the acts of 1985, is hereby amended by striking out the words “; provided, however, that within thirty days of the vote of the corporation to dissolve and liquidate the Share Insurance Fund, declared eligible for distribution, in accordance with section nine of said chapter seventy-three, and prior to any distribution to member banks, an excise of five million dollars shall be paid by the corporation to the commissioner of revenue as an excise for the privilege of dissolving and liquidating said fund in whole or in part. No such excise shall be paid for such privilege subsequent to the initial distribution made in accordance with said section nine. After payment of such excise, the balance of the proceeds declared eligible for distribution shall be distributed in accordance with said section nine. Such excise shall be subject to all other relevant provisions of applicable law consistent with the provisions of this section; provided, however, that the application of such relevant provisions shall in no way diminish the amount of such excise. The revenues received by the commonwealth from the excise imposed by this section shall be placed in a separate fund to be applied solely to defray the cost of the purposes set forth in chapter twenty-one E of the General Laws”.

              SECTION 23.              Said section 1 of said chapter 45, as most recently amended by said section 10 of said chapter 405, is hereby further amended by inserting after the second paragraph the following paragraph:-

              The term federal deposit insurance agency as used in this act shall mean Federal Deposit Insurance Corporation or any successor to such corporation.

              SECTION 24.              The first paragraph of section 2 of said chapter 45, as appearing in section 1 of chapter 176 of the acts of 1984, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- There shall be a board of directors of the central bank consisting of no fewer than nine directors but no more than fifteen directors, who shall be elected by the member banks in the manner hereinafter provided for terms of three years except in the case of vacancies.

              SECTION 25.              The sixth sentence of the first paragraph of said section 2 of said chapter 45, as so appearing, is hereby amended striking out the words “eleven members” and inserting in place thereof the following words:- a majority of the directors.

              SECTION 26.              Subsection (a) of said section 2 of said chapter 45, as appearing in section 11 of chapter 405 of the acts of 1985, is hereby amended by striking out the word “fifteen” and inserting in place thereof the following words:- no fewer than seven directors but no more than twelve.

              SECTION 27.              Subsection (b) of said section 2 of said chapter 45, as appearing in section 1 of chapter 176 of the acts of 1984, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- The delegates of the member banks shall elect from a list of persons nominated by such banks a number of directors equal to one-fifth the total number of directors serving on the board, rounded up to the nearest whole number, but which shall be not less than two, none of whom shall be directors, officers, employees or agents of a member bank or a director, trustee or other officer of any other financial institution.

              SECTION 28.              Section 4 of said chapter 45, as most recently amended by chapter 271 of the acts of 1991, is hereby further amended by striking out the words “two or more vice presidents, one of whom may be named as executive vice president,”.

              SECTION 29.              Said section 4 of said chapter 45 is hereby further amended by striking out the word “corporation”, each time it appears, and inserting in place thereof, in each instance, the following words:- central bank.

              SECTION 30.              Said section 4 of said chapter 45 is hereby further amended by inserting after the second sentence the following sentence:- Any person may serve in more than one office.

              SECTION 31.              The first sentence of section 6 of said chapter 45, as most recently amended by section 79 of chapter 371 of the acts of 1983, is hereby further amended by striking out the words “a total of not more than seventy-five per cent of such reserve as such member bank is required to establish and maintain under section twenty-two of said chapter one hundred and seventy of the General Laws, computed on the basis of its total assets as appearing in its last preceding annual report to the commissioner” and inserting in place thereof the following words:- such amount as the directors may determine with the approval of the commissioner.

              SECTION 32.              The third sentence of said section 6 of said chapter 45, as most recently amended by section 1 of chapter 366 of the acts of 1971, is hereby further amended by striking out the words “an initial deposit hereunder and from time to time may call for”.

              SECTION 33.              The third sentence of said section 6 of said chapter 45 is hereby further amended by striking out the word “further”.

              SECTION 34.              The first sentence of the first paragraph of section 7 of said chapter 45 is hereby amended by striking out the word “shareholders” and inserting in place thereof the following word:- depositors.

              SECTION 35.              Said section 7 of said chapter 45, as most recently amended by section 1 of chapter 116 of the acts of 1994, is hereby further amended by striking out the third paragraph and inserting in place thereof the following 7 paragraphs:-

              The central bank may by a vote of its directors borrow money and pledge its assets as security therefor.

