BILL ANALYSIS
H.B. 2529
By: Marchant (Lucio)
Economic Development
5-22-95
Senate Committee Report (Unamended)
BACKGROUND
Currently, under Section 10.01 of the Texas Credit Union Act, the
Banking Commissioner has the option to put a credit union into
suspension or conservation when there are difficulties. A
conservatorship allows credit unions to operate while under
regulatory supervision, thereby allowing the credit union to return
to the membership when the problems are corrected. However,
suspension of charter without further action effectively closes the
credit union.
PURPOSE
As proposed, H.B. 2529 deletes provisions providing for the
suspension of a state chartered credit union by the credit union
commissioner.
RULEMAKING AUTHORITY
It is the committee's opinion that rulemaking authority is granted
to the banking commission under SECTION 1 (Sec.10.01(c), Article
2461-10.01, V.T.C.S.) of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 10.01, Article 2461-10.01, V.T.C.S.
(Texas Credit Union Act), as follows:
Sec. 10.01 New heading: CONSERVATION. (a) Authorizes the
banking commissioner (commissioner), if the commissioner makes
certain findings and determines that the findings are of such
severity that immediate affirmative action is needed to
prevent further dissipation of the assets of the credit union,
to issue an order of conservation and appoint a conservator to
manage the affairs of the credit union. Requires service of
the order of conservation to be delivered to an officer or
director of the credit union by the commissioner, the deputy
commissioner, or any other authorized designee. Authorizes
mail delivery, if no officer or director is available for
service on the date of issuance. Provides that service by
certified or registered mail, addressed to the credit union at
the last address of its principal office as shown by the
records of the department is complete on deposit of the paper.
Deletes certain mailing requirements for orders of suspension
and conservation.
(b) Requires the order to clearly state the grounds for
conservation, rather than suspension. Sets forth guidelines
for service of conservation.
(c) Sets forth authorized actions for the conservator which
are subject to rules adopted by the banking commission
(commission) and under supervision of the commissioner.
Makes a conforming change.
(d) Requires the conservator to take the steps toward the
removal of the causes and conditions that have necessitated
the order that the commissioner directs. Requires the
conservator, during the conservatorship, to make required
reports to the commissioner. Sets forth authorized actions
for the conservator.
(e) Requires the commissioner to determine the cost incident
to the conservatorship. Provides that this cost is a charge
against the assets and funds of the credit union to be
allowed and paid as the commissioner directs.
(f) Prohibits a court from restraining or affecting the
exercise of the powers or functions of the conservator of a
credit union, and provides that no court has jurisdiction
over claims against the conservator or the credit union,
until all administrative remedies have been exhausted.
(g) Requires the conservator to serve for the period
necessary to accomplish the purposes of the conservatorship
as intended by this Act. Requires the credit union, if it is
rehabilitated, to be returned to the management of the board
of directors under the terms that are necessary to prevent
recurrence of the conditions that occasioned the
conservatorship.
(h) Authorizes the commissioner, if the commissioner
determines that the credit union in conservatorship is not
in a condition to continue business and cannot be
rehabilitated as provided by this section, to issue an order
of liquidation appointing a liquidating agent.
(i) Provides that an agreement that tends to diminish or
defeat the right, title, or interest of the conservator in
any asset acquired by the conservator under this section,
either as security for a loan or by purchase, is invalid
against the conservator unless the agreement meets certain
provisions.
(j) Requires the board of directors of the credit union, no
later than 30 days after an order of conservation is served,
to file a written reply to the order. Authorizes the credit
union board of directors to appeal the order to the
commission by filing with the commissioner a written appeal,
including a duly certified resolution of the board. Requires
the commissioner, if the board of directors files an appeal
and requests a hearing, to request a hearing date from the
State Office of Administrative Hearings (hearings office)
that is not less than 10 or more than 30 days after receipt
of the request. Requires the commissioner to give notice to
the credit union of the date, time, and place of the
hearing. Provides that the filing of an appeal does not
suspend the effect of the order of conservation, and the
order remains in force pending final disposition of the
appeal by the commission. Requires the commission, no later
than 45 days after receipt of a proposal for decision from
the hearings office, to meet to consider the proposal for
decision. Deletes the provision that the board of directors
file a reply to an order. Deletes existing Subsections (d)-(k). Makes conforming changes.
(k) Redesignates existing Subsection (l). Deletes the
provision that if the board of directors of the credit union
does not file a reply to the order of suspension, the
commissioner may dispose of the matter as he considers
appropriate.
(l) Makes conforming changes.
(m) Deletes existing Subsection (n).
(o) Makes a conforming change.
SECTION 2. Emergency clause.
Effective date: upon passage.