AN
ACT Relating to modernizing, clarifying, and simplifying the Washington state
credit union act; amending RCW 31.12.025, 31.12.035, 31.12.075, 31.12.085,
31.12.105, 31.12.185, 31.12.225, 31.12.235, 31.12.246, 31.12.255, 31.12.265,
31.12.275, 31.12.285, 31.12.326, 31.12.345, 31.12.365, 31.12.306, 31.12.145,
31.12.155, 31.12.295, 31.12.485, 31.12.317, 31.12.445, 31.12.465, 31.12.705,
31.12.715, 31.12.725, 31.12.516, 31.12.545, 31.12.215, 31.12.575, 31.12.585,
31.12.595, 31.12.605, 31.12.625, 31.12.655, 31.12.665, 31.12.675, 31.12.685,
and 31.12.635; reenacting and amending RCW 31.12.005, 31.12.015, 31.12.055,
31.12.065, 31.12.115, 31.12.195, 31.12.335, 31.12.125, 31.12.136, 31.12.385,
31.12.406, 31.12.425, 31.12.435, 31.12.695, 31.12.526, 31.12.555, and 31.12.565;
adding new sections to chapter 31.12 RCW; creating a new section; recodifying
RCW 31.12.005, 31.12.015, 31.12.025, 31.12.035, 31.12.055, 31.12.065,
31.12.075, 31.12.085, 31.12.105, 31.12.115, 31.12.185, 31.12.195, 31.12.225,
31.12.235, 31.12.246, 31.12.255, 31.12.265, 31.12.275, 31.12.285, 31.12.326,
31.12.335, 31.12.345, 31.12.365, 31.12.306, 31.12.045, 31.12.145, 31.12.155,
31.12.295, 31.12.125, 31.12.136, 31.12.037, 31.12.039, 31.12.385, 31.12.485,
31.12.406, 31.12.317, 31.12.425, 31.12.435, 31.12.445, 31.12.465, 31.12.695,
31.12.705, 31.12.715, 31.12.526, 31.12.725, 31.12.516, 31.12.545, 31.12.555,
31.12.565, 31.12.215, 31.12.575, 31.12.585, 31.12.595, 31.12.605, 31.12.615,
31.12.625, 31.12.655, 31.12.665, 31.12.675, 31.12.685, 31.12.720, 31.12.740,
31.12.735, 31.12.635, and 31.12.902; repealing RCW 31.12.095, 31.12.165,
31.12.206, 31.12.315, 31.12.355, 31.12.376, 31.12.395, 31.12.415, 31.12.455,
31.12.475, 31.12.495, 31.12.506, 31.12.535, 31.12.645, 31.12.903, 31.12.904,
31.12.905, and 43.320.125; prescribing penalties; and providing effective
dates.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
NEW
SECTION. Sec. 1. The
legislature finds that credit unions provide many valuable services to the
consumers of this state and will be better prepared to continue providing these
services if the Washington state credit union act is modernized, clarified, and
reorganized.
Furthermore,
the legislature finds that credit unions and credit union members will benefit
by enacting provisions clearly specifying the director of financial
institution's authority to enforce statutory provisions.
Revisions
to this act reflect the legislature's intent to modernize, clarify, and
reorganize the existing act, and specify the director's enforcement authority.
By enacting the revisions to this act, it is not the intent of the legislature
to affect the scope of credit unions' field of membership or tax status, or impact
federal parity provisions.
Sec.
2. RCW
31.12.005 and 1994 c 256 s 68 and 1994 c 92 s 175 are each reenacted and
amended to read as follows:
Unless
the context clearly requires otherwise, as used in this chapter:
(1)
"Board" means the board of directors of a credit union.
(2)
"Board officer" means an officer of the board elected under RCW
31.12.265(1) (as recodified by this act).
(3)
"Branch" means any ((office, other than the principal place of
business, maintained by a credit union, alone or together with other credit
unions, for the purpose of accepting deposits or making loans to its members.
"Branch" does not include a facility that is limited to an electronic
funds transferring machine or a similar service facility that does not involve
the approval of loans.
(3)
"Credit union" means a credit union organized and operating under
this chapter.
(4)
"Director" means the director of financial institutions.
(5)
"Employees" means the principal operating officer and other operating
personnel of a credit union.
(6)
"Federal credit union" means a credit union organized and operating
under the laws of the United States.
(7)
"Officers" means the officers of the board of a credit union who are
elected under RCW 31.12.265.
