Mutual Community Bank Competitive Equality Act - Amends the Revised Statutes of the United States to authorize the Comptroller of the Currency to charter mutual national banks either de novo or through a conversion of any insured depository institution or any state mutual bank or credit union.
Amends the Federal Deposit Insurance Act to authorize a mutual depository to issue Mutual Investment Certificates, to be included as Tier 1 capital for purposes of any capital standards issued by an appropriate federal banking agency.
Amends the Home Owners' Loan Act to: (1) prohibit any company or subsidiary, or any director, officer, employee, or person with voting power or holding proxies representing more than 25% of the voting shares of such company or subsidiary, from holding, soliciting, or exercising any proxies in respect of a mutual savings association with the intention to to control the association; and (2) allow an aggrieved association to bring a civil action to prevent such takeover attempts.
Prohibits any company, subsidiary, director, officer, employee, or person owning, controlling, or holding with the power to vote, or holding proxies representing more than 25% of the voting shares of such a company or subsidiary, to hold, solicit, or exercise any proxies in respect of a mutual savings association with the view or intention to controlling or attempting to control it directly or indirectly.
Prescribes conditions under which a mutual holding company or its stock subsidiary may: (1) contribute stock to a charitable foundation either the company or the stock subsidiary establishes, and (2) waive the right to receive any dividend declared by one of its subsidiaries.
Requires the Board of Governors of the Federal Reserve to apply its Small Bank Holding Company Policy Statement to any mutual holding company that would otherwise qualify as a small bank holding company, if it were one.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1603 Introduced in House (IH)]
113th CONGRESS
1st Session
H. R. 1603
To support and promote community financial institutions in the mutual
form, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 17, 2013
Mr. Grimm (for himself, Mr. King of New York, and Mr. Meeks) introduced
the following bill; which was referred to the Committee on Financial
Services
_______________________________________________________________________
A BILL
To support and promote community financial institutions in the mutual
form, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Mutual Community Bank Competitive
Equality Act''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Mutual financial institutions have been an integral
part of the American banking landscape for almost 200 years.
(2) Such institutions operate for the purpose of serving
the local depositors and borrowers and the communities in which
they operate.
(3) Mutual banks play a critical role in encouraging
thrift, providing home loans and loans for small businesses.
(4) Mutual banks are among the strongest financial
institutions in the country and are characterized by high
capital ratios and conservative, community-focused management.
(5) Congress deems it necessary to provide for the support
and continued development of these vital community financial
institutions.
SEC. 3. MUTUAL NATIONAL BANKS AUTHORIZED.
Chapter one of title XII of the Revised Statutes of the United
States (12 U.S.C. 21 et seq.) is amended by inserting after section
5133 the following new section:
``SEC. 5133A. MUTUAL NATIONAL BANKS.
``(a) In General.--Notwithstanding the section designated the
`Third' of section 5134, in order to provide mutual institutions for
the deposit of funds, the extension of credit, and provision of other
services, the Comptroller of the Currency may charter mutual national
banks either de novo or through a conversion of any insured depository
institution or any State mutual bank or credit union, subject to
regulations prescribed by the Comptroller of the Currency in accordance
with this section. The powers conferred by this section are intended to
provide for the creation and maintenance of mutual national banks as
bodies corporate existing in perpetuity for the benefit of their
depositors and the communities in which they operate.
``(b) Regulations.--
``(1) Regulations of the comptroller.--The Comptroller of
the Currency is authorized to prescribe appropriate regulations
for the organization, incorporation, governance, conversion,
examination, operation, supervision, and regulation of mutual
national banks.
``(2) Applicability of capital stock requirements.--The
Comptroller of the Currency shall prescribe regulations
regarding appropriate capital substitutes for the requirements
of this title with respect to capital stock, and limitations
imposed on national banks under this title based on capital
stock, as such requirements shall apply to mutual national
banks.
