Mutual Bank Choice and Continuity Act of 2014 - Amends the Federal Deposit Insurance Act to authorize a mutual depository to issue mutual capital certificates that qualify as common equity Tier 1 capital for purposes of capital requirements mandated by federal law or regulation.
Defines "mutual capital certificate" as a financial instrument issued by a mutual depository that entitles the holder to a payment of fixed, variable, or participating dividends but no voting or member rights, nor is it redeemable until five years after issuance.
Defines "mutual depository" as an insured depository institution operating in a non-stock form, including a federal non-stock depository and any form of non-stock depository provided for under state law, whose deposits are insured by an instrumentality of the federal government.
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 conversion of an insured depository institution or insured credit union, in order to establish mutual institutions operating in non-stock form for the deposit of funds, the extension of credit, and other services.
Prescribes procedures for voluntary conversion of: (1) a mutual depository to a mutual national bank, (2) a mutual national bank to a stock national bank, or (3) a mutual national bank to a state national bank operating in stock form.
Prescribes procedures for: (1) a mutual national bank to reorganize as a federal mutual bank holding company, and (2) a mutual bank holding company organized under state law to convert to a federal mutual bank holding company.
Permits a mutual national bank to retain capital at the holding company level in order to comply with the capital requirements of the Board of Governors of the Federal Reserve System.
Grants a tax liable depositor in a savings, demand, or other authorized depository account in a depository institution subsidiary the same rights regarding the federal mutual bank holding company as that depositor would have had if the depository institution subsidiary had been a mutual national bank.
Subjects a federal mutual bank holding company to Federal Reserve Board regulation and supervision.
Prescribes procedures for a federal mutual bank holding company governing: (1) capital improvement, and (2) insolvency and liquidation.
Permits a mutual holding company, including any form of mutual depository holding company under state law, to convert to federal mutual bank holding company status.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4252 Introduced in House (IH)]
113th CONGRESS
2d Session
H. R. 4252
To amend the Federal Deposit Insurance Act to allow mutual capital
certificates to satisfy capital requirements for mutual depositories,
to amend the Revised Statutes of the United States to establish mutual
national banks, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 14, 2014
Mr. Rothfus introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the Federal Deposit Insurance Act to allow mutual capital
certificates to satisfy capital requirements for mutual depositories,
to amend the Revised Statutes of the United States to establish mutual
national banks, 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 Bank Choice and Continuity
Act of 2014''.
SEC. 2. TREATMENT OF MUTUAL CAPITAL CERTIFICATES.
(a) In General.--Section 38 of the Federal Deposit Insurance Act
(12 U.S.C. 1831o) is amended--
(1) in subsection (b)(2)--
(A) by redesignating subparagraphs (F) through (I)
as subparagraphs (H) through (K), respectively; and
(B) by inserting after subparagraph (E) the
following new subparagraphs:
``(F) Mutual capital certificate.--The term `mutual
capital certificate' means a financial instrument
issued by a mutual depository pursuant to subsection
(c)(1)(C) that--
``(i) is subordinate to all claims against
such mutual depository;
``(ii) is unsecured by the assets of such
mutual depository;
``(iii) does not permit preemptive rights;
``(iv) does not provide voting or member
rights to the holder unless the board of
directors of such mutual depository proposes to
change the specific terms of any class of such
certificates in a manner adverse to the
interests of the holder;
``(v) is not eligible for use as collateral
for any loan made by such mutual depository;
``(vi) if declared by the board of
directors of such mutual depository, entitles
the holder to a payment of fixed, variable, or
participating dividends; and
``(vii) is not redeemable until the date
that is 5 years after the date of issuance,
except in the case of merger, conversion, or
consolidation of such mutual depository, or
reorganization of such mutual depository into a
mutual holding company or a Federal mutual bank
holding company (as such term is defined in
section 5133A(a) of the Revised Statutes of the
United States).
``(G) Mutual depository.--The term `mutual
depository' means an insured depository institution
operating in a non-stock form, including a Federal non-
stock depository and any form of non-stock depository
provided for under State law, the deposits of which are
insured by an instrumentality of the Federal
Government.''; and
(2) in subsection (c)(1)--
(A) in subparagraph (A), by inserting ``and
subparagraph (C)'' after ``subparagraph (B)(ii)''; and
(B) by inserting after subparagraph (B) the
following new subparagraph:
``(C) Mutual capital certificates.--A mutual
depository is authorized to issue mutual capital
certificates that shall qualify as common equity Tier 1
capital (as such term is defined by the appropriate
Federal banking agency) for purposes of any capital
requirements mandated by any Federal law or
regulation.''.