(8)
"Shares" and "deposits" are synonymous and
interchangeable. Shares and deposits of a credit union shall be subject to
such terms and conditions as established by the board of the credit union.
(9)
"Supervisory committee" means a committee having the powers and
duties set forth in RCW 31.12.326 through 31.12.345. Supervisory committees
are the statutory successors of auditing committees.)) physical
facility where shares and deposits are taken. The term does not include an
automated teller machine or a machine permitting members to communicate with
credit union employees who are not located at the site of the machine, unless
employees of the credit union at the site of the machine take shares and
deposits on a regular basis. A facility is not deemed to be a branch of a
credit union, regardless of any affiliation, accommodation arrangement, or
other relationship between the organization owning or leasing the facility and
the credit union, unless the facility is owned or leased in whole or part, directly
or indirectly, by the credit union.
(4)
"Business loan" means a loan for business, investment, commercial, or
agricultural purposes.
(5)
"Capital" means a credit union's reserves, undivided earnings, and
allowances for loan loss.
(6)
"Consumer loan" means a loan for consumer, family, or household
purposes.
(7)
"Credit union" means a credit union organized and operating under
this chapter.
(8)
"Credit union service organization" means an organization that a
credit union has invested in pursuant to RCW 31.12.425(8) (as recodified by
this act), or a credit union service organization invested in by an
out-of-state credit union or federal credit union.
(9)
"Director" means the director of financial institutions.
(10)
"Federal credit union" means a credit union organized and operating
under the laws of the United States.
(11)
"Financial institution" means any commercial bank, trust company,
savings bank, or savings and loan association, whether state or federally chartered,
and any credit union, out-of-state credit union, or federal credit union.
(12)
"Foreign credit union" means a credit union organized and operating
under the laws of another country or other jurisdiction.
(13)
"Insolvency" means:
(a)
If, under generally accepted accounting principles, the recorded value of the
credit union's assets are less than its obligations to its share account
holders, depositors, creditors, and others; or
(b)
If it is likely that the credit union will be unable to pay its obligations or
meet its share account holders' and depositors' demands in the normal course of
business.
(14)
"Loan" means any loan, overdraft line of credit, extension of credit,
or lease, in whole or in part.
(15)
"Material violation of law" means:
(a)
If the credit union or person has violated a material provision of:
(i)
Law;
(ii)
Any cease and desist order issued by the director;
(iii)
Any condition imposed in writing by the director in connection with the
approval of any application or other request of the credit union; or
(iv)
Any written agreement entered into with the director;
(b)
If the credit union or person has concealed any of the credit union's books,
papers, records, or assets, or refused to submit the credit union's books,
papers, records, or affairs for inspection to any examiner of the state or, as
appropriate, to any examiner of the national credit union administration; or
(c)
If the person has breached his or her fiduciary duty to the credit union.
(16)
"Membership share" means an initial share required to be purchased in
order to establish and maintain membership in a credit union.
(17)
"Net capital" means a credit union's capital, less the allowance for
loan loss.
(18)
"Operating officer" means an officer of a credit union designated
under RCW 31.12.265(2) (as recodified by this act).
(19)
"Organization" means a corporation, partnership, association, limited
liability company, trust, or other organization or entity.
(20)
"Out-of-state credit union" means a credit union organized and
operating under the laws of another state or United States territory.
(21)
"Person" means an organization or a natural person including, but not
limited to, a sole proprietorship.
(22)
"Principally" or "primarily" means more than one-half.
(23)
"Unsafe or unsound condition" means, but is not limited to:
(a)
If the credit union is insolvent;
(b)
If the credit union has incurred or is likely to incur losses that will deplete
all or substantially all of its capital; or
(c)
If the credit union is in imminent danger of losing its share and deposit
insurance or guarantee.
(24)
"Unsafe or unsound practice" means any action, or lack of action,
which is contrary to generally accepted standards of prudent operation, the
likely consequences of which, if continued, would be abnormal risk of loss or
danger to a credit union, its members, or an organization insuring or
guaranteeing its shares and deposits.
Sec.
3. RCW
31.12.015 and 1994 c 256 s 69 and 1994 c 92 s 176 are each reenacted and
amended to read as follows:
A
credit union is a cooperative society organized under this chapter as a nonprofit
corporation for the purposes of promoting thrift among its members and creating
a source of credit for them at fair and reasonable rates of interest.
