HF 525 (LSB 1366HV (1) 87)

HOUSE FILE 525

BY  COMMITTEE ON COMMERCE

(SUCCESSOR TO HSB 118)

A BILL FOR

An Act relating to state credit union examinations and board meetings called by the superintendent of credit unions, and providing penalties.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 533.113, Code 2017, is amended to read as follows:
   533.113  Examinations.
   1.  The superintendent may do any or all of the following:
   a.  Make or cause to be made an examination of a credit union whenever the superintendent believes such examination is necessary or advisable, but in no event less frequently than once during each twenty-four-month period.
   b.  Make or cause to be made such limited examinations at such times and with such frequency as the superintendent deems necessary and advisable to determine the condition of any state credit union and whether any person has violated the provisions of this chapter.
   c.  Make or cause to be made an examination of any corporation or credit union service organization in which a state credit union owns shares or has made an investment.
   d.  Make or cause to be made an examination of any person having business transactions or a relationship with any state credit union when such examination is deemed necessary and advisable in order to determine whether the capital of the state credit union is impaired or whether the safety of its deposits, its financial information or accounts, or its computer systems or computer networks, is imperiled.
   e.  Accept, in lieu of the examination of a state credit union, or any corporation or credit union service organization in which a state credit union owns shares or has made an investment, or of any person having business transactions or a relationship with any state credit union, an examination report prepared by a federal regulatory authority.
   f.  Accept, in lieu of the examination of a state credit union, an audit report conducted by a certified public accounting firm selected from a list of firms previously approved by the superintendent. The cost of the audit shall be paid by the state credit union.
   g.  Accept, in lieu of the examination of an out-of-state credit union which also conducts business in this state, an examination report prepared by a state or federal regulatory authority.
   h.  Retain, at the examinee’s expense, accountants, investigators, and other experts as reasonably necessary to assist in the conduct of the examination. Any person so retained shall serve in a purely advisory capacity at the direction of the superintendent.
   2.  A state credit union and all of its officers and agents shall give to the representatives of the superintendent free and unimpeded access to all books, papers, securities, records, and other sources of information under their control.
   3.  a.  A report of examination shall be forwarded to the chairperson of a state credit union within thirty days after the completion of the examination. Within thirty days of the receipt of this report, a meeting of the directors shall be called by the state credit union to consider matters contained in the report and the action taken shall be set forth in the minutes of the board.
   b.  The report of examination of any affiliate or of any person examined as provided in this subsection shall not be transmitted by the superintendent to any such affiliate or person or to the board of directors of any state credit union unless authorized or requested by such affiliate or person.
   c.  All reports of examinations, including any copies of such reports in the possession of any person other than the superintendent or employee of the credit union division, including any state credit union, agency, or institution to which any report of such examination may be furnished under this section, or section 533.108 or 533.325, shall be confidential communications, shall not be subject to subpoena from any person except as provided in section 533.108, subsection 2, paragraph “b”, and shall not be published, shared, or made public in any way by any person without the written authorization of the credit union division and the execution of a confidentiality agreement between all of the parties pursuant to section 533.108, subsection 1, paragraph “d”.
   d.  All reports of examinations, including any copies of such reports in the possession of any person other than the superintendent or employee of the credit union division, shall remain the exclusive property of the credit union division.
   4.  a.  Whenever the superintendent deems it necessary and advisable, the superintendent may notify the board of directors of a state credit union that a meeting will be held at a place and time and manner as the superintendent directs. The superintendent’s notice may disclose the purpose of the meeting.
   b.  The superintendent may present to the board at the meeting any item the superintendent desires to bring to the attention of the board, including but not limited to any report of an examination required or allowed by this chapter, any conclusions or projections drawn by the superintendent, any recommendations made relative to a report of an examination, and any other matters concerning the operation and condition of the state credit union.
   c.  The state credit union shall cause the matters presented at the meeting to be recorded in the minutes of the meeting.