(b) Regulations.--Not later than 180 days after the date of
enactment of this section, the appropriate Federal banking agencies
shall jointly issue regulations to implement this section.
SEC. 3. CHARTERING MUTUAL NATIONAL BANKS AND ESTABLISHING FEDERAL
MUTUAL BANK HOLDING COMPANIES.
(a) In General.--Chapter 1 of title LXII 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 sections:
``SEC. 5133A. MUTUAL NATIONAL BANKS.
``(a) Definitions.--In this section and in section 5133B the
following definitions shall apply:
``(1) Appropriate federal banking agency.--The term
`appropriate Federal banking agency' has the meaning given such
term in section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813).
``(2) Depository institution subsidiary.--The term
`depository institution subsidiary' means an insured depository
institution that is a subsidiary (as such term is defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813)) of a Federal mutual bank holding company.
``(3) Insured depository institution.--The term `insured
depository institution' has the meaning given such term in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813).
``(4) Federal mutual bank holding company.--The term
`Federal mutual bank holding company' means a bank holding
company operating in mutual form organized under section 5133B
that owns, directly or indirectly, a majority of the shares of
voting stock of each depository institution subsidiary.
``(5) Modification of a federal mutual bank holding
company.--The term `modification of a Federal mutual bank
holding company' means--
``(A) the sale of shares of common or preferred
stock in a depository institution subsidiary to any
party other than the parent Federal mutual bank holding
company of such depository institution subsidiary or a
wholly owned subsidiary of that parent;
``(B) the voluntary grant of a lien on shares of
common or preferred stock in a depository institution
subsidiary; or
``(C) any action that affects the corporate
structure of the Federal mutual bank holding company
and materially impacts the rights of its members.
``(6) Mutual capital certificate.--The term `mutual capital
certificate' has the meaning given such term in section
38(b)(2) of the Federal Deposit Insurance Act (12 U.S.C.
1831o(b)(2)).
``(7) Mutual depository.--The term `mutual depository'
means an insured depository institution operating in a non-
stock form, including a Federal non-stock depository and any
form of non-stock depository provided for under State law, the
deposits of which are insured by an instrumentality of the
Federal Government.
``(8) Mutual national bank.--The term `mutual national
bank' means a mutual depository chartered by the Comptroller of
the Currency under this section.
``(9) 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 non-
stock depository institutions, or a holding company organized
under a Federal or State law providing for the organization of
non-stock entities that control one or more depository
institutions.
``(10) National bank.--The term `national bank' means a
banking association organized pursuant to section 5133.
``(11) Mutual member.--The term `mutual member' means each
tax liable depositor in a mutual depository's savings, demand,
or other authorized depository accounts who is not a prior
charter member.
``(12) Prior charter member.--The term `prior charter
member' means each tax liable depositor in a mutual national
bank that maintains under its prior mutual depository charter
pursuant to subsection (d)(1)(B).
``(13) State bank.--The term `State bank' has the meaning
given such term in section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813).
``(14) Tax liable depositor.--The term `tax liable
depositor' means the single person responsible for paying any
Federal taxes due on any interest paid on any deposits held
within any savings, demand, or other authorized depository
account.
``(b) Chartering Mutual National Banks.--Notwithstanding the
provision designated the `Third' of section 5134, in order to establish
mutual institutions operating in non-stock form 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 insured credit union (as such term is defined in section 101 of the
Federal Credit Union Act (12 U.S.C. 1752)), 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.
``(c) Regulations.--
``(1) Regulations of the comptroller.--The Comptroller of
the Currency is authorized to prescribe appropriate regulations
for the organization, incorporation, examination, operation,
and regulation of mutual national banks.
``(2) Applicability of capital stock requirements.--The
Comptroller of the Currency shall prescribe regulations
applicable to mutual national banks regarding the requirements
of this title with respect to capital stock and the limitations
imposed on national banks under this title based on capital
stock.
``(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, a mutual depository that elects
to convert to a mutual national bank shall submit to the
Comptroller of the Currency a notice of its election to convert
on a specified date that is on or after the date that is 30
days after the date on which the notice is filed.
