By: Barrientos S.B. No. 464
73R4303 LJD-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of credit unions.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Sections 10.01(c), (d), (e), (f), (g), (h), (j),
1-5 (k), (l), (m), and (o), Texas Credit Union Act (Article 2461-10.01,
1-6 Vernon's Texas Civil Statutes), are amended to read as 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>. If under an
1-21 order of suspension, the board of directors may request that a
1-22 conservator be appointed for the credit union or that the credit
1-23 union be closed and a liquidating agent be appointed and waive
1-24 rights to further appeal, in which event the commissioner may
2-1 immediately appoint a conservator, or order that the credit union
2-2 be liquidated and appoint a liquidating agent. If under an order
2-3 of conservation, the board of directors may consent to the
2-4 conservatorship and waive rights to further appeals.
2-5 (d) If the board of directors <files its reply and> requests
2-6 a show cause hearing as provided by Subsection (c), the district
2-7 court <commissioner> shall set and hold the hearing not less than
2-8 10 nor more than 30 days after the date of receipt of such a
2-9 request. The commissioner shall promptly give notice to the
2-10 credit union of the date, time, and place of the hearing. Before
2-11 the show cause hearing <Not later than 10 days after the earlier of
2-12 the date of conclusion of the hearing or the date on which the
2-13 suspension expires>, the commissioner may <shall> adopt a <the>
2-14 plan to continue operations under the control of the board of
2-15 directors presented by the credit union or<,> agree with the credit
2-16 union on an alternative plan to continue operations under the
2-17 control of the board of directors or other appropriate measures<,
2-18 reject the plan to continue operations under the control of the
2-19 board of directors and issue an order of conservation appointing a
2-20 conservator, continue a previous order of conservation, or issue an
2-21 order of liquidation ordering that the credit union be closed,
2-22 ordering that its affairs and business be liquidated, and
2-23 appointing a liquidating agent>. If the board of directors and the
2-24 commissioner reach an agreement under this subsection, the board of
2-25 directors shall notify the court that the board waives its right to
2-26 the show cause hearing.
2-27 (e) If the commissioner prevails at the show cause hearing
3-1 or a show cause hearing is waived under this section <rejects the
3-2 credit union's plan to continue operations> and the commissioner
3-3 determines that it is in the public interest and in the best
3-4 interest of the members, depositors, and creditors of the credit
3-5 union to rehabilitate the credit union, he may permit the credit
3-6 union to operate under his direction and control, and shall
3-7 continue or issue an order of conservation appointing a conservator
3-8 to manage the affairs of the credit union. The commissioner shall
3-9 serve the order of conservation in the same manner as provided for
3-10 service of an order of suspension.
3-11 (f) Subject to rules adopted by the commission and under the
3-12 supervision of the commissioner, the conservator may take charge of
3-13 the books, records, property, assets, and business of the credit
3-14 union and conduct the business and affairs of the credit union;
3-15 determine the existence of and the amount of any claims and allow
3-16 proved claims of security, preference, or priority or disallow
3-17 claims of security, preference, or priority not proved; repudiate
3-18 any contract or unexpired lease the conservator considers
3-19 burdensome to the credit union; sell or assign assets to himself;
3-20 settle, compromise, or release claims in favor of or against the
3-21 credit union; and do all other things that may be necessary in
3-22 connection with the conservation. The conservator shall take the
3-23 steps toward the removal of the causes and conditions that have
3-24 necessitated the order that the commissioner directs. During the
3-25 conservatorship, the conservator shall make the reports to the
3-26 commissioner from time to time that the commissioner requires. The
3-27 conservator may take all necessary measures to preserve, protect,
4-1 and recover the assets or property of the credit union, including
4-2 claims or causes of action belonging to or that may be asserted by
4-3 the credit union, may deal with that property in his own name as
4-4 conservator, and may file, prosecute, or defend against a suit by
4-5 or against the credit union if the conservator considers this
4-6 action necessary to protect the interested parties or property
4-7 affected by the suit. The commissioner shall document and retain
4-8 information on the qualifications, recommendations, and fees of an
4-9 independent conservator and on negligence, fidelity, or other
4-10 professional insurance held by the conservator.
4-11 (g) The commissioner shall determine what costs are <the
4-12 cost> incident to the conservatorship. Those costs are charges
4-13 <This cost is a charge> against the assets and funds of the credit
4-14 union to be allowed and paid as the commissioner in writing
4-15 directs. The commissioner shall retain detailed documentation of
4-16 all costs paid under this subsection.
