BILL ANALYSIS



H.B. 2529
By: Marchant
03-27-95
Committee Report (Unamended)


BACKGROUND

Currently, under 10.01 of the Texas Credit Union  Act, the
commissioner has the option to put a credit union into suspension
or conservation when there are difficulties.

PURPOSE

The purpose of this legislation is to  eliminate suspension of a
state chartered credit union by the credit union commissioner. 
Suspension of the charter without further action effectively closes
the credit union.  Normally, conservatorship is the method used to
correct financial or management problems in credit unions.  This
allows credit unions to continue to operate while under regulatory
supervision; therefore, the credit union may be returned to the
membership when the problems are corrected.

RULEMAKING AUTHORITY

In the committee's opinion, this bill grants rulemaking authority
to the Texas Credit Union Commission and the Credit Union
Commissioner in Section 1 of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1. Section 10.01, Texas Credit Union Act (Article 2461-10.01, Vernon's Texas Civil Statutes), is amended to read as
follows:

     Section 10.01.  Conservation.
     (a)   No changes.
     (b)   Eliminates language allowing for suspension of credit
           union.  Specifies  procedure for delivery of orders of
           conservation.
     (c)   Eliminates language allowing for suspension of credit
           union.  Authorizes commission to adopt rules regarding
           powers of conservator.  Authorizes commissioner to
           supervise conservator.  Lists powers of conservator:
           (1) take charge of the books, records, property,
               assets, and business of the credit union and
               conduct the business and affairs of the credit
               union;
           (2) determine the existence of and the amount of
               any claims and allow proved claims of
               security, preference, or priority or disallow
               claims of security, preference, or priority
               not proved;
           (3) repudiate any contract or unexpired lease the
               conservator considers burdensome to the credit
               union;
           (4) sell or assign assets to himself or herself;
           (5) settle,  compromise, or release claims in
               favor of or against the credit union; and 
           (6) do all other things that may be necessary in
               connection with the conservation.
     (d)   Conservator is charged to remove causes that brought
           credit union to conservation.  The conservator shall
           respond with reports when requested by the commissioner. 
           The conservator may:
           (1) take any efforts necessary to protect credit
               union assets, including claims or causes of
               action of the credit union,
           (2) deal with the property in the conservator's
               name; and
           (3) file, prosecute, or defend any lawsuit against
               the credit union if it is necessary to protect
               interested parties or property affected by the
               suit.
     (e)   The commissioner shall determine the cost of the
           conservatorship and will be charged against credit union
           assets as the commissioner directs.
     (f)   A court may not affect the work of the conservator until
           all administrative remedies have been exhausted.  A suit
           filed against the credit union in conservatorship or the
           conservator shall be filed in Travis County.  Any suit
           filed by the conservator shall be filed in Travis
           County. 
     (g)   The conservator shall serve until the purposes of the
           conservatorship are fulfilled.  If the credit union is
           rehabilitated, the credit union will be returned to the
           board of directors under terms to avoid reoccurrence of
           problems.
     (h)   If the commissioner decides the credit union cannot be
           rehabilitated, he may order liquidation.
     (i)   An agreement that diminishes the interest of the
           conservator in assets is invalid unless:
           (1) written,
           (2) executed by the credit union and each person
               claiming adverse interest under the agreement,
               including the obligor,
           (3) approved by the board of directors in their
               minutes; and
           (4) an official record of the credit union
               continuously from the time of its execution.
     (j)   Thirty days after an order of conservation is served,
           the board shall reply in writing.  The board may file
           a written appeal with a certified board resolution.  The
           commissioner shall request a hearing date between 10 and
           30 days after the board requests a hearing and hearing
           appeal.  The commissioner must give the credit union
           notice of the hearing.  The order of conservation does
           not suspend the effect of the conservation order and
           will remain until the appeal is complete.  Within 45
           days after receipt of the proposed decision from the
           State Office of Administration Hearings, the commission
           will meet on the proposed decision.
     (k)   Eliminates suspension language from present Section (l).
     (l)   Eliminates suspension language from present Section (m).
     (m)   Eliminates suspension language from present Section (o).

SECTION 2.  Emergency clause.

SUMMARY OF COMMITTEE ACTION

The committee convened in a public hearing on March 27, 1995 to
consider HB 2529.  

The following person testified in favor of the bill:
Jeff Huffman.

The motion to report HB 2529 favorably without amendments, with the
recommendation that it do pass and be printed and be sent to the
Committee on Local and Consent Calendars, prevailed by the
following record vote:  5 Ayes, 0 Nays, 0 PNV, 4 Absent.