HB 1113-1_ Filed 02/22/2001, 09:14


Text Box

Adopted Rejected


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COMMITTEE REPORT


                                                        YES:

12

                                                        NO:
0

MR. SPEAKER:
    Your Committee on       Financial Institutions     , to which was referred       House Bill 1113     , has had the same under consideration and begs leave to report the same back to the House with the recommendation that said bill be amended as follows:

SOURCE: Page 3, line 30; (01)AM111301.3. -->     Page 3, between lines 30 and 31, begin a new paragraph and insert:
SOURCE: IC 28-7-1-9; (01)AM111301.4. -->     "SECTION 4. IC 28-7-1-9 , AS AMENDED BY P.L.62-1999, SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2001]: Sec. 9. A credit union has the following powers:
        (1) To issue shares of its capital stock to its members. No commission or compensation shall be paid for securing members or for the sale of shares.
        (2) To make loans to members or other credit unions. A loan to another credit union may not exceed twenty percent (20%) of the paid-in capital and surplus of the credit union making the loan.
        (3) To make loans to officers, directors, or committee members, but only if:
            (A) the loan complies with all requirements under this chapter with respect to loans to other borrowers and is not on terms

more favorable than those extended to other borrowers;
            (B) upon the making of the loan, the aggregate amount of loans outstanding under this subdivision will not exceed twenty percent (20%) of the unimpaired capital and surplus of the credit union;
            (C) the loan is approved by the credit committee or loan officer; and
            (D) the borrower takes no part in the consideration of or vote on the application.
        (4) To invest in any of the following:
            (A) Bonds, notes, or certificates that are the direct or indirect obligations of the United States, or of the state, or the direct obligations of a county, township, city, town, or other taxing district or municipality or instrumentality of Indiana and that are not in default.
            (B) Bonds or debentures issued by the Federal Home Loan Bank Act (12 U.S.C. 1421 through 1449) or the Home Owners' Loan Act (12 U.S.C. 1461 through 1468).
            (C) Interest-bearing obligations of the FSLIC Resolution Fund and obligations of national mortgage associations issued under the authority of the National Housing Act.
            (D) Mortgages on real estate situated in Indiana which are fully insured under Title 2 of the National Housing Act (12 U.S.C. 1707 through 1715z).
            (E) Obligations issued by farm credit banks and banks for cooperatives under the Farm Credit Act of 1971 (12 U.S.C. 2001 through 2279aa-14).
            (F) In savings and loan associations, other credit unions that are insured under IC 28-7-1-31.5 and certificates of indebtedness or investment of an industrial loan and investment company if the association or company is federally insured. Not more than twenty percent (20%) of the assets of a credit union may be invested in the shares or certificates of an association or company; nor more than forty percent (40%) in all such associations and companies.
            (G) Corporate credit unions.
            (H) Federal funds or similar types of daily funds transactions with other financial institutions.
            (I) Mutual funds created and controlled by credit unions,

credit union associations, or their subsidiaries. Mutual funds referred to in this clause may invest only in instruments that are approved for credit union purchase under this chapter.
            (J) Shares, stocks, or obligations of any credit union service organization (as defined in Section 701.27 712 of the Rules and Regulations of the National Credit Union Administration) with the approval of the department. Not more than five percent (5%) of the total paid in and unimpaired capital of the credit union may be invested under this clause.
        (5) To deposit its funds into:
            (A) depository institutions that are federally insured; or
            (B) state chartered credit unions that are privately insured by an insurer approved by the department.
        (6) To purchase, hold, own, or convey real estate as may be conveyed to the credit union in satisfaction of debts previously contracted or in exchange for real estate conveyed to the credit union.
        (7) To own, hold, or convey real estate as may be purchased by the credit union upon judgment in its favor or decrees of foreclosure upon mortgages.
        (8) To issue shares of stock and upon the terms, conditions, limitations, and restrictions and with the relative rights as may be stated in the bylaws of the credit union, but no stock may have preference or priority over the other to share in the assets of the credit union upon liquidation or dissolution or for the payment of dividends except as to the amount of the dividends and the time for the payment of the dividends as provided in the bylaws.
        (9) To charge the member's share account for the actual cost of necessary locator service when the member has failed to keep the credit union informed about the member's current address. The charge shall be made only for amounts paid to a person or concern normally engaged in providing such service, and shall be made against the account or accounts of any one (1) member not more than once in any twelve (12) month period.
        (10) To transfer to an accounts payable, a dormant account, or a special account share accounts which have been inactive, except