``(c) De Novo Charters.--
``(1) The Comptroller of the Currency is authorized to
issue a certificate of authority to commence the business of
banking to a mutual national bank in accordance with the
requirements set forth in section 5169, provided that
references to `capital stock' shall mean `pledged accounts,
nonwithdrawable investment certificates, or similar
instruments' by the incorporators.
``(2) Upon the issuance of the certificate required by
paragraph (1), the mutual national bank shall become a body
corporate and the incorporators shall become the first board of
directors, with the power and authority to manage the affairs
of the bank as herein set forth.
``(d) Conversions.--
``(1) Conversion of a mutual depository to a mutual
national bank.--Subject to such regulations as the Comptroller
of the Currency may prescribe, any mutual depository may
convert to a mutual national bank by filing with the
Comptroller of the Currency a notice of its election to convert
on a specified date that is not earlier than 30 days after the
date on which the notice is filed, and the mutual depository
shall be converted to a mutual national bank charter on the
date specified in the notice.
``(2) Conversion to stock national bank.--Subject to such
regulations as the Comptroller of the Currency may prescribe
for the protection of depositors' rights and for any other
purpose the Comptroller of the Currency may consider
appropriate, any national bank that is organized in the mutual
form under subsection (a) may reorganize on an equitable basis
as a stock national bank.
``(3) Conversion to state banks.--Any national mutual bank
may convert to a State bank charter in accordance with
regulations prescribed by the Comptroller of the Currency and
applicable State law.
``(e) Terminating Mutuality.--If a mutual national bank elects to
terminate mutuality, it must do so by--
``(1) liquidating; or
``(2) converting on an equitable basis to a national
banking association operating in stock form.
``(f) Status and Rights of Members.--
``(1) In general.--In general, the status of a member is
primarily that of a depositor and secondarily that of a holder
of an inchoate right to participate in the equity of a mutual
national bank upon a liquidation or conversion in accordance
with regulations prescribed by the Comptroller of the Currency.
``(2) Mandatory rights.--Each member of a mutual national
bank shall have the following rights:
``(A) Such rights as may be agreed upon, by
contract, between the member and the mutual national
bank.
``(B) In the event the board of directors, in its
sole discretion, determines a conversion of a mutual
national bank to a national banking association
operating in stock form is in the best interests of the
community in which the bank operates, then the members
as of a record date set by the board of directors shall
have the first right to subscribe for and purchase
stock in the converted bank, on an equitable basis
based on the amount of the deposit held by such member
as of the record date.
``(C) In the event--
``(i) the board of directors, in its sole
discretion, determines a liquidation of the
mutual national bank is in the best interests
of the community in which the bank operates,
and such board of directors has adopted a plan
of liquidation in accordance with regulations
proscribed by the Comptroller of the Currency,
and the Comptroller of the Currency has
approved if such plan; or
``(ii) if for any other reason the bank is
liquidated by operation of law,
then the members as of the date of liquidation shall
have the right to have credited to their accounts, on a
pro rata basis, any residual assets left after the
payment of all liabilities and expenses, including
expenses of liquidation of the mutual national bank.
``(g) Management of the Bank.--The board of directors shall have
the entire management and control of the affairs of the mutual national
bank. No depositor or borrower shall have the right to vote on any
matter relating to the mutual national bank. Any voting rights of
members prior to a conversion to a mutual national bank shall be
extinguished upon a conversion to a mutual national bank.
``(h) Mutual Holding Company Formation.--A mutual national bank may
reorganize into the mutual holding company form of organization in
accordance with regulations promulgated by the Comptroller of the
Currency.
``(i) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) Insured depository institution.--The term `insured
depository institution' has the same meaning as in section 3 of
the Federal Deposit Insurance Act.
``(2) Mutual national bank.--The term `mutual national
bank' means a national banking association that operates in
mutual form and is chartered by the Comptroller of the Currency
under this section.