The
director is the state's credit union regulatory authority whose purpose is to
protect ((the)) members' financial interests, the integrity of credit
unions as cooperative institutions, and the interests of the general public,
and to ensure that ((state-chartered)) credit unions remain viable and
competitive in this state.
Sec.
4. RCW
31.12.025 and 1994 c 256 s 70 are each amended to read as follows:
(1)
A credit union shall include ((in its name)) the words "credit ((union."))
union" in its name.
(2)
No person((, partnership, association, corporation, or other organization))
may ((transact)) conduct business or engage in any other activity
under a name or title containing the words "credit union", or
represent itself as a credit union, unless it is:
(a)
A credit union, out-of-state credit union, or a foreign credit union;
(b)
An organization ((comprised of corporations organized under state or federal
credit union laws)) whose membership or ownership is limited to credit
unions, out-of-state credit unions, federal credit unions, or their trade
organizations;
(c)
A ((sole proprietorship, partnership, or corporation)) person
that is primarily in the business of managing one or more credit unions,
out-of-state credit unions, or federal credit unions; or
(d)
((An organization specifically authorized under the laws of this state or
under federal law to use the words "credit union" in its name.)) A
credit union service organization.
Sec.
5. RCW
31.12.035 and 1994 c 92 s 177 are each amended to read as follows:
Seven
or more natural persons who reside in this state may apply to the
director for permission to organize a credit union. ((The director shall
approve the application if it is in compliance with this chapter.)) The
application must include copies of the proposed articles of incorporation and
bylaws, and such other information as may be required by the director. The
director shall approve or deny a complete application within sixty days of
receipt.
Sec.
6. RCW
31.12.055 and 1994 c 256 s 71 and 1994 c 92 s 179 are each reenacted and
amended to read as follows:
(1)
Persons applying for the organization of a credit union shall execute articles
of incorporation stating:
(a)
The initial name and location of the ((proposed)) credit union ((and
its location));
(b)
That the duration of the credit union is perpetual;
(c)
That the purpose of the credit union is to engage in the business of a credit
union and any other lawful activities permitted to a credit union by applicable
law((s and rules));
(d)
The number of its directors, which ((shall)) must not be less
than five ((nor)) or greater than fifteen, and the names((,
occupations, and addresses)) of the persons who are to serve as the initial
directors;
(e)
The names((, occupations, and addresses)) of the ((subscribers to the
articles of incorporation, and a statement of the number of shares which each
has agreed to take)) incorporators;
(f)
The initial par value, if any, of the shares of the credit union;
(g)
((Any provision the applicants elect to so set forth which is permitted by
RCW 23B.17.030; and)) The extent, if any, to which personal liability of
directors is limited;
(h)
The extent, if any, to which directors, supervisory committee members,
officers, employees, and others will be indemnified by the credit union; and
(i)
Any other provision ((the applicants elect to so set forth)) which is
not inconsistent with this chapter.
(2)
Applicants shall submit the articles of incorporation in triplicate to the
director.
Sec.
7. RCW
31.12.065 and 1994 c 256 s 72 and 1994 c 92 s 180 are each reenacted and
amended to read as follows:
(1)
Persons applying for the organization of a credit union shall adopt bylaws that
((are consistent with this chapter and that)) prescribe the manner in
which the business of the credit union shall be conducted. The bylaws shall
include:
(a)
The name of the credit union;
(b)
The ((purposes)) field of membership of the credit union;
(c)
((The)) Reasonable qualifications for membership in the credit
union, including, but not limited to, the minimum number of shares, and
the payment of a membership fee, if any, required for membership ((status)),
and the ((standards and)) procedures for expelling a member ((who has
failed to maintain the minimum number of shares));
(d)
The number of directors and supervisory committee members, and the length of
terms they serve and the permissible term length of any interim director or
supervisory committee member;
(e)
Any qualification for eligibility to serve on the credit union's board, or
supervisory committee;
(f)
The number of credit union employees that may serve on the board, if any;
(g)
The frequency of regular meetings of the board and the supervisory committee,
and the manner in which members of the board or supervisory committee are to be
notified of meetings;
(((f)))
(h) The powers and duties of ((the)) board officers ((elected
by the board));
(((g)))
(i) The timing of the annual membership meeting ((and));
(j)
The manner in which members may call a special membership meeting;
(k)
The manner in which members are to be notified of membership meetings((,
including special membership meetings));
(((h)))
(l) The number of members constituting a quorum at a membership meeting;
((and
(i)
Other matters considered appropriate by the applicants to be included in the
bylaws))
(m)
Provisions, if any, for the indemnification of directors, supervisory committee
members, officers, employees, and others by the credit union, if not included
in the articles of incorporation; and
(n)
Any other provision which is not inconsistent with this chapter.