4-17 (h) Except as provided by this section, no <No> court may
4-18 restrain or affect the exercise of the powers or functions of the
4-19 conservator of a credit union, and no court has jurisdiction over
4-20 claims against the conservator or the credit union<, until all
4-21 administrative remedies have been exhausted>. A suit filed against
4-22 a credit union or its conservator while a conservatorship order is
4-23 in effect must be brought in a court of competent jurisdiction in
4-24 Travis County. The conservator may file suit in a court of
4-25 competent jurisdiction in Travis County against any person for the
4-26 purpose of preserving, protecting, or recovering assets or property
4-27 of the credit union, including a claim or cause of action belonging
5-1 to or that may be asserted by the credit union.
5-2 (j) If, after final adjudication of a show cause hearing or
5-3 waiver of the hearing, the commissioner makes written findings
5-4 <determines> that the credit union in conservatorship is not in a
5-5 condition to continue business and cannot be rehabilitated as
5-6 provided by this section, he may issue an order of liquidation
5-7 appointing a liquidating agent.
5-8 (k) In a show cause hearing requested under this section,
5-9 the burden of proof is on the commissioner to show by clear and
5-10 convincing evidence that the commissioner or conservator should not
5-11 be ordered to return control of the credit union to its board of
5-12 directors. If the court decides in favor of the commissioner, the
5-13 conservatorship or suspension remains in effect during any pending
5-14 appeal by the board of directors. If the court decides in favor of
5-15 the credit union, control of the credit union shall be returned
5-16 immediately to its board of directors, and control remains with the
5-17 board during any pending appeal by the commissioner. An order
5-18 issued by a district court in a show cause hearing under this
5-19 section is a final order for the purpose of appeal <If, after a
5-20 hearing under this section, the board of directors of the credit
5-21 union is dissatisfied with the decision of the commissioner, the
5-22 board may appeal to the commission by filing with the commissioner
5-23 a written appeal, including a duly certified resolution of the
5-24 board, not later than 10 days after the day that the commissioner's
5-25 order is served. If an appeal is duly filed, the commissioner
5-26 shall set a date for a hearing on the appeal not more than 30 days
5-27 after the date on which the appeal is filed. The commissioner
6-1 shall promptly give notice of the date, time, and place of the
6-2 hearing to the credit union and any other interested party. The
6-3 filing of an appeal does not suspend the effect of the order of
6-4 conservation and this order remains in force pending final
6-5 disposition of the appeal by the commission. At the conclusion of
6-6 the hearing, the commission may reverse the order of the
6-7 commissioner and adopt and approve the credit union's plan to
6-8 continue operations, affirm the commissioner's order of
6-9 conservation, or order that other appropriate action be taken>.
6-10 (l) If the board of directors of the credit union does not
6-11 request a show cause hearing after an <file a reply to the> order
6-12 of suspension or an order of conservation as required by this
6-13 section or fails to request and appear at the hearing provided for
6-14 by this section, the <commissioner may dispose of the matter as he
6-15 considers appropriate. The> credit union is presumed to have
6-16 consented to this action and may not contest it.
6-17 (m) The period of suspension and the date and time of a
6-18 hearing <the hearings> provided for by this section may be extended
6-19 by written agreement of the parties and the commissioner.
6-20 (o) Orders of suspension, orders of conservation, and copies
6-21 of all notices and correspondence relating to those orders are
6-22 confidential and may not be publicized or revealed to the public by
6-23 the department or its agents except in related legal proceedings,
6-24 including a show cause hearing, or as otherwise authorized by law.
6-25 This subsection does not restrict an affected credit union or its
6-26 agents subject to an order from disclosing the action or the basis
6-27 of the action.
7-1 SECTION 2. The change in law made by this Act applies only
7-2 to an order of suspension or conservatorship made by the credit
7-3 union commissioner on or after the effective date of this Act. An
7-4 order of suspension or conservatorship made by the credit union
7-5 commissioner before the effective date of this Act is governed by
7-6 the law in effect at the time of the order, and the prior law is
7-7 continued in effect for this purpose.
7-8 SECTION 3. The importance of this legislation and the
7-9 crowded condition of the calendars in both houses create an
7-10 emergency and an imperative public necessity that the
7-11 constitutional rule requiring bills to be read on three several
7-12 days in each house be suspended, and this rule is hereby suspended,
7-13 and that this Act take effect and be in force from and after its
7-14 passage, and it is so enacted.