``(A) Charter.--The mutual depository shall be
converted to a mutual national bank and the Comptroller
of the Currency shall issue a charter described in
subsection (b) on the specified date described in
paragraph (1).
``(B) Option to maintain mutual depository
charter.--After converting and receiving a charter
under subparagraph (A), such mutual national bank may
continue to exercise the governance, investments, and
authorities permitted under its prior mutual depository
charter.
``(2) Conversion of a mutual national bank to a stock
national bank.--Subject to such regulations as the Comptroller
of the Currency may prescribe for the protection of the rights
of mutual members and for any other purpose the Comptroller of
the Currency may consider appropriate, any mutual national bank
may reorganize as a national bank operating in stock form.
``(3) Conversion of a mutual national bank to a state
bank.--Any mutual national bank may convert to a State bank in
accordance with regulations prescribed by the Comptroller of
the Currency and applicable State law.
``(e) Terminating Mutuality.--A mutual national bank shall
terminate mutuality by--
``(1) liquidating; or
``(2) converting to a national bank operating in stock form
under subsection (d)(2) or to a State bank under subsection
(d)(3).
``(f) Status and Rights of Members.--
``(1) In general.--The status of a mutual member or prior
charter member is primarily as a depositor and secondarily as a
holder of a contingent right to participate in the equity of
such mutual national bank upon a liquidation or conversion
pursuant to subsection (e).
``(2) Member rights.--
``(A) Prior charter member rights.--The status and
rights of a prior charter members shall be governed by
the law of the prior mutual depository charter.
``(B) Mutual member rights.--Each mutual member of
a mutual national bank that receives a charter pursuant
to subsection (b) shall have the following rights:
``(i) The right to vote for delegates to
the board of directors of such mutual national
bank.
``(ii) The right to attend any meeting of
mutual members called by the board of directors
of such mutual national bank.
``(iii) Any other rights agreed upon by
contract between the mutual member and the
mutual national bank.
``(3) Certain voting rights.--On questions requiring action
by its mutual members, the mutual national bank shall provide
in its charter that each such mutual member shall have either--
``(A) one vote per mutual member; or
``(B) one vote for each $100, or fraction thereof,
of the withdrawal value of the mutual member's account,
but not more than 1,000 votes per mutual member.
``(4) Continuity of rights.--If a mutual national bank
converts to a Federal mutual bank holding company pursuant to
section 5133B, a mutual member or prior charter member of such
mutual national bank shall have the same rights with respect to
that Federal mutual bank holding company as such member had
with respect to the mutual national bank immediately prior to
such conversion.
``(5) Conversion rights.--If the board of directors of a
mutual national bank, in its sole discretion, determines that a
conversion described in paragraph (2) or (3) of subsection (d)
is in the best interests of the community in which such bank
operates, and the mutual members or prior charter members of
such bank approve the conversion through a special proxy, then
on a record date set by the board of directors such members
shall have the first right to subscribe for and purchase stock
in the converted bank.
``(6) Liquidation rights.--If a mutual national bank is
liquidated by operation of law, or if the board of directors of
a mutual national bank, in its sole discretion, determines a
liquidation of such bank is in the best interests of the
community in which such bank operates and the mutual members or
prior charter members of such bank approve the liquidation,
then on the date of liquidation, members of the liquidated
mutual national bank shall have the right to have credited to
their accounts, on a pro rata basis, any residual assets that
remain after the liquidation of such bank.
``(g) Proxies.--
``(1) In general.--A mutual member may give a perpetual
proxy to a committee of the board of directors of the mutual
depository in writing or electronically. Such proxy may be used
to vote on any issue requiring approval of the mutual members.
``(2) Use of proxies.--A proxy given under paragraph (1)
may vote on the conversion of a mutual depository to a mutual
national bank and any concurrent or subsequent reorganization
to a Federal mutual bank holding company, except that absent a
finding by the appropriate Federal banking agency of the mutual
depository that action is needed to avoid loss to the Deposit
Insurance Fund of the Federal Deposit Insurance Corporation or
to protect the stability of the United States financial system,
such proxy may not be used to vote in favor of--
``(A) terminating mutuality for a mutual national
bank or a Federal mutual bank holding company; or
``(B) permitting the modification of a Federal
mutual bank holding company.