``(3) Mutual depository.--The term `mutual depository'
means a depository institution that is organized in nonstock
form, including a Federal non-stock depository and any form of
nonstock depository provided for under State law, the deposits
of which are insured by an instrumentality of the Federal
Government.
``(4) Mutuality.--The term `mutuality' means the quality of
being an insured depository institution organized under a
Federal or State law providing for the organization of nonstock
depository institutions, or a holding company organized under a
Federal or State law providing for the organization of nonstock
entities that control one or more depository institutions.
``(5) Member.--The term `member' means each insured account
holder in a mutual depository's savings, demand, or other
authorized depository accounts and each insured account holder
in such an account in a depository subsidiary of a mutual bank
holding company. The board of directors may adopt a bylaw
setting a minimum dollar threshold to qualify as a member up to
$1,000.
``(6) Membership rights.--The term `membership rights'
means the rights of each member under this section.
``(j) Conforming References.--Unless otherwise provided by the
Comptroller of the Currency--
``(1) any reference in any Federal law to a national bank
operating in stock form, including a reference to the term
`national banking association', `member bank', `national bank',
`national association', `bank', `insured bank', `insured
depository institution', or `depository institution', shall be
deemed to refer also to a mutual national bank;
``(2) any reference in any Federal law to the term `board
of directors', `director', or `directors' of a national bank
operating in stock form shall be deemed to refer also to the
board of a mutual national bank; and
``(3) any terms in Federal law that may apply only to a
national bank operating in stock form, including the terms
`stock', `shares', `shares of stock', `capital stock', `common
stock', `stock certificate', `stock certificates',
`certificates representing shares of stock', `stock dividend',
`transferable stock', `each class of stock', `cumulate such
shares', `par value', `preferred stock' shall not apply to a
mutual national bank, unless the Comptroller of the Currency
determines that the context requires otherwise.''.
SEC. 4. MUTUAL INVESTMENT CERTIFICATES AUTHORIZED.
Section 38(c)(1) of the Federal Deposit Insurance Act (12 U.S.C.
Sec. 1831o(c)(1)) is hereby amended by deleting ``subparagraph
(B)(ii)'' in paragraph ``(A)'' and inserting ``subparagraph (B)(ii) and
paragraph (C)'' and by adding at the end of subparagraph (B)(ii) the
following:
``(C)(i) Notwithstanding any other provision of
law, a mutual depository, as defined in (12 U.S.C.
5133A(h)(3)), is authorized to issue Mutual Investment
Certificates, which shall be included as Tier 1 capital
for purposes of any capital standards issued by an
appropriate Federal banking agency, provided that such
certificates must be--
``(I) nonvoting, except that the issuing
mutual depository institution may permit voting
in the event that--
``(aa) the mutual depository
institution fails to pay dividends for
a minimum of three consecutive dividend
periods, and then the holders of the
class or classes of Mutual Investment
Certificates granted such voting
rights, and voting as a single class,
with one vote for each outstanding
certificate, may elect by a majority
vote a maximum of one-third of the
institution's board of directors, the
directors so elected to serve until the
next annual meeting of the institution
succeeding the payment of all current
and past dividends;
``(bb) any merger, consolidation,
or reorganization (except in a
supervisory case) is sought to be
authorized, where the issuing
institution is not the survivor,
provided that the regulatory capital of
the resulting institution available for
payment of any class of Mutual
Investment Certificates on liquidation
is less than the regulatory capital
available for such class prior to the
merger, consolidation, or
reorganization;
``(cc) any action is sought to be
authorized which would create any class
of Mutual Investment Certificates
having a preference or priority over an
outstanding class or classes of Mutual
Investment Certificates;
``(dd) any action is sought to be
authorized which would adversely change
the specific terms of any class of
Mutual Investment Certificates;
``(ee) action is sought to be
authorized which would increase the
number of a class of Mutual Investment
Certificates, or the number of a class
of Mutual Investment Certificates
ranking prior to or on parity with
another class of Mutual Investment
Certificates; or
``(ff) action is sought which would
authorize the issuance of an additional
class or classes of Mutual Investment
Certificates without the institution
having met specific financial
standards;
``(II) redeemable at the sole discretion of
the Board of Directors of the mutual
depository; and
``(III) provide that any dividends paid
must be non-cumulative.