              The funds of the central bank may be invested only in:

              (a) Bankers’ acceptances and bills of exchange of the kinds and maturities made eligible by law for rediscount with federal reserve banks, provided that the same are accepted by a bank, banking association or trust company incorporated under the laws of the United States or of this commonwealth;

              (b) Obligations of the United States and federal agency obligations;

              (c) Obligations of the commonwealth;

              (d) Loans to member banks; such loans to be in such amounts and subject to such conditions as the directors may determine; and

              (e) Deposits in member banks, national banks and in trust companies established under the laws of this commonwealth.

              SECTION 36.              The first paragraph of section 10 of said chapter 45, as most recently amended by section 81 of chapter 371 of the acts of 1983, is hereby further amended by inserting after the first sentence the following sentence:- In lieu of providing such list, the commissioner may notify the central bank that the information required in such list is available to the central bank from a source maintained by the commissioner or a federal deposit insurance agency.

              SECTION 37.              Said chapter 45 is hereby further amended by inserting after section 12 the following section:-

              Section 13.  The central bank shall have the authority to indemnify its directors, officers, employees and other agents to whatever extent specified in or authorized by a by-law adopted pursuant to law. Such indemnification may include payment by the central bank of expenses incurred in defending a civil or criminal action or proceeding in advance of the final disposition of such action or proceeding upon receipt of an undertaking by the person indemnified to repay such payment if he shall be adjudicated to be not entitled to indemnification under this section which undertaking may be accepted without reference to the financial ability of such person to make repayment. Any such indemnification may be provided although the person to be indemnified is no longer an officer, director, trustee, employee or agent of the central bank.

              No indemnification shall be provided for any person with respect to any matter as to which he shall have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his action was in the best interests of the central bank.

              The central bank shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or other agent of the central bank, against any liability incurred by him in any such capacity, or arising out of his status as such, whether or not the central bank would have the power to indemnify him against such liability.

              SECTION 38.              Chapter 73 of the acts of 1934 is hereby amended by striking out section 1, as most recently amended by section 23 of chapter 405 of the acts of 1985, and inserting in place thereof the following section:-

              Section 1.  The Co-operative Central Bank, established by chapter forty-five of the acts of nineteen hundred and thirty-two hereinafter referred to as the central bank, shall in the manner herein provided establish a fund for the insurance of shares in co-operative banks established under the laws of the commonwealth, hereinafter referred to as member banks. For such purpose, in addition to the assessments hereinafter provided for, the directors of the central bank may, by assessments made from time to time upon the member banks determined in accordance with section 16 hereof, require each member bank to pay over in cash to the central bank a total of not more than one per cent of the deposits of such member bank as shown by its last preceding annual report to the commissioner of banks, hereinafter referred to as the commissioner, or as shown on the records of the federal deposit insurance agency, such assessments to be in addition to all other payments to the central bank required under said chapter forty-five. When and as determined by the board of directors of the central bank and approved by the commissioner, such bank shall pay to the central bank such assessment, if any, as authorized by the board of directors of the central bank and approved by the commissioner. If any member bank shall fail to pay any assessment lawfully required under this section, the treasurer of the central bank shall notify the commissioner of such failure and the commissioner shall forthwith notify such member bank in writing. The failure of such member bank to make such payment within fifteen days after such notice from the commissioner shall constitute a violation of law within the meaning of section twelve of chapter one hundred and sixty-seven of the General Laws. All assessments under this section and all payments under sections twenty-eight and twenty-nine of chapter one hundred and seventy 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 under said chapter forty-five and under said section twenty-nine of chapter one hundred and seventy. When the net fair value of the assets of said fund, as determined by the central bank and the commissioner, shall equal three per cent of the aggregate deposits of all member banks insured by the central bank no assessments shall be made, and if at any time or from time to time thereafter the net fair value of the assets of said fund as so determined shall fall below such three per cent, the payment of such assessments, as hereinbefore provided, shall be resumed and shall be continued until the net fair value of such assets as so determined again equals such three per cent. The Share Insurance Fund shall be invested separately from the other funds of the central bank and shall not be liable for the obligations of the central bank other than those created by or under this act, as amended. Assets of the central bank not held in the Share Insurance Fund shall not be liable for any obligations created hereby or hereunder. All cost of administering the Share Insurance Fund shall be paid therefrom.