for dividend credits, for a period of two (2) years. The credit union shall not consider the payment of dividends on the transferred account.
        (11) To invest in fixed assets with the funds of the credit union. An investment in fixed assets in excess of five percent (5%) of its assets is subject to the approval of the department.
        (12) To establish branch offices, upon approval of the department, provided that all books of account shall be maintained at the principal office.
        (13) To pay an interest refund on loans proportionate to the interest paid during the dividend period by borrowers who are members at the end of the dividend period.
        (14) To purchase life savings and loan protection insurance for the benefit of the credit union and its members, if:
            (A) the coverage is placed with an insurance company licensed to do business in Indiana; and
            (B) no officer, director, or employee of the credit union personally benefits, directly or indirectly, from the sale or purchase of the coverage.
        (15) To sell and cash negotiable checks, travelers checks, and money orders for members.
        (16) To purchase members' notes from any liquidating credit union, with written approval from the department, at prices agreed upon by the boards of directors of both the liquidating and the purchasing credit unions. However, the aggregate of the unpaid balances of all notes of liquidating credit unions purchased by any one (1) credit union shall not exceed ten percent (10%) of its unimpaired capital and surplus unless special written authorization has been granted by the department.
        (17) To exercise such incidental powers necessary or requisite to enable it to carry on effectively the business for which it is incorporated.
        (18) To act as a custodian or trustee of any trust created or organized in the United States and forming part of a stock bonus, pension, or profit sharing plan which qualifies or qualified for specific tax treatment under Section 408(a) or Section 401(d) of the Internal Revenue Code, if the funds of the trust are invested only in share accounts or insured certificates of the credit union.


        (19) To issue shares of its capital stock or insured certificates to a trustee or custodian of a pension plan, profit sharing plan, or stock bonus plan which qualifies for specific tax treatment under Sections 401(d) or 408(a) of the Internal Revenue Code.
        (20) Subject to the restrictions in section 9.1 of this chapter, to engage in any activities in which the credit union could engage if the A credit union were a federally chartered credit union, may exercise any rights and privileges that are:
            (A) granted to federal credit unions; but
            (B) not authorized for credit unions under the Indiana Code (except for this section) or any rule adopted under the Indiana Code;

        if the department authorizes the credit union to engage in the activities. complies with section 9.2 of this chapter.
        (21) To sell, pledge, or discount any of its assets, to purchase all or part of the assets of another credit union, and to assume the liabilities of the selling credit union. However, a credit union may not pledge any of its assets as security for the safekeeping and prompt payment of any money deposited, except that a credit union may, for the safekeeping and prompt payment of money deposited, give security as authorized by federal law.
        (22) To act as a fiscal agent of the United States and to receive deposits from nonmember units of the federal, state, or county governments, from political subdivisions, and from other credit unions upon which the credit union may pay varying interest rates at varying maturities subject to terms, rates, and conditions that are established by the board of directors. However, the total amount of public funds received from units of state and county governments and political subdivisions that a credit union may have on deposit may not exceed ten percent (10%) of the total assets of that credit union, excluding those public funds.
        (23) To join the National Credit Union Administration Central Liquidity Facility.
        (24) To participate in community investment initiatives under the administration of organizations:
            (A) exempt from taxation under Section 501(c)(3) of the Internal Revenue Code; and
            (B) located or conducting activities in communities in which

the credit union does business.
        Participation may be in the form of either charitable contributions or participation loans. In either case, disbursement of funds through the administering organization is not required to be limited to members of the credit union. Total contributions or participation loans may not exceed one tenth of one percent (0.001) of total assets of the credit union. A recipient of a contribution or loan is not considered qualified for credit union membership. A contribution or participation loan made under this subdivision must be approved by the board of directors.
        (25) To establish and operate an automated teller machine (ATM):
            (A) at any location within Indiana; or
            (B) as permitted by the laws of the state in which the automated teller machine is to be located.
        (26) To demand and receive, for the faithful performance and discharge of services performed under the powers vested in the credit union by this article:
            (A) reasonable compensation, or compensation as fixed by agreement of the parties;
            (B) all advances necessarily paid out and expended in the discharge and performance of its duties; and
            (C) unless otherwise agreed upon, interest at the legal rate on the advances referred to in clause (B).
        (27) Subject to any restrictions the department may impose, to become the owner or lessor of personal property acquired upon the request and for the use of a member and to incur additional obligations as may be incident to becoming an owner or lessor of such property.