(2)
Applicants shall submit the bylaws in duplicate to the director((, if
requested)).
Sec.
8. RCW
31.12.075 and 1994 c 92 s 181 are each amended to read as follows:
(1)
When the proposed articles of incorporation and bylaws complying with
the requirements of RCW 31.12.055 and 31.12.065 (as recodified by this act)
have been filed with the director, the director shall:
(a)
Determine whether the articles of incorporation and bylaws are consistent with
((the purposes and requirements of)) this chapter; and
(b)
Determine the feasibility of the credit union, taking into account surrounding
facts and circumstances ((pertaining to a)) influencing the
successful operation of ((a)) the credit union.
((The
director may establish by rule, as a prerequisite to approval of a proposed
credit union, specific criteria consistent with the purposes and policies of
this chapter.))
(2)
If the director is satisfied with the determinations made under subsection
(1)(a) and (b) of this section, the director shall endorse each of the articles
of incorporation "approved" ((and)), indicate the date
the approval ((is)) was granted, and return two sets of articles
and one set of bylaws to the applicants.
(3)
If the director is not satisfied with the determinations made under subsection
(1)(a) and (b) of this section, the director shall endorse each of the articles
of incorporation "((refused)) denied," indicate the
date of, and reasons for, the ((refusal)) denial,
and return two copies of the articles of incorporation with one copy of the
bylaws to the person from whom they were received. The director shall at the
time of returning the copies of the articles of incorporation and bylaws,
also provide notice to the applicant of the applicant's right to appeal the ((refusal))
denial under chapter 34.05 RCW. The ((refusal)) denial is
conclusive unless the applicant requests a hearing under chapter 34.05 RCW.
(((4)
The director shall accept or refuse the articles of incorporation within sixty
days of receipt.))
Sec.
9. RCW
31.12.085 and 1994 c 92 s 182 are each amended to read as follows:
(1)
Upon ((the)) approval ((of the director)) under RCW 31.12.075(2) (as
recodified by this act), the ((applicants)) director shall ((file))
deliver a copy of the articles of incorporation ((with)) to
the secretary of state for filing. Upon receipt of the approved
articles of incorporation and a twenty dollar filing fee ((to be))
provided by the applicants, the secretary of state shall file ((and record))
the articles of incorporation. ((The applicants shall in writing promptly
notify the director of the exact date of the filing.))
(2)
Upon ((the)) filing ((and recording of)) the approved articles of
incorporation ((with)) by the secretary of state, the persons
named in the articles of incorporation and their successors may ((operate))
conduct business as a credit union, ((which shall have)) having
the powers ((and be subject to the)), duties, and
obligations ((of)) set forth in this chapter. A credit union ((shall))
may not conduct business until the articles have been ((recorded))
filed by the secretary of state.
(3)
A credit union shall organize and begin conducting business within six
months of the date that its articles of incorporation are filed ((and
recorded with)) by the secretary of state or its charter ((shall
become)) is void((, unless)). However, the director
((for cause)) may grant((s)) an extension of the six-month
period. The director ((shall)) may not grant a single extension
exceeding three months, but may grant as many extensions to a credit union as
circumstances require.
Sec.
10. RCW
31.12.105 and 1994 c 92 s 184 are each amended to read as follows:
((The))
A credit union's articles of incorporation ((of a credit union))
may be amended((,)) by the board with the approval of the
director((, by a resolution of the board. Amendments to the articles of
incorporation shall be filed with the director and)). Complete
applications for amendments to the articles must be approved or denied by the
director within sixty days of receipt. Upon approval, the director shall
promptly deliver the amendments, including any necessary filing fees paid by
the applicant, to the secretary of state for filing. Amendments
to a credit union's articles of incorporation must conform with RCW 31.12.055
(as recodified by this act).
Sec.
11. RCW
31.12.115 and 1994 c 256 s 73 and 1994 c 92 s 185 are each reenacted and
amended to read as follows:
((Except
to the extent approval of the director may be required by rule, the bylaws of))
(1) A credit ((union)) union's field of membership bylaws
may be amended by the board ((of directors at any regular meeting or at a
special meeting called for that purpose. An amendment of the bylaws requires
the affirmative vote of two-thirds of the total members of the board. At least
seven days before a meeting at which an amendment to the bylaws is to be voted
upon, a copy of the proposed amendment, together with a written notice of the
meeting as provided in the bylaws, shall be served upon each member of the
board either personally or by mail to the director's last known post office address))
with approval of the director. All complete applications to amend a credit
union's field of membership bylaws must be approved or denied by the director
within sixty days of receipt.