``(ii) Notwithstanding any other provision of law,
nonwithdrawable accounts, pledged accounts, mutual
capital certificates, or similar instruments,
authorized as of the date of the enactment of the
Mutual Community Bank Equity Act, shall be included as
Tier 1 capital for purposes of any capital standards
issued by an appropriate Federal banking agency.
``(iii) The appropriate Federal banking agencies
are hereby authorized to prescribe appropriate
regulations to implement these provisions.''.
SEC. 5. PROTECTION OF MUTUAL DEPOSITORIES.
(a) In General.--Subsection (h) of section 10 of the Home Owners'
Loan Act (12 U.S.C. 1467a(h)) is amended--
(1) by striking ``or'' after the semicolon at the end of
paragraph (2);
(2) by striking the period at the end of paragraph (3) and
inserting ``; or''; and
(3) by inserting after paragraph (3), the following new
paragraph:
``(4) any company or any subsidiary of any company, any
director, officer, employee, or person owning, controlling, or
holding with the power to vote, or holding proxies representing
more than 25 percent of the voting shares, of such company or
subsidiary, or any director, officer, employee, or person
acting in concert with such company or subsidiary, to hold,
solicit, or exercise any proxies in respect of a savings
association which is a mutual association, with the view or
intention to, directly or indirectly, control or attempt to
control the mutual association.''.
(b) Enforcement Action.--Subsection (i) of section 10 of the Home
Owners' Loan Act (12 U.S.C. 1467a(i)) is amended by inserting after
paragraph (3) the following new paragraph:
``(4) Civil actions by association.--
``(A) Equitable relief.--Any aggrieved mutual
savings association may bring a civil action in a court
of appropriate jurisdiction and may recover such
equitable relief, including injunctive relief, and
reasonable attorney's fees, as determined by the court
for any violation or attempted violation of paragraph
(1) or (4) of subsection (h).
``(B) Proxies null and void.--In addition to any
damages or relief under paragraph (1), any proxy held
or exercised by any party the holding or exercise of
which has been determined to be a violation of
paragraph (1) or (4) of subsection (h) shall be deemed
null and void, as of the inception of such proxy, and
shall not be counted for purposes of determining a
quorum at any meeting of such aggrieved mutual
association.
``(C) Statute of limitation.--
``(i) In general.--An action may not be
brought under subparagraph (A) after the end of
the 180-day period beginning on the later of--
``(I) the date of the discovery of
the alleged violation by the aggrieved
mutual savings association; or
``(II) the date of the enactment of
the Mutual Savings Association
Preservation Act.
``(ii) `No attribution' rule.--For purposes
of clause (i)(I), the knowledge of the facts
and circumstances giving rise to an alleged
violation by any party to the violation shall
not be attributed to the savings
association.''.
SEC. 6. ESTABLISHMENT OF CHARITABLE FOUNDATIONS AUTHORIZED.