SOURCE: IC 28-7-1-9.1; (01)AM111301.5. -->     SECTION 5. IC 28-7-1-9.1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2001]: Sec. 9.1. (a) A credit union or a related credit union service organization (as defined in section 0.5(f) 0.5(7) of this chapter) that acts as an agent for the sale of a life insurance policy or an annuity contract issued by a life insurance company (as defined in IC 27-1-2-3 ):
        (1) is subject to the requirements of IC 27; and
        (2) must comply with the disclosure requirements of IC 28-1-11-2.6.
    (b) A credit union or credit union service organization may not condition:
        (1) an extension of credit;
        (2) a lease or sale of real or personal property;
        (3) the performance of a service; or
        (4) the amount charged for:
            (A) extending credit;
            (B) leasing or selling real or personal property; or
            (C) performing services;
upon a person's purchase of a life insurance policy or an annuity contract from the credit union or related credit union service organization.
    (c) This section does not prohibit a credit union or a credit union service organization from requiring that a person, as a condition to a transaction, obtain a life insurance policy from an insurance company acceptable to the credit union or credit union service organization.
SOURCE: IC 28-7-1-9.2; (01)AM111301.6. -->     SECTION 6. IC 28-7-1-9.2 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2001]: Sec. 9.2. (a) As used in this section, "rights and privileges" means the power to:
        (1) create;
        (2) deliver;
        (3) acquire; or
        (4) sell;
a product, a service, or an investment that is available to or offered by federal credit unions domiciled in Indiana.
    (b) A credit union that intends to exercise any rights and privileges that are:
        (1) granted to federal credit unions; but
        (2) not authorized for credit unions under the Indiana Code (except for this section) or any rule adopted under the Indiana Code;
shall submit a letter to the department describing in detail the requested rights and privileges granted to federal credit unions that the credit union intends to exercise. If available, copies of relevant federal law, regulations, and interpretive letters must be attached to the letter submitted by the credit union.
    (c) The department shall promptly notify the requesting credit

union of the department's receipt of the letter submitted under subsection (b). Except as provided in subsection (e), the credit union may exercise the requested rights and privileges sixty (60) days after the date on which the department receives the letter unless otherwise notified by the department.
    (d) The department, through its members, may prohibit the credit union from exercising the requested rights and privileges only if the members find that:
        (1) federal credit unions domiciled in Indiana do not possess the requested rights and privileges; or
        (2) the exercise of the requested rights and privileges by the credit union would adversely affect the safety and soundness of the credit union.
    (e) The sixty (60) day period referred to in subsection (c) may be extended by the department based on a determination that the credit union's letter raised issues requiring additional information or additional time for analysis. If the sixty (60) day period is extended under this subsection, the credit union may exercise the requested rights and privileges only if the credit union receives prior written approval from the department. However:
        (1) the members must:
            (A) approve or deny the requested rights and privileges; or
            (B) convene a hearing;
        not later than sixty (60) days after the department receives the credit union's letter; and
        (2) if a hearing is convened, the members must approve or deny the requested rights and privileges not later than sixty (60) days after the hearing is concluded.
    (f) The exercise of rights and privileges by a credit union in compliance with and in the manner authorized by this section is not a violation of any provision of the Indiana Code or rules adopted under IC 4-22-2.
    (g) Whenever, in compliance with this section, a credit union exercises rights and privileges granted to federal credit unions domiciled in Indiana, all credit unions may exercise the same rights and privileges if the department by order determines that the exercise of the rights and privileges by all credit unions would not adversely affect their safety and soundness.


    (h) If the department denies the request of a credit union under this section to exercise any rights and privileges that are granted to federal credit unions, the credit union may appeal the decision of the department to the circuit court with jurisdiction in the county in which the principal office of the credit union is located. In an appeal under this section, the court shall determine the matter de novo.
".
    Renumber all SECTIONS consecutively.
    (Reference is to HB 1113 as introduced.)

and when so amended that said bill do pass.

__________________________________

Representative Bodiker


AM111301/DI 94    2001