              The term “federal deposit insurance agency” as used in this act shall mean Federal Deposit Insurance Corporation any successor to such corporation.

              SECTION 39.              The first paragraph of section 1A of said chapter 73, as inserted by section 2 of chapter 179 of the acts of 1980, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- The directors from time to time may, to the extent which the commissioner deems desirable, review the financial condition of any member bank as it relates to deposit insurance, and shall report thereon to the commissioner with the recommendations of the directors.

              SECTION 40.              The first paragraph of said section 1A of said chapter 73 is hereby further amended by inserting after the second sentence the following 2 sentences:- The commissioner shall, to the extent permitted by federal law, furnish to the treasurer of the central bank one copy of the report of any examination of the books, securities, cash, assets and liabilities of any member bank made by the commissioner, pursuant to section two of chapter one hundred and sixty-seven, in the form furnished to such bank as provided in that section. Every member bank shall furnish to the treasurer of the central bank one 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, pursuant to section fourteen of chapter one hundred and seventy, in each case within fifteen days after such report is filed with or otherwise furnished to the commissioner.

              SECTION 41.              The first sentence of the second paragraph of said section 1A of said chapter 73 is hereby amended by striking out the word “shareholders” and inserting in place thereof the following word:- depositors.

              SECTION 42.              The first sentence of the second paragraph of said section 1A of said chapter 73 is hereby further amended by striking out the word “perscribe” and inserting in place thereof the following word:- prescribe.

              SECTION 43.              The first sentence of the second paragraph of said section 1A of said chapter 73 is hereby further amended by striking out after the words “such evidence” the word “or” and inserting in place thereof the following word:- of.

              SECTION 44.              The second sentence of the third paragraph of said section 1A of said chapter 73 is hereby amended by striking out the word “corporation” and inserting in place thereof the following words:- central bank.

              SECTION 45.              Section 3 of said chapter 73 is hereby amended by striking out the first paragraph, as most recently amended by section 2 of chapter 16 of the acts of 1994, and inserting in place thereof the following paragraph:-

              The central bank may pay dividends to member banks and at such times as the directors may determine, subject to the prior approval of the commissioner of any such payment, rates and times and subject to his prior approval as to the terms, conditions and use of such payments to member banks, upon the amounts paid in by such banks to the Share Insurance Fund. The Fund may be invested by the central bank  only as provided in subsections (a), (b), (c) and (e) of section seven of Chapter 45 of the Acts of 1932, as amended, on such terms and conditions and at such valuations as the directors may determine. The central bank may by vote of its directors borrow money for the purposes of the Share Insurance Fund and pledge any assets in which such fund is invested as security for such loans.

              SECTION 46.              The first sentence of the second paragraph of said section 3 of said chapter 73, as appearing in section 23A of chapter 405 of the acts of 1985, is hereby amended by inserting after the word “In”, the first time it appears, the following word:- the.

              SECTION 47.              The first sentence of the second paragraph of said section 3 of said chapter 73, as so appearing, is hereby further amended by striking out after the word “of”, the first time it appears, the word “the” and inserting in place thereof the following word:- a.

              SECTION 48.              The first sentence of the second paragraph of said section 3 of said chapter 73, as so appearing, is hereby further amended by striking out after the words “assumption of” the word “its” and inserting in place thereof the following word:- the.

              SECTION 49.              The first sentence of the second paragraph of said section 3 of said chapter 73, as so appearing, is hereby further amended by striking out after the words “a member of”, the first time they appear, the word “a” and inserting in place thereof the following word:- the.

              SECTION 50.              The first sentence of the second paragraph of said section 3 of said chapter 73, as so appearing, is hereby further amended by striking out the comma after the words “federal deposit insurance agency”, the first time they appear.

              SECTION 51.              The second paragraph of said section 3 of said chapter 73, as so appearing, is hereby further amended by striking out the second sentence.