   d.  Each member of the board of directors shall furnish the superintendent a statement on forms supplied by the superintendent that the member is familiar with the matters presented by the superintendent.
   5. 4.  The superintendent may require any of the following state credit unions to submit to an additional examination or to an independent audit performed by a certified public accounting firm as provided in subsection 1, paragraph “f”, at the expense of the state credit union:
   a.  A state credit union where the records are inadequate.
   b.  A state credit union in which the books have not been balanced as of the end of the month not less than thirty days previously.
   c.  A state credit union whose affairs are in an unfavorable condition.
   6. 5.  The superintendent may furnish a copy of the examination report and materials relating to any or all examinations made of any state credit union and any affiliate of a state credit union to any or all of the following, including any official or supervising examiner of any office or regulatory authority:
   a.  The national credit union administration.
   b.  The federal deposit insurance corporation.
   c.  The federal reserve system.
   d.  The office of the comptroller of the currency.
   e.  The federal home loan bank.
   f.  Financial institution regulatory authorities of other states.
   g.  The financial crimes enforcement network of the United States department of the treasury.
   7.  If the superintendent concludes that a state credit union’s affairs are in an unfavorable condition, the superintendent may direct the state credit union to consider consolidation, dissolution, or any other form of reorganization.
   6.  The superintendent may impose a penalty, after notice in writing and opportunity for a hearing, for a violation of this section. If a state credit union fails to satisfactorily resolve the matter within sixty days from receipt of such notice, the superintendent may impose a penalty against the state credit union in an amount not to exceed one hundred dollars per day per violation for each day that the violation remains unresolved.
    Sec. 2.  NEW SECTION.  533.113A  Meetings of the board called by superintendent.
   1.  Whenever the superintendent deems it necessary and advisable, the superintendent may notify the board of directors of a state credit union that a meeting will be held at a place and time and manner as the superintendent directs. The superintendent’s notice may disclose the purpose of the meeting.
   2.  The superintendent may present to the board at the meeting any item the superintendent desires to bring to the attention of the board, including but not limited to any report of an examination required or allowed by this chapter, any conclusions or projections drawn by the superintendent, any recommendations made relative to a report of an examination, and any other matters concerning the operation and condition of the state credit union.
   3.  Each member of a board of directors required to hold a meeting with the superintendent pursuant to this section shall furnish a statement to the superintendent, on forms supplied by the superintendent, that the member acknowledges the matters presented by the superintendent.
   4.  A state credit union required to hold a meeting with the superintendent pursuant to this section shall cause the matters presented at such meeting to be recorded in the minutes of the meeting.
   5.  If the superintendent concludes that a state credit union’s affairs are in an unfavorable condition, the superintendent may direct the state credit union to consider consolidation, dissolution, or any other form of reorganization.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to state credit union examinations and board meetings called by the superintendent.
   The bill modifies Code section 533.113, relating to the examinations of state credit unions, by providing that the reports of examinations, including any copies furnished to any person outside of the credit union division, are confidential communications, are not subject to subpoena, are not to be published or made public by any person without the credit union division’s written authorization and the execution of a confidentiality agreement between all of the parties, and are the exclusive possession of the credit union division. The bill authorizes penalties for any violation of Code section 533.113. The superintendent may impose a penalty of not more than $100 per day per violation for each day that the violation is unresolved, after notice and an opportunity for a hearing and a 60-day period for resolving the violation.
   The bill deletes Code section 533.113(4), allowing the superintendent to call a meeting of the board of directors of a state credit union, and Code section 533.113(7), allowing the superintendent to direct a state credit union to consider consolidation, dissolution, or any other form of reorganization if the superintendent concludes that its affairs are in an unfavorable condition. However, the language from these sections is incorporated into new Code section 533.113A. In addition, the bill requires each member of a board of directors required to hold a meeting with the superintendent under new Code section 533.113A to furnish a statement to the superintendent that the member acknowledges the matters presented at the meeting. The matters presented at such meeting must also be recorded in the meeting minutes.