By: Barrientos S.B. No. 464
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the regulation of credit unions.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Subsections (c), (d), (e), (f), (g), (h), (j),
1-4 (k), (l), and (m), Section 10.01, Texas Credit Union Act (Article
1-5 2461-10.01, Vernon's Texas Civil Statutes), are amended to read as
1-6 follows:
1-7 (c) After a suspension order has been served on the credit
1-8 union, the commissioner shall take possession and control of the
1-9 books, records, property, assets, and business of the credit union,
1-10 and the credit union shall cease all operations, except those
1-11 authorized by the commissioner and conducted under his supervision.
1-12 Not later than 15 days after the date an order of suspension or
1-13 conservation is served, the board of directors <shall file a
1-14 written reply to the order, and> may file a written request in a
1-15 district court in Travis County for a show cause hearing at which
1-16 the commissioner must show cause that the commissioner or the
1-17 conservator should not be ordered to return control of the credit
1-18 union to its board of directors <to present to the commissioner a
1-19 plan to continue operations under the control of the board of
1-20 directors setting out proposed corrective actions>. The board of
1-21 directors may as an alternative request a hearing by the commission
1-22 to review the commissioner's order of suspension or conservation.
1-23 Such hearing shall be held in accordance with rules adopted by the
1-24 commission. A final order resulting from such a hearing may be
2-1 appealed by the board of directors to the district court in Travis
2-2 County. The availability of this alternative shall not prejudice
2-3 or affect the right of the board of directors to request a show
2-4 cause hearing under this subsection. If under an order of
2-5 suspension, the board of directors may request that a conservator
2-6 be appointed for the credit union or that the credit union be
2-7 closed and a liquidating agent be appointed and waive rights to
2-8 further appeal, in which event the commissioner may immediately
2-9 appoint a conservator, or order that the credit union be liquidated
2-10 and appoint a liquidating agent. If under an order of
2-11 conservation, the board of directors may consent to the
2-12 conservatorship and waive rights to further appeals.
2-13 (d) If the board of directors <files its reply and> requests
2-14 a show cause hearing as provided by Subsection (c), the district
2-15 court <commissioner> shall set and hold the hearing not less than
2-16 10 nor more than 30 days after the date of receipt of such a
2-17 request. Before the show cause hearing <The commissioner shall
2-18 promptly give notice to the credit union of the date, time, and
2-19 place of the hearing. Not later than 10 days after the earlier of
2-20 the date of conclusion of the hearing or the date on which the
2-21 suspension expires>, the commissioner may <shall> adopt a <the>
2-22 plan to continue operations under the control of the board of
2-23 directors presented by the credit union or<,> agree with the credit
2-24 union on an alternative plan to continue operations under the
2-25 control of the board of directors or other appropriate measures<,
2-26 reject the plan to continue operations under the control of the
2-27 board of directors and issue an order of conservation appointing a
3-1 conservator, continue a previous order of conservation, or issue an
3-2 order of liquidation ordering that the credit union be closed,
3-3 ordering that its affairs and business be liquidated, and
3-4 appointing a liquidating agent>. If the board of directors and the
3-5 commissioner reach an agreement under this subsection, the board of
3-6 directors shall notify the court that the board waives its right to
3-7 the show cause hearing. If the board of directors and the
3-8 commissioner do not reach an agreement under this subsection, the
3-9 order of conservation or suspension shall remain in effect pending
3-10 final adjudication of a show cause hearing.
3-11 (e) If the commissioner prevails at the show cause hearing,
3-12 or at a hearing held by the commission, or a show cause hearing is
3-13 waived under this section <rejects the credit union's plan to
3-14 continue operations> and the commissioner determines that it is in
3-15 the public interest and in the best interest of the members,
3-16 depositors, and creditors of the credit union to rehabilitate the
3-17 credit union, he may permit the credit union to operate under his
3-18 direction and control, and shall continue or issue an order of
3-19 conservation appointing a conservator to manage the affairs of the
3-20 credit union. The commissioner shall serve the order of
3-21 conservation in the same manner as provided for service of an order
3-22 of suspension.
3-23 (f) Subject to rules adopted by the commission and under the
3-24 supervision of the commissioner, the conservator may take charge of
3-25 the books, records, property, assets, and business of the credit
3-26 union and conduct the business and affairs of the credit union;
3-27 determine the existence of and the amount of any claims and allow
4-1 proved claims of security, preference, or priority or disallow
4-2 claims of security, preference, or priority not proved; repudiate
4-3 any contract or unexpired lease the conservator considers
4-4 burdensome to the credit union; sell or assign assets to himself;
4-5 settle, compromise, or release claims in favor of or against the
4-6 credit union; and do all other things that may be necessary in
4-7 connection with the conservation. The conservator shall take the
4-8 steps toward the removal of the causes and conditions that have
4-9 necessitated the order that the commissioner directs. During the
4-10 conservatorship, the conservator shall make the reports to the
4-11 commissioner from time to time that the commissioner requires. The
4-12 conservator may take all necessary measures to preserve, protect,
4-13 and recover the assets or property of the credit union, including
4-14 claims or causes of action belonging to or that may be asserted by
4-15 the credit union, may deal with that property in his own name as
4-16 conservator, and may file, prosecute, or defend against a suit by
4-17 or against the credit union if the conservator considers this
4-18 action necessary to protect the interested parties or property
4-19 affected by the suit. The commissioner shall document and retain
4-20 information on the qualifications, recommendations, and fees of a
4-21 conservator and on insurance held by the conservator for the
4-22 benefit of the credit union.