              SECTION 52.              Said chapter 73 is hereby further amended by striking out section 3A, as most recently amended by section 12 of chapter 507 of the acts of 1980, and inserting in place thereof the following section:-

              Section 3A.  Whenever it shall appear to the commissioner that it is inadvisable or inexpedient for any member bank to continue to transact the business for which it is organized without receiving financial assistance as provided in this section, he may, in his discretion, so notify the central bank, and thereupon, if in the judgment of the directors of the central bank  such action may reduce the risk or avert a threatened loss to the central bank, or may facilitate a merger or consolidation of such member bank with another member bank, or may facilitate the sale of the assets of such member bank to and the assumption of its liabilities by one or more other member banks, the central bank  may, with the approval of the commissioner and in order to effect the purposes of this act, do any one or more of the following: (a) purchase from such member bank the whole or any part of, or any equitable or other interest in, its assets at the book value thereof, or at some other value mutually agreed upon by such member bank and said directors, notwithstanding that either of such values may exceed the market value of the assets so purchased, and upon such terms and conditions as said directors, with the approval of the commissioner, may determine; (b) make loans to such member bank, secured in whole or in part, in such amounts, and upon such terms and conditions, as said directors, with the approval of the commissioner, may determine; (c) pay to such member bank in accordance with an agreement entered into between such member bank and the central bank, with the approval of the commissioner, an amount not in excess of the difference between the book value of certain or all its assets and the fair value thereof as determined by said agreement, in consideration for which such member bank shall agree to write down such assets to such fair value and to pay over to the central bank  so much of any net proceeds realized from the sale or other disposition of each and all such assets as is in excess of such fair value, such payment to be made in such amounts, at such times and upon such terms and conditions as said directors, with the approval of the commissioner, may determine; provided, that any amount paid by the central bank  hereunder to such member bank and the agreement of such member bank to repay the excess, as hereinbefore provided, shall constitute liabilities of such member bank only to the extent of any such excess from time to time actually realized; (d) pay into the surplus account of such member bank in accordance with an agreement entered into between such member bank and the central bank, with the approval of the commissioner, an amount not in excess of the difference between the book value of certain or all its assets and the fair value thereof as determined by said agreement, such member bank being hereby authorized and empowered, notwithstanding any other provision of law, to repay such amount to the central bank  at such time or times and in such manner as such agreement may prescribe; provided, that any such payment made by the central bank  to such member bank, and any agreement of such member bank to repay the same, shall constitute liabilities of such member bank only to the extent provided by said agreement; (e) make a deposit in such bank of such amount as the directors deem advisable which deposit shall not be subject to limits imposed by section three of chapter one hundred and sixty-seven D of the General Laws or by the by-laws of the bank, and which may or may not be a subordinated deposit and may or may not be in accordance with an agreement that dividends thereon will be at a lower rate than is paid to other depositors. (f) assume any liabilities of such member bank; (g) make loans or contributions to or deposits in, or purchase any assets of, any financial institution which will acquire control of or merge or consolidate with such member bank or will purchase the assets and assume the liabilities of such member bank; (h) guarantee such member bank, or any financial institution which will acquire control of or merge or consolidate with such member bank or will purchase the assets and assume the liabilities of such member bank, against loss by reason of such acquisition of control, merger or consolidation or purchase of assets and assumption of liabilities; (i) take any other action which the directors in their opinion deem appropriate to carry out the purposes of this section.

              In addition to or apart from the financial assistance authorized under the preceding paragraph, the central bank  by vote of at least two-thirds of its directors and in order to effect the purposes of this act may, by agreement with a member bank and with the approval of the commissioner, grant financial assistance to such member bank by any or all of the methods prescribed and subject to the terms, conditions and benefits contained in clauses (a) to (i) inclusive, of this section, for any of the purposes stated in this section or for the purpose of providing reserve funds for the protection of depositors of such member bank; provided, that the total financial assistance granted to a member bank under the authority of this paragraph shall not at any one time exceed a sum equal to the greater of five per cent of the deposits of such bank or five hundred thousand dollars.

              Such bank, by vote of at least two thirds of its directors, may take any and all action necessary or advisable to enable it to carry out any or all provisions of this section.