``(3) Effect of conversion or reorganization.--A proxy
given under paragraph (1) shall continue to be valid after the
conversion of a mutual depository to a mutual national bank
pursuant to subsection (d)(1)(A) and any concurrent or
subsequent reorganization to a Federal mutual bank holding
company.
``(4) Revoking a proxy.--A mutual member may revoke a proxy
given under paragraph (1) in writing or electronically. The
revocation shall be effective not later than 6 business days
after it is made.
``(h) 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', `share', `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', or `preferred stock' shall not apply to a
mutual national bank.
``SEC. 5133B. FEDERAL MUTUAL BANK HOLDING COMPANIES.
``(a) Reorganization of Mutual National Bank as a Federal Mutual
Bank Holding Company.--
``(1) In general.--Subject to approval under the Bank
Holding Company Act of 1956 (12 U.S.C. 1841 et seq.), a mutual
national bank may reorganize into a Federal mutual bank holding
company by submitting a reorganization plan to the Board of
Governors of the Federal Reserve System (hereinafter referred
to as the `Board of Governors').
``(2) Plan approval.--A reorganization plan submitted under
paragraph (1) requires the approval of--
``(A) a majority of the board of directors of the
mutual national bank; and
``(B) a majority of mutual members or prior charter
members of the mutual national bank at a meeting held
at the call of the board of directors of such bank
under the procedures prescribed by the charter or
bylaws of such bank.
``(3) Conversion to a federal mutual bank holding
company.--Upon the approval of the reorganization plan
submitted under paragraph (1) and the issuance of the
appropriate charters--
``(A) the substantial part of the assets and
liabilities of the mutual national bank, including all
of the insured liabilities, shall be transferred to a
national bank, a majority of the shares of voting stock
of which is owned, directly or indirectly, by the
mutual national bank that is to become a Federal mutual
bank holding company; and
``(B) the mutual national bank shall become a
Federal mutual bank holding company.
``(b) Ownership of Depository Institution Subsidiaries.--To avoid
terminating mutuality, a Federal mutual bank holding company must own,
directly or indirectly, at least a majority of the shares of voting
stock of each of its depository institution subsidiaries.
``(c) Terminating Mutuality.--
``(1) Liquidating or converting.--A Federal mutual bank
holding company shall terminate mutuality by liquidating or
converting to a bank holding company operating in stock form.
``(2) No termination.--Notwithstanding paragraph (1), a
reorganization of a mutual depository or a modification of a
Federal mutual bank holding company may not terminate
mutuality.
``(d) Retention of Capital.--In connection with a reorganization
described in subsection (a), a mutual national bank may retain capital
at the holding company level in order to comply with the capital
requirements of the Board of Governors for holding companies.
``(e) Other Conversions.--
``(1) Conversion of a state mutual bank holding company to
a federal mutual bank holding company.--Subject to such
regulations as the Board of Governors may prescribe, a mutual
bank holding company organized under State law that elects to
convert to a Federal mutual bank holding company--
``(A) shall submit to the Board of Governors a
notice of its election to convert on a specified date
that is on or after the date that is 30 days after the
date on which the notice is filed; and
``(B) shall be converted to a Federal mutual bank
holding company on such specified date.
``(2) Maintenance of original powers, governance, and
authorities.--Upon conversion to a Federal mutual bank holding
company, the entity may continue to exercise the powers,
governance, and authorities permitted to it as a mutual bank
holding company organized under State law.
``(3) Conversion of federal mutual bank holding company to
bank holding company.--Subject to such regulations as the Board
of Governors may prescribe, any Federal mutual bank holding
company that is organized under subsection (a) may reorganize
as a bank holding company operating in stock form.
``(f) Rights of Mutual Holding Company Members.--Each tax liable
depositor in a savings, demand, or other authorized depository account
in depository institution subsidiary shall have the same rights with
respect to the Federal mutual bank holding company as such depositor
would have had if the depository institution subsidiary had been a
mutual national bank.
``(g) Regulation.--A Federal mutual bank holding company shall be--
``(1) chartered by the Board of Governors and subject to
its regulation and supervision; and
``(2) regulated under the Bank Holding Company Act of 1956
(12 U.S.C. 1841 et seq.) on terms, and subject to limitations,
comparable to those applicable to any other bank holding
company.