(2)
Bylaw amendments, other than those requiring the approval of the director under
subsection (1) of this section, may be approved at any regular board meeting,
or any special board meeting called for the purpose of amending the credit
union's bylaws.
(3)
Amendments to a credit union's bylaws must conform with RCW 31.12.065 (as
recodified by this act).
Sec.
12. RCW
31.12.185 and 1987 c 338 s 2 are each amended to read as follows:
(1)
((The regular)) A credit union's annual membership meeting ((of
a credit union)) shall be held ((annually,)) at such time and place
as the bylaws prescribe, and shall be conducted according to the ((customary))
rules of ((parliamentary)) procedure approved by the board.
(2)
Notice of ((regular)) the annual membership meetings of a credit
union shall be given as provided in the bylaws of the credit union.
(((3)
No member may have more than one vote regardless of the number of shares held
by the member. A fraternal organization, voluntary association, partnership,
or corporation having a membership in a credit union may cast one vote by its
authorized agent, who shall be an officer of the organization, association,
partnership, or corporation. Voting by mail ballot may be authorized by the
board as prescribed in the bylaws.))
Sec.
13. RCW
31.12.195 and 1994 c 256 s 77 and 1994 c 92 s 188 are each reenacted and
amended to read as follows:
(1)
A special membership meeting of a credit union may be called by a
majority of the board, a majority vote of the supervisory committee, or upon
written application of at least ten percent or two thousand((, whichever is
less, of the voting)) of the members of a credit union, whichever
is less.
(2)
A request for a special membership meeting of a credit union shall be in
writing and shall state specifically the purpose or purposes for which the meeting
is called. At this meeting, only those agenda items detailed in the written
request may be considered. If the special membership meeting is
being called for the removal of ((a)) one or more directors,
the ((notice)) request shall state the name of the director or
directors whose removal is sought.
(((2)))
(3) Upon receipt of a request for a special membership meeting,
the secretary of the credit union shall designate the time and place at which
the special membership meeting will be held. The designated place of
the meeting ((shall)) must be a reasonable location within the
county in which the principal ((office)) place of business of the
credit union is located, unless provided otherwise by the bylaws. The
designated time of the membership meeting ((shall)) must
be no sooner than twenty ((nor)), and no later than thirty days
after the request is received by the secretary.
The
secretary shall give notice of the meeting within ten days of receipt of
the request ((give notice of the meeting, including)) or within such
other reasonable time period as may be provided by the bylaws. The notice must
include the purpose or purposes for which the meeting is called, as
provided in the bylaws. ((A wilful violation of this section constitutes a
violation of this chapter and constitutes grounds sufficient for the suspension
and removal of the secretary under RCW 31.12.575.)) If the special
membership meeting is being called for the removal of one or more directors,
the notice must state the name of the director or directors whose removal is
sought.
(((3)))
(4) Except as provided in this subsection, the ((chairman or
president)) chairperson of the board shall preside over special membership
meetings. If the purpose of the special meeting includes the proposed removal
of the ((chairman or president from the board)) chairperson, the
next highest ranking board officer ((of the board)) whose removal
is not sought shall preside over the special meeting. If the removal of all ((of
the)) board officers ((of the board)) is sought, the ((chairman))
chairperson of the supervisory committee shall preside over the special
meeting. ((After every special meeting, the chairman of the supervisory
committee shall report to the director the results of the special meeting and
whether the special meeting was conducted in a fair manner in accordance with
the bylaws of the credit union and with customary rules of parliamentary
procedure.))
(5)
Special membership meetings shall be conducted according to the rules of
procedure approved by the board.
Sec.
14. RCW
31.12.225 and 1984 c 31 s 24 are each amended to read as follows:
(1)
The business and affairs of a credit union shall be managed by a board of not
less than five ((nor)) and not greater than fifteen directors.
(2)
The directors ((shall)) must be elected at the credit union's
annual membership meeting((s)). ((The directors, as well as
the principal operating officer and committee members of the credit union,
shall be sworn to the faithful performance of their duties. The directors))
They shall hold their offices((, unless sooner removed as provided in
this chapter,)) until their successors are qualified ((under RCW
31.12.235)) and elected or appointed.