              Notwithstanding the provisions of section twenty-seven of chapter one hundred and seventy 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 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 under section twenty-four of said chapter one hundred and seventy. A liquidating committee of three persons, subject to the approval of the central bank, shall thereupon be elected by and from said directors, and, under such regulations as may be prescribed by the commissioner, shall liquidate the remaining assets, and after satisfying or adjusting all debts of and claims against such member bank not assumed by such other co-operative bank, shall distribute the remaining proceeds among those entitled thereto proportionate to their respective interests therein. The supreme judicial court, or any justice thereof, shall have jurisdiction in equity to enforce the provisions of this paragraph and to act upon all applications and in all proceedings thereunder.

              At any time after ten years from the date financial assistance shall have been granted to a member bank under any of the provisions of this section, any unpaid balance thereof may be compromised or settled for such cash payment or other consideration as the central bank  and the member bank, with the approval of the commissioner, may agree upon, and upon such compromise or settlement the member bank shall be deemed to be released and discharged from any further obligation to repay the unpaid balance of such financial assistance except to the extent provided by such agreement. The supreme judicial court shall have jurisdiction in equity to approve any such agreement for compromise or settlement and to enforce the provisions of this paragraph and to act upon all applications and in all proceedings thereunder.

              SECTION 53.              Section 3B of said chapter 73 is hereby repealed.

              SECTION 54.              Said chapter 73 is hereby further amended by striking out section 4, as most recently amended by section 2 of chapter 72 of the acts of 1981, and inserting in place thereof the following section:-

              Section 4.  Whenever it shall appear to the commissioner that any member bank is in an unsound or unsafe condition to transact the business for which it is organized, or that it is unsafe and inexpedient for it to continue to transact such business, he may so certify to the central bank, and upon receipt of such certificate the central bank shall, by notice in writing to the commissioner and to the bank, take possession and control forthwith of the property and business of such bank and shall operate such bank, subject to such rules and regulations as the commissioner may prescribe, until the bank shall be turned back to the member bank pursuant to Section 5 of this act, be consolidated with or have its assets and liabilities sold to another financial institution, or until its affairs shall finally be liquidated. The central bank may, while thus carrying on such business, pay to such bank out of the Share Insurance Fund such sums as the central bank’s directors deem necessary for the protection of the bank’s depositors, and may order the same to be repaid when no longer required for that purpose, or may purchase assets from said bank to effect the purposes of this act on such terms and conditions and at such valuations as the directors, with the approval of the commissioner, may determine.

              SECTION 55.              The first sentence of section 5 of said chapter 73 is hereby amended by striking out the comma after the words “section four”, the first time they appear.

              SECTION 56.              The second sentence of said section 5 of said chapter 73 is hereby amended by striking out the word “it”, the first time it appears, and inserting in place thereof the following words:- the central bank.

              SECTION 57.              The second sentence of said section 5 of said chapter 73 is hereby further amended by striking out the word “shareholders” and inserting in place thereof the following word:- depositors.

              SECTION 58.              The second sentence of said section 5 of said chapter 73 is hereby further amended by striking out the words “of the corporation”.

              SECTION 59.              Said section 5 of said chapter 73 is hereby further amended by striking out the word “corporation”, each time it appears, and inserting in place thereof, in each instance, the following words:- central bank.

              SECTION 60.              Said chapter 73 is hereby further amended by striking out section 6, as most recently amended by chapter 13 of the acts of 1982, and inserting in place thereof the following section:-