4-23 (g) The commissioner shall determine what costs are <the
4-24 cost> incident to the conservatorship. Those costs are charges
4-25 <This cost is a charge> against the assets and funds of the credit
4-26 union to be allowed and paid as the commissioner in writing
4-27 directs. The commissioner shall retain detailed documentation of
5-1 all costs paid under this subsection.
5-2 (h) Except as provided by this section, no <No> court may
5-3 restrain or affect the exercise of the powers or functions of the
5-4 conservator of a credit union, and no court has jurisdiction over
5-5 claims against the conservator or the credit union<, until all
5-6 administrative remedies have been exhausted>. A suit filed against
5-7 a credit union or its conservator while a conservatorship order is
5-8 in effect must be brought in a court of competent jurisdiction in
5-9 Travis County. The conservator may file suit in a court of
5-10 competent jurisdiction in Travis County against any person for the
5-11 purpose of preserving, protecting, or recovering assets or property
5-12 of the credit union, including a claim or cause of action belonging
5-13 to or that may be asserted by the credit union.
5-14 (j) If, after final adjudication of a show cause hearing,
5-15 waiver of the hearing, or final order of the commission, the
5-16 commissioner makes written findings <determines> that the credit
5-17 union in conservatorship is not in a condition to continue business
5-18 and cannot be rehabilitated as provided by this section, he may
5-19 issue an order of liquidation appointing a liquidating agent.
5-20 (k) In a show cause hearing requested under this section,
5-21 the burden of proof is on the commissioner to show that the
5-22 commissioner or conservator should not be ordered to return control
5-23 of the credit union to its board of directors. If the court
5-24 decides in favor of the commissioner, the conservatorship or
5-25 suspension remains in effect during any pending appeal by the board
5-26 of directors. If the court decides in favor of the credit union,
5-27 control of the credit union shall be returned immediately to its
6-1 board of directors, and control remains with the board during any
6-2 pending appeal by the commissioner. An order issued by a district
6-3 court in a show cause hearing under this section is a final order
6-4 for the purpose of appeal <If, after a hearing under this section,
6-5 the board of directors of the credit union is dissatisfied with the
6-6 decision of the commissioner, the board may appeal to the
6-7 commission by filing with the commissioner a written appeal,
6-8 including a duly certified resolution of the board, not later than
6-9 10 days after the day that the commissioner's order is served. If
6-10 an appeal is duly filed, the commissioner shall set a date for a
6-11 hearing on the appeal not more than 30 days after the date on which
6-12 the appeal is filed. The commissioner shall promptly give notice
6-13 of the date, time, and place of the hearing to the credit union and
6-14 any other interested party. The filing of an appeal does not
6-15 suspend the effect of the order of conservation and this order
6-16 remains in force pending final disposition of the appeal by the
6-17 commission. At the conclusion of the hearing, the commission may
6-18 reverse the order of the commissioner and adopt and approve the
6-19 credit union's plan to continue operations, affirm the
6-20 commissioner's order of conservation, or order that other
6-21 appropriate action be taken>.
6-22 (l) If the board of directors of the credit union does not
6-23 request a show cause hearing after an <file a reply to the> order
6-24 of suspension or an order of conservation as required by this
6-25 section or fails to request and appear at the hearing provided for
6-26 by this section, the <commissioner may dispose of the matter as he
6-27 considers appropriate. The> credit union is presumed to have
7-1 consented to this action and may not contest it.
7-2 (m) The period of suspension and the date and time of a
7-3 hearing <the hearings> provided for by this section may be extended
7-4 by written agreement of the parties and the commissioner.
7-5 SECTION 2. Section 10.05, Texas Credit Union Act (Article
7-6 2461-10.05, Vernon's Texas Civil Statutes), is amended to read as
7-7 follows:
7-8 Sec. 10.05. APPOINTMENT OF CONSERVATOR, <OR> LIQUIDATING
7-9 AGENT, OR LEGAL COUNSEL. The commission shall adopt rules on the
7-10 selection of a conservator, liquidating agent, or legal counsel for
7-11 a credit union in conservatorship or liquidation. The rules must
7-12 include minimum experience and demonstrated ability requirements
7-13 for the person appointed. The commissioner may appoint any person
7-14 or entity, including the share and deposit guaranty corporation or
7-15 credit union provided for by Subsection (e) of Section 11.10 of
7-16 this Act, that meets the requirements imposed by rule to be a
7-17 conservator or a liquidating agent under this chapter. The
7-18 commissioner shall attempt to make the appointment in a manner that
7-19 imposes a reasonable financial burden on the credit union in
7-20 conservatorship or liquidation, taking into consideration the size
7-21 of the credit union and other relevant factors.