``(h) Capital Improvement.--
``(1) Pledge of stock of national bank subsidiary.--This
section shall not prohibit a Federal mutual bank holding
company from pledging all or a portion of the stock of the
national bank chartered as part of a transaction described in
subsection (a) to raise capital for such national bank.
``(2) Issuance of nonvoting shares.--This section shall not
prohibit a national bank chartered as part of a transaction
described in subsection (a) from issuing any nonvoting shares
or less than 50 percent of the voting shares of such national
bank to any person other than the Federal mutual bank holding
company.
``(i) Insolvency and Liquidation.--
``(1) In general.--Notwithstanding any other provision of
law, the Board of Governors may file a petition under chapter 7
of title 11, United States Code, with respect to a Federal
mutual bank holding company upon--
``(A) the default of any depository institution
subsidiary, the stock of which is owned by the Federal
mutual bank holding company; or
``(B) a foreclosure on a pledge by the Federal
mutual bank holding company described in subsection
(h)(1).
``(2) Distribution of net proceeds.--Except as provided in
paragraph (3), the net proceeds of any liquidation of any
Federal mutual bank holding company under paragraph (1) shall
be transferred to persons who hold an interest in such Federal
mutual bank holding company.
``(3) Recovery by fdic.--If the Federal Deposit Insurance
Corporation incurs a loss as a result of the default of any
depository institution subsidiary that is liquidated under
paragraph (1), the Federal Deposit Insurance Corporation shall
succeed to the interests of the depositors of the depository
institution subsidiary as members of the Federal mutual bank
holding company to the extent of the Federal Deposit Insurance
Corporation's loss.
``(j) Conforming References.--Unless otherwise provided by the
Board of Governors--
``(1) any reference in any Federal law to a bank holding
company operating in stock form shall be deemed to refer also
to a Federal mutual bank holding company;
``(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 Federal mutual bank holding company; 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', or `preferred stock' shall not apply to a
Federal mutual bank holding company unless the Board of
Governors of the Federal Reserve System determines that context
requires otherwise.
``(k) Limitation on Federal Regulation of Mutual Depositories.--
Except as otherwise provided in Federal law, the Comptroller of the
Currency, the Board of Governors of the Federal Reserve System, and the
Federal Deposit Insurance Corporation may not adopt or enforce any
regulation that contravenes the corporate mutual governance rules
prescribed by State law or regulation for mutual depositories unless
the Comptroller, Board of Governors, or Corporation finds that the
Federal regulation is necessary to assure the safety and soundness of
the mutual depository.''.
(b) Table of Contents Amendment.--The table of sections for
chapter 1 of title LXII of the Revised Statutes of the United States
(12 U.S.C. 21 et seq.) is amended by inserting after the item relating
to section 5133 the following new items:
``Sec. 5133A. Mutual national banks.
``Sec. 5133B. Federal mutual bank holding companies.''.
(c) Appropriate Federal Banking Agency for Federal Mutual Bank
Holding Companies.--Section 3(q)(3) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(q)(3)) is amended--
(1) in subparagraph (F), by striking ``; and'' and
inserting a semicolon at the end;
(2) in subparagraph (G), by striking the period at the end
and inserting ``; and''; and
(3) by inserting after subparagraph (G) the following new
subparagraph:
``(H) supervisory or regulatory proceedings arising
from the authority given to the Board of Governors
under section 5133B of the Revised Statutes of the
United States.''.
SEC. 4. CONVERSION OF A MUTUAL HOLDING COMPANY TO A FEDERAL MUTUAL BANK
HOLDING COMPANY.
(a) In General.--A mutual holding company, including any form of
mutual depository holding company provided for under State law, may
convert to a Federal mutual bank holding company by filing with the
Board of Governors of the Federal Reserve System a notice of its
election to convert on a specified date that is on or after the date
that is 30 days after the date on which the notice is filed, and such
mutual holding company shall be converted to a Federal mutual bank
holding company on such specified date.
(b) Definitions.--In this section the following definitions apply:
(1) Federal mutual bank holding company.--The term
``Federal mutual bank holding company'' has the meaning given
such term in section 5133A(a) of the Revised Statutes of the
United States.
(2) Mutual holding company.--The term ``mutual holding
company'' has the meaning given such term in section 10(o)(10)
of the Home Owners' Loan Act (12 U.S.C. 1467a(o)(10)).
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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