(3)
Directors shall be elected to terms of between one and three years, as provided
in the bylaws. If the terms are longer than one year, the ((terms shall))
directors must be divided into classes, and an equal number of ((terms))
directors, as near as possible, ((shall)) must be elected
each year.
(4)
Any vacancies on the board must be filled by interim directors appointed by the
board, unless the interim director would serve a term of fewer than ninety
days. Interim directors will serve out the unexpired term of the former
director, unless provided otherwise in the credit union's bylaws.
(5)
The board will meet as often as necessary, but not less frequently than once
each month.
Sec.
15. RCW
31.12.235 and 1994 c 256 s 78 are each amended to read as follows:
(1)
A director ((shall be)) must be a natural person and a member of
the credit union. If a director ceases to be a member of the credit union, the
director shall no longer serve as a director.
(2)
Unless reasonably excused by the board, a director shall no longer serve as a
director if the director is absent from more than thirty-three percent of
the regular board meetings in any twelve-month period ((is absent from
more than thirty-three percent of the regular board meetings required by this
chapter)).
(3)
((The remainder of the term of a director's office that becomes vacant under
subsection (1) or (2) of this section shall be served by an interim director
appointed by the board.)) A director must meet any qualification
requirements set forth in the credit union's bylaws. If a director fails to
meet these requirements, the director shall no longer serve as a director.
(4)
The officers and employees of the credit union may serve as directors of the
credit union, but only as permitted by the credit union's bylaws.
Sec.
16. RCW
31.12.246 and 1984 c 31 s 26 are each amended to read as follows:
The
members of a credit union may remove a director of the credit union at a
special membership meeting held in accordance with RCW 31.12.195 (as
recodified by this act) and called for that purpose. If the members remove
a director, the members may at the same special membership meeting elect
an interim director to complete the remainder of the former director's
term of office or ((may elect to)) authorize the board to appoint an
interim director as provided in RCW ((31.12.235)) 31.12.225 (as
recodified by this act).
Sec.
17. RCW
31.12.255 and 1994 c 256 s 79 are each amended to read as follows:
((The
board shall have the general direction of the affairs of the credit union. The
board shall meet as often as necessary, but not less than once each month.))
The business and affairs of a credit union shall be managed by the board of
the credit union. The duties of the board include, but are not limited to, the
duties enumerated in this section. The duties listed in subsection (1) of this
section may not be delegated by the credit union's board of directors. The
duties listed in subsection (2) of this section may be delegated to a
committee, officer, or employee, with appropriate reporting to the board.
(1)
The board shall:
(((1)
Act upon applications for membership with the credit union;
(2)
Expel members for cause as provided in this chapter;
(3)
Borrow and invest money on behalf of the credit union as provided by this
chapter;
(4)
Determine the maximum amount of shares and deposits that a member may hold in
the credit union;
(5)
Declare dividends on shares and set the rate of interest on deposits;
(6)
Determine the amount which may be loaned to a member and the finance charges,
including interest, to be charged on the loans;
(7)
Prescribe the conditions and terms under which a loan officer or credit
committee may approve loans;
(8)
Set the minimum number of shares, if any, required for active member status;
(9)
Fill vacancies on all committees except the supervisory committee;
(10)
Set the par value of shares, if any, of the credit union;
(11)
Set the fees, if any, to be charged by the credit union to its members for the
right to be a member of the credit union and for services rendered by the
credit union;
(12)
Approve the charge-off of credit union losses; or
(13)
Perform such other acts as are required by this chapter. The board may
authorize a committee, officer, or employee to take the actions referenced in
subsections (1), (3), (5), and (6) of this section.))
(a)
Set the par value of shares, if any, of the credit union;
(b)
Set the minimum number of shares, if any, required for membership;
(c)
Establish the loan policies under which loans may be approved, including
policies on any automated loan approval programs;
(d)
Establish the conditions under which a member may be expelled for cause;
(e)
Fill vacancies on all committees except the supervisory committee;
(f)
Approve an annual operating budget or financial plan for the credit union;
(g)
Designate those persons or positions authorized to execute or certify documents
or records on behalf of the credit union;
(h)
Review the supervisory committee's annual report; and
(i)
Perform such other duties as the members may direct.