7-22 SECTION 3. Subsections (a) and (d), Section 11.02, Texas
7-23 Credit Union Act (Article 2461-11.02, Vernon's Texas Civil
7-24 Statutes), are amended to read as follows:
7-25 (a) Six members of the commission must be individuals who
7-26 are currently engaged in the exercise of the duties,
7-27 responsibilities, rights, and powers of a duly authorized director,
8-1 officer, or committee member of a credit union that is organized
8-2 and doing business in this state under this Act or the Federal
8-3 Credit Union Act and that has its principal office in this state,
8-4 and who have five years or more of active experience as such a
8-5 director, officer, or committee member. No more than one person
8-6 from a federal credit union may serve on the commission at any
8-7 time. Experience as an <a commissioner, deputy commissioner, or>
8-8 examiner is equivalent to the type of experience required by this
8-9 subsection. If a person holding a position in accordance with this
8-10 subsection ceases to be engaged in the exercise of the duties,
8-11 responsibilities, rights, and powers prescribed by this subsection
8-12 for a period exceeding 90 days, the person is ineligible to serve
8-13 as a member and the person's position on the commission is vacant.
8-14 (d) A person currently serving as an officer or board member
8-15 <chairman, first vice-chairman, president, vice-president,
8-16 secretary, or treasurer> of a state trade association in the credit
8-17 union industry that employs paid staff, or an employee or paid
8-18 consultant of such an organization, may not serve as a member of
8-19 the commission.
8-20 SECTION 4. Section 11.07, Texas Credit Union Act (Article
8-21 2461-11.07, Vernon's Texas Civil Statutes), is amended by adding
8-22 Subsection (d) to read as follows:
8-23 (d) On request of any person in attendance at a meeting to
8-24 discuss proposed rules, the commission must supply the person with
8-25 a written copy of the text of the proposed rule.
8-26 SECTION 5. Subsections (b) and (c), Section 11.08, Texas
8-27 Credit Union Act (Article 2461-11.08, Vernon's Texas Civil
9-1 Statutes), are amended to read as follows:
9-2 (b) The commissioner must have three <at least 5> years'
9-3 practical experience in the operation of credit unions <within the
9-4 10 years immediately preceding his appointment>. The experience
9-5 may consist of experience in the exercise of the duties,
9-6 responsibilities, rights, and powers of a duly authorized director,
9-7 officer, or committee member of a credit union or in the employment
9-8 of a credit union regulatory agency.
9-9 (c) The commissioner may not be:
9-10 (1) compensated for serving as an <a salaried>
9-11 officer, board member, <salaried> employee, or <salaried>
9-12 consultant of a trade association in the credit union industry; or
9-13 (2) related within the second degree by affinity or
9-14 consanguinity, as determined under Article 5996h, Revised Statutes,
9-15 to a person who is a salaried officer, salaried employee, or paid
9-16 <salaried> consultant of a trade association in the credit union
9-17 industry.
9-18 SECTION 6. (a) Subsection (i), Section 5.09, Texas Credit
9-19 Union Act (Article 2461-5.09, Vernon's Texas Civil Statutes), is
9-20 amended to read as follows:
9-21 (i) An order to cease and desist, an order for removal from
9-22 office, and each copy of a notice, correspondence, or other record
9-23 relating to an order concerning violations or unsound practices are
9-24 confidential and may not be revealed to the public except in a
9-25 lawsuit authorized by this Act or by other lawful order or
9-26 authority. However, the commissioner may disclose this information
9-27 to a share and deposit guaranty corporation or credit union, or a
10-1 department, agency, or instrumentality of this state or the United
10-2 States if he determines the disclosure to be necessary or proper
10-3 for the enforcement of the laws of this state or the United States.
10-4 The commissioner may also disclose this information to a member if:
10-5 (1) the member requests the information in writing
10-6 fully describing the information sought and the reason for the
10-7 request;
10-8 (2) the commissioner determines that the requested
10-9 disclosure will not result in harm to the safety and soundness or
10-10 reputation of the credit union or impair or endanger the rights of
10-11 any individual; and
10-12 (3) if requested by the commissioner, the member
10-13 agrees not to reveal the information to the public.
10-14 (b) Subsection (o), Section 10.01, Texas Credit Union Act
10-15 (Article 2461-10.01, Vernon's Texas Civil Statutes), is repealed.
10-16 SECTION 7. The amendment of Subsection (d), Section 11.02,
10-17 Texas Credit Union Act (Article 2461-11.02, Vernon's Texas Civil
10-18 Statutes), shall not apply to any member of the commission who, on
10-19 the effective date of this Act, has previously been appointed by
10-20 the governor, with the advice and consent of the senate, and whose
10-21 term of office has not expired.
10-22 SECTION 8. The importance of this legislation and the
10-23 crowded condition of the calendars in both houses create an
10-24 emergency and an imperative public necessity that the
10-25 constitutional rule requiring bills to be read on three several
10-26 days in each house be suspended, and this rule is hereby suspended,
10-27 and that this Act take effect and be in force from and after its
11-1 passage, and it is so enacted.