              Section 6.  The central bank, with the approval of the commissioner, may, and at the request of the commissioner shall, at any time after it has taken over the control, possession and operation of any member bank under section four, discontinue the business of such bank and proceed to liquidate its affairs. The central bank shall in such event pay to the depositors of such bank, or make arrangements with the federal deposit insurance agency to pay, the full amount of their deposits at the date of the discontinuance of the business of the bank with interest from the last dividend date to the date of discontinuance at such rate as the directors shall determine, such payments to be made within three years from such discontinuance and at such times and in such installments as the directors with the approval of the commissioner shall determine. For such purpose the central bank shall use, in addition to the assets of the bank, such sums as may be required from the Share Insurance Fund. In case of liquidation the central bank shall be subject to such orders, rules and regulations as may be prescribed from time to time by the commissioner. The central bank shall collect all debts due and claims belonging to such bank and with the approval of the commissioner may sell or compound all bad or doubtful debts and with like approval may sell all or any part of the real or personal property of the bank on such terms as the commissioner may approve. To execute and perform the powers and duties conferred upon the central bank, it may in the name of any such bank prosecute and defend all suits and other legal proceedings and may in the name of the bank execute, acknowledge and deliver all deeds, assignments, leases and other instruments necessary and proper to effectuate any sale of real or personal property or any compromise approved by the commissioner and any deed or other instrument executed pursuant to the authority hereby given shall be valid and effectual for all purposes to the same extent as though executed by the officers of the bank by authority of its board of directors. The compensation of employees, counsel, and other assistants, and all expenses incurred in connection with the liquidation of any such bank shall be fixed, subject to the approval of the commissioner, by the directors. The officers of the central bank and any other persons employed by the directors to liquidate the affairs of any member bank under this section shall give bond to the directors for the faithful performance of their duties in relation to such liquidation in such amount and with such surety or sureties as the commissioner may approve. The persons appointed for the purpose of liquidating the affairs of any such bank shall be subject to all the penalties to which agents appointed by the commissioner for the purpose of liquidating the affairs of a bank are now or may hereafter be subject. All accounts for which no claimant can be found after six years following the discontinuance of the business of any such bank shall, if no other provisions to care for said claim have been made, be turned over to the commissioner of revenue pursuant to the provisions of chapter two hundred A of the General Laws. Said accounts may be reclaimed in the manner provided in section ten of said chapter but not interest shall be paid thereon for the time held by the commissioner.

              SECTION 61.              Section 6A of said chapter 73, inserted by section 5 of chapter 244 of the acts of 1938, is hereby amended by striking out the word “corporation”, each time it appears, and inserting in place thereof, in each instance, the following words:- central bank.

              SECTION 62.              Section 7 of said chapter 73, as most recently amended by section 92 of chapter 371 of the acts of 1983, is hereby further amended by striking out the word “corporation”, each time it appears, and inserting in place thereof, in each instance, the following words:- central bank.

              SECTION 63.              The first sentence of said section 7 of said chapter 73 is hereby further amended by inserting after the words “and may exercise all”, the following word:- the.

              SECTION 64.              The first sentence of said section 7 of said chapter 73 is hereby further amended by striking out the word “shareholders” and inserting in place thereof the following word:- depositors.

              SECTION 65.              The first sentence of said section 7 of said chapter 73 is hereby further amended by striking out the words “sale of assets” and inserting in place thereof the following word:- merger.

              SECTION 66.              Said section 7 of said chapter 73 is hereby further amended by inserting after the second sentence the following 2 sentences:- Upon the central bank taking possession of any member bank under this act, all rights and privileges of stockholders in such member bank shall terminate and each stockholder of any such member bank shall be entitled only to a pro rata portion of the surplus, if any, of the amount realized by the central bank upon the disposition of the assets of such member bank, over the total liabilities, including reserves for contingent liabilities, of such member bank. Upon the approval of the commissioner of the determination of such surplus, such determination shall become binding upon the central bank and the stockholders of such member bank. 

              SECTION 67.              Section 8 of said chapter 73, as amended by section 4 of chapter 179 of the acts of 1980, is hereby further amended by striking out the word “corporation” and inserting in place thereof the following words:- central bank. 

              SECTION 68.              Said section 8 of said chapter 73 is hereby further amended by striking out after the words “and for” the word “such” and inserting in place thereof the following word:- the.

              SECTION 69.              Said section 8 of said chapter 73 is hereby further amended by inserting after the word “purposes” the following words:- of this act.

              SECTION 70.              Said section 8 of said chapter 73 is hereby further amended by inserting after the words “with the directors and” the following word:- may.

              SECTION 71.              Said section 8 of said chapter 73 is hereby further amended by striking out after the words “member bank, as” the word “they” and inserting in place thereof the following words:- the directors may.