(a) Any mutual holding company or direct or indirect stock
subsidiary of a mutual holding company may contribute or issue shares
of such stock subsidiary to a charitable foundation established by the
mutual holding company or any direct or indirect stock subsidiary of
the mutual holding company, provided that--
(1) the charitable foundation qualifies as a 501(c)(3)
organization under the Internal Revenue Code, as amended;
(2) the Foundation's governance complies with regulations
adopted by the appropriate Federal banking agency;
(3) at the time of the contribution or issuance to the
charitable foundation, no direct or indirect stock subsidiary
of the mutual holding company, nor any affiliate thereof, has
issued shares of common stock to any nonaffiliate of the direct
or indirect stock subsidiary of the mutual holding company;
(4) the value of the stock so contributed or issued by the
direct or indirect stock subsidiary of the mutual holding
company, as determined in accordance with subsection (b), shall
not exceed more than 10 percent of the insured depository
institution's consolidated Tier 1 capital, as of the quarter
end prior to the establishment of the charitable foundation;
(5) the direct or indirect stock subsidiary of the mutual
holding company that contributes or issues the shares to the
charitable foundation must reasonably expect to utilize the tax
deduction within the time period proscribed by the Internal
Revenue Service for contributions to charitable foundations;
and
(6) the mutual holding company and each direct or indirect
stock subsidiary of the mutual holding company will be ``well
capitalized'' under the prompt corrective action regulations
immediately following the contribution to the charitable
foundation.
(b) Prior to any contribution or issuance by a direct or indirect
stock subsidiary of the mutual holding company to a charitable
foundation pursuant to subsection (a), the mutual holding company shall
obtain an appraisal, by an independent appraiser experienced in such
matters, of the pro forma value of the stock so contributed on a fully
converted basis. The value of the stock so contributed, as determined
by the appraiser, shall be limited in accordance with paragraph (4) of
subsection (b).
SEC. 7. DIVIDENDS PAID BY SUBSIDIARIES OF MUTUAL HOLDING COMPANIES.
Section 10(o)(11)(B) of the Home Owners' Loan Act (12 U.S.C.
1467a(o)(11)(B)) is amended by deleting ``or'' at the end of (i),
deleting the period at the end of (ii) and inserting a semicolon at the
end thereof, and adding the following:
``(iii) a majority of the board of
directors of the mutual holding company, or a
committee thereof, consists of directors who
are not affiliates of any stock subsidiary of
the mutual holding company and who do not
directly or indirectly own any shares of the
stock to which the waiver would apply, and vote
in favor of the waiver of the dividend; or
``(iv) an independent corporate committee
consisting of persons who are not stockholders,
affiliates, depositors, borrowers, or members
of the mutual holding company or any stock
subsidiary of the mutual holding company vote
in favor of the waiver of the dividend.''.
SEC. 8. PRESERVING MUTUALITY BYLAWS AUTHORIZED.
(a) The Board of Directors of a mutual depository may adopt a bylaw
to preserve the mutuality of a mutual depository. Such bylaw provisions
may include--
(1) supermajority voting requirements, up to 80 percent, by
the members to approve a conversion to stock form;
(2) a prohibition against any person from serving, or
nominating a person to serve, on the Board of Directors of the
mutual depository, if such person or nominee has an intention
to propose a conversion from mutual to stock form;
(3) a requirement that any person serving or nominated to
serve on the Board of Directors may not propose a conversion
from mutual to stock form for a period of time not exceeding
five years, as determined by the Board, beginning on the later
of the date such bylaw is adopted or such person is elected to
serve on the Board;
(4) a prohibition against any member from proposing a
conversion to stock form at any annual or special meeting of
members or by the written consent of members; and
(5) a violation of one or more of the bylaw provisions
adopted to preserve mutuality shall be a basis for termination
as a member of the Board of Directors.
(b) Notwithstanding the foregoing, in no event shall any bylaw
adopted pursuant to section (a) have any force and effect in the event
the mutual depository is not well capitalized in accordance with the
rules established by such depositories appropriate Federal banking
agency.
SEC. 9. APPLICABILITY OF SMALL BANK HOLDING COMPANY POLICY STATEMENT TO
SMALL MUTUAL HOLDING COMPANY.
The Board of Governors of the Federal Reserve shall apply its Small
Bank Holding Company Policy Statement to any mutual holding company
that would otherwise qualify as a small bank holding company, if it
were a bank holding company.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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