(2)
In addition, the board shall:
(a)
Act upon applications for membership in the credit union;
(b)
Determine the maximum amount of shares and deposits that a member may hold in
the credit union;
(c)
Declare dividends on shares and set the rate of interest on deposits;
(d)
Set the fees, if any, to be charged by the credit union to its members for the
right to be a member of the credit union and for services rendered by the
credit union;
(e)
Determine the amount which may be loaned to a member together with the terms
and conditions of loans;
(f)
Establish policies under which the credit union may borrow and invest; and
(g)
Approve the charge-off of credit union losses.
Sec.
18. RCW
31.12.265 and 1994 c 256 s 80 are each amended to read as follows:
(1)
The board at its first meeting after the annual membership meeting ((of
the members)) shall elect ((a chairman or president, and one or more
vice chairmen or vice presidents, a secretary, a treasurer, and other officers
that may be)) board officers from among its members, as provided in the
credit union's bylaws. The board will elect as many board officers as it deems
necessary for transacting the business of the board of the credit union. The board
officers ((of the board of the credit union)) shall hold office until
their successors are qualified and elected ((and qualified)),
unless sooner removed as provided ((by)) in this chapter. ((The
offices of secretary and treasurer may be held by the same person.)) All board
officers ((of the board of a credit union shall)) must be elected
members of the board. However, the office of board treasurer and ((the))
board secretary may be held by the same person and need not be
elected members of the board. ((The board may designate such employees,
including a principal operating officer who shall not share the title chosen
for the chairman or president of the board and who need not be a member of the
board, as are necessary for the operation of the credit union.))
(2)
The board may designate as many operating officers as it deems necessary for
conducting the business of the credit union, including, but not limited to, a
principal operating officer. Individuals serving as operating officers may
also serve as board officers in accordance with subsection (1) of this section
and subject to RCW 31.12.235(4) (as recodified by this act).
NEW
SECTION. Sec. 19. A
new section is added to chapter 31.12 RCW to read as follows:
Directors
and board officers are deemed to stand in a fiduciary relationship to the
credit union, and must discharge the duties of their respective positions:
(1)
In good faith;
(2)
With the care an ordinarily prudent person in a like position would exercise
under similar circumstances; and
(3)
In a manner the director or board officer reasonably believes to be in the best
interests of the credit union.
Sec. 20. RCW
31.12.275 and 1984 c 31 s 29 are each amended to read as follows:
The
board may, for cause, remove ((an)) a board officer
from office or a committee member from a committee, other than the supervisory
committee. For the purpose of this section "cause" includes
demonstrated financial irresponsibility, a breach of fiduciary duty to the
credit union, or activities which, in the judgment of the board, are
detrimental to the credit union.
Sec.
21. RCW
31.12.285 and 1984 c 31 s 30 are each amended to read as follows:
The
board may((, by a two-thirds vote,)) suspend for cause a member of the
board or a member of the supervisory committee until a membership meeting is
held. The membership meeting ((shall)) must be held
within thirty days after the suspension. The members attending ((that))
the meeting shall vote whether to remove ((the)) a
suspended party. For purposes of this section, "cause" includes
demonstrated financial irresponsibility, a breach of fiduciary duty to the
credit union, or activities which, in the judgment of the board, threaten the
safety and soundness of the credit union.
Sec.
22. RCW
31.12.326 and 1984 c 31 s 34 are each amended to read as follows:
(1)
A supervisory committee of at least three members ((shall)) must
be elected at the annual membership meeting of the credit union. ((A
member)) Members of the supervisory committee shall serve a term of
three years, unless sooner removed under this chapter or until ((a)) their
successors ((commences the performance of the member's duties)) are
qualified and elected or appointed. The members of the supervisory
committee shall be divided into classes so that as equal a number as is
possible is elected each year.
(2)
If a member of the supervisory committee ceases to be a member of the credit
union, the member's office ((shall)) becomes vacant. ((The
supervisory committee shall fill vacancies in its membership until successors
are elected, except that)) Any vacancy on the committee must be filled
by an interim member appointed by the committee, unless the interim member
would serve a term of fewer than ninety days. Interim members may serve out
the unexpired term of the former member, unless provided otherwise by the
credit union's bylaws. However, if all positions on the committee are
vacant at the same time, the board may ((fill the vacancies)) appoint
interim members to serve until the next annual membership meeting.
(3)
No operating officer or employee of a credit union may serve on the credit
union's supervisory committee ((of that credit union)). No more
than one director may be a member of the supervisory committee at the same time,
unless provided otherwise by the credit union's bylaws. No member of the
supervisory committee may serve on the credit committee or investment committee
of the credit union while serving on the supervisory committee.
Sec.
23. RCW
31.12.335 and 1994 c 256 s 82 and 1994 c 92 s 192 are each reenacted and
amended to read as follows:
The
supervisory committee of a credit union shall:
(1)
Meet as often as necessary and at least quarterly;
(2)
Keep fully informed as to the financial condition of the credit union and
the decisions of the credit union's board;
(3)
((Cause to be made)) Annually perform or arrange for a
complete ((examination)) audit of ((the)) internal
controls, loans, investments, cash, ((the credit union)) general
ledger accounts, including, but not limited to, income and expense,
and the members' share and deposit accounts ((in accordance with
rules adopted by the director)); and
(4)
Report its findings and recommendations to the board and make an annual report
to ((the)) members at ((the)) each annual membership
meeting.
At
least one supervisory committee member may attend each regular board meeting.
Sec.
24. RCW
31.12.345 and 1984 c 31 s 36 are each amended to read as follows:
(1)
The supervisory committee may, by unanimous vote ((the supervisory
committee of a credit union may suspend for cause an officer of the credit
union)), for cause, suspend a member of ((a committee)) the
board, ((or a member of the board)) until a membership meeting is
held. The membership meeting ((shall)) must be held
within thirty days after the suspension. The members attending that meeting
shall vote whether to remove the suspended party or parties. The
supervisory committee may, by unanimous vote, for cause, suspend members of
other committees until a membership meeting is held. The meeting must be held
within thirty days after the suspension. The members attending that meeting
shall vote whether to remove the suspended party or parties.
(2)
For purposes of this section, "cause" includes demonstrated financial
irresponsibility, a breach of fiduciary duty to the credit union, or activities
which, in the judgment of the supervisory committee, threaten the safety and
soundness of the credit union.
Sec.
25. RCW
31.12.365 and 1984 c 31 s 38 are each amended to read as follows:
(1)
Directors and members of committees shall not receive compensation for their
service((s, except to the extent that an officer serving as principal
operating officer may receive compensation)) as directors and committee
members. However, this subsection does not prohibit directors or committee
members from receiving incidental services available to employees generally,
and gifts of minimal value.
(2)
Directors and members of committees may receive reimbursement for reasonable
expenses incurred ((in the performance of their duties.)) on behalf
of themselves and their spouses in the performance of the directors' and
committee members' duties.
(3)
Loans to directors and committee members ((shall)) may not be made
under ((no)) more favorable terms and conditions ((and terms))
than those ((under which loans to general)) made to members ((are
made)) generally.
Sec.
26. RCW
31.12.306 and 1994 c 92 s 191 are each amended to read as follows:
(1)
Each director, officer, committee member, and employee of a credit union
((shall)) must be bonded in an amount and ((with surety and))
in accordance with conditions established by the director.
(2)
When the bond coverage under subsection (1) of this section is suspended or
terminated, the board of the affected credit union shall notify the director in
writing within five days of ((having received)) receipt of the
notice of ((the)) suspension or termination.
Sec.
27. RCW
31.12.145 and 1984 c 31 s 16 are each amended to read as follows:
(1)
A credit union may admit to membership those persons qualified for membership
as set forth in its bylaws ((upon the payment of a membership fee, if any,
or the purchase of one or more shares, as provided in the bylaws)). ((A
fraternal))
(2)
An organization((, partnership, or corporation having a usual place of
business in this state and)) whose membership, ownership, or employees
are comprised principally of persons who are eligible for membership in the
credit union may become a member of the credit union.
Sec.
28. RCW
31.12.155 and 1994 c 256 s 76 are each amended to read as follows:
((A
minor under age eighteen does not have the right to vote as a member.)) (1)
No member may have more than one vote regardless of the number of shares held
by the member. An organization having membership in a credit union may cast
one vote through its agent duly authorized in writing.
(2)
Members may vote, as prescribed in the credit union's bylaws, by mail ballot,
absentee ballot, or other method. However, no member may vote by proxy.
(3)
A member who is not at least eighteen years of age is not eligible to vote as a
member unless otherwise provided in the credit union's bylaws.
Sec.
29. RCW
31.12.295 and 1984 c 31 s 31 are each amended to read as follows:
(1)
((The board may, by a two-thirds vote, expel a member for cause. The board
shall notify the member)) Members expelled from the credit union will be
notified of the expulsion and the reasons upon which it is based. The ((board
shall)) credit union will, upon request of the expelled