              SECTION 72.              Said chapter 73 is hereby further amended by striking out section 9, as most recently amended by section 25 of chapter 405 of the acts of 1985, and inserting in place thereof the following section:-

              Section 9.  The central bank, at a special meeting called for this purpose and held in accordance with the by-laws and with section five of said chapter forty-five, may determine, by four-fifths vote of all member banks, that, as a fact, the deposits of all member banks are adequately insured by a federal deposit insurance agency and that the Share Insurance Fund is no longer needed for the insurance of deposits of member banks. If the commissioner concurs with such determination of fact, he shall declare any balance of such fund, after payment of losses, expenses and obligations of the central bank, eligible for distribution to member banks upon any dissolution and liquidation of the fund. When voting for the purposes provided in this section, each such member bank, by a delegate authorized by its board of directors, shall have one vote. Upon any such vote to dissolve and liquidate the Share Insurance Fund, the central bank shall distribute, over a period of not more than twelve months, the amount of the fund so voted for distribution to the then member banks pro rata to the then member banks based upon their total amounts of assessments paid into said fund.

              SECTION 73.              The first sentence of section 10 of said chapter 73, as appearing in section 6 of chapter 696 of the acts of 1950, is hereby amended by striking out the word “shares” and inserting in place thereof the following word:- deposits.

              SECTION 74.              The first sentence of said section 10 of said chapter 73, as so appearing, is hereby further amended by striking out the words “so much of”.

              SECTION 75.              The first sentence of said section 10 of said chapter 73, as so appearing, is hereby further amended by striking out the word “said”.

              SECTION 76.              The first sentence of said section 10 of said chapter 73, as so appearing, is hereby further amended by striking out the words “as relates to possession of banks by the commissioner”.

              SECTION 77.              Said section 10 of said chapter 73, as most recently amended by section 93 of chapter 371 of the acts of 1983, is hereby further amended by striking out the second and third sentences.

              SECTION 78.              Section 11 of said chapter 73 is hereby repealed.

              SECTION 79.              Section 12 of said chapter 73 is hereby repealed.

              SECTION 80.              Section 14 of said chapter 73 is hereby repealed.

              SECTION 81.              The introductory paragraph of section 16 of said chapter 73, as most recently amended by section 31 of chapter 405 of the acts of 1985, is hereby further amended by striking out the words “shares and accounts” and inserting in place thereof the following word:- deposits.

              SECTION 82.              The introductory paragraph of said section 16 of said chapter 73 is hereby further amended by striking out the words “ten thousand dollars or of such other sums as from time to time shall be insured by a” and inserting in place thereof the following words:- the amount covered by the insurance of the.

              SECTION 83.              The introductory paragraph of said section 16 of said chapter 73 is hereby further amended by striking out the word “accounts” and inserting in place thereof the following word:- deposits.

              SECTION 84.              Said section 16 of said chapter 73 is hereby further amended by striking out paragraph (a) and inserting in place thereof the following 5 paragraphs:-

              (a) The board of directors may require each member bank to pay to the Share Insurance Fund an annual excess deposit insurance assessment on July 1 of a year computed upon such member bank’s excess deposits as of the preceding June 30, or such other date as shall be fixed by directors and approved by the commissioner, as shown by a statement filed with the central bank and attested to by an authorized officer of such bank. The annual excess deposit insurance assessment, if any, for any year may be established as a single, uniform rate for all member banks or as a schedule of differing rates to be assessed on the basis of risk classifications established by the central bank and assigned to member banks. Any such risk-based classifications, assessments and assignments shall become effective upon the approval thereof by the commissioner. The criteria for such classifications of risk may include, but need not be limited to, the following: the bank’s so-called CAMELS rating; foreign country activity; types of deposit accounts held; amount of excess deposits held; level of capital; balance sheet composition; diversification and quality of loan and investment portfolios; level, severity and trend of classified assets; level, trend and stability of earnings; ability to meet liquidity needs; compliance with law, regulations, and regulatory and supervisory actions and classifications; and such other factors as, in the opinion of the directors and the commissioner, are deemed necessary, including a classification of greater than normal loss exposure risk.

              Whenever the central bank, by a two-thirds vote of the full membership of its board of directors, determines that a member bank constitutes a greater than normal loss exposure risk to the Share Insurance Fund, it shall inform the commissioner of such determination and the basis therefor. If the commissioner concurs in such determination, the directors may require such member bank to do any one or more of the following: (i) pay an additional, non-refundable excess deposit insurance risk assessment; (ii) pay a capital contribution which shall be retained as additional capital; (iii) provide collateral acceptable to the directors to minimize any loss which might be incurred; (iv) secure reinsurance, naming the Share Insurance Fund as loss payee, in such form and amount and issued by such reinsurers as the directors shall deem acceptable or, in lieu thereof, to reimburse the Share Insurance Fund for the cost of its acquisition of such reinsurance; (v) reduce the amount of excess deposits held by such member bank in such amount and in such time period as the directors shall prescribe; or (vi) take such other actions as the directors deem appropriate. The amount, terms and conditions of any such required actions shall become effective when approved by the commissioner.

              Whenever a member bank has been so determined to constitute a greater than normal loss exposure risk to the Share Insurance Fund, the directors shall notify such bank in writing thereof, including an explanation of the basis for said determination, and advise said bank of any of the requirements imposed pursuant to the preceding paragraph. In any such event, said member bank shall have the option (a) of complying therewith within 60 days following such written notification, or (b) notifying the central bank of its intention to withdraw from membership therein. Upon such notification of intent to withdraw, such bank shall if state-chartered convert to a state-chartered trust company charter in the manner hereinafter prescribed. Upon said conversion, such bank shall be referred to as a former member bank, and its membership and excess deposit insurance coverage shall cease on a date set by the directors, with the approval of the commissioner, subject to the following conditions: (1) each insured excess deposit in such bank on the date of cessation of insurance coverage, other than a term deposit, shall continue to be insured for one year after said date; and (2) each term deposit in said bank on said date shall continue to be insured until maturity; provided, however, that such bank shall be liable to the central bank for the cost of such coverage during said time periods at the assessed rate approved by the commissioner; and provided, further, that with the approval of the commissioner, the central bank may make arrangements with the holders of term deposits for an early withdrawal of such term deposits without penalty; and (3) said bank shall give written notice to its depositors of the cessation of its excess insurance coverage in such manner as the commissioner shall prescribe.

              Upon any such withdrawal from membership, a former member bank shall not retain, succeed to or acquire any rights with respect to the assets of the central bank, except as otherwise provided herein. All amounts paid by the withdrawing bank pursuant to section 1 and paragraph (a) and all amounts paid by such bank pursuant to section 6 of chapter 45 of the acts of 1932 shall be retained by the central bank as a charge for the insurance of such bank’s deposits and for the availability of liquidity assistance while it was a member bank; provided, however, that such bank shall participate in any distribution made under the provisions of section 9, and may, with the approval of the commissioner, receive dividends on such retained assessments and deposits declared pursuant to section 5 of said chapter 45.

              The establishment of said risk classifications, the assignment thereof to member banks and the notice of any additional actions to be taken, as provided for herein, shall be completed and effective not later than 90 days after the effective date of this act.

              SECTION 85.              Paragraph (b) of said section 16 of said chapter 73 is hereby amended by inserting after the words “except as” the following word:- hereinbefore.

              SECTION 86.              Paragraph (b) of said section 16 of said chapter 73 is hereby further amended by striking out the words “in section twelve and”.

              SECTION 87.              Paragraph (c) of said section 16 of said chapter 73 is hereby amended by inserting a comma after the word “inclusive”.

              SECTION 88.              Paragraph (c) of said section 16 of said chapter 73 is hereby further amended by striking out the word “accounts” and inserting in place thereof the following word:- deposits.

              SECTION 89.              Paragraph (d) of said section 16 of said chapter 73 is hereby amended by striking out the word “parts” and inserting in place thereof the following word:- part.

              SECTION 90.              Paragraph (d) of said section 16 of said chapter 73 is hereby further amended by striking out the word “account”, each time it appears, and inserting in place thereof, in each instance, the following word:- deposit.

              SECTION 91.              Paragraph (d) of said section 16 of said chapter 73 is hereby further amended by inserting a comma after the words “Share Insurance Fund”, the second time they appear.

              SECTION 92.              Said section 16 of said chapter 73 is hereby further amended by inserting after paragraph (d) the following paragraph:-

              (e) Notwithstanding any other provisions hereof, if the federal deposit insurance agency is at any time a depositor, either directly or through any other governmental agency, in any member bank which is a member of a federal deposit insurance agency, the amounts deposited, directly or indirectly, by the federal deposit insurance agency shall not be deemed insured to any extent by the Share Insurance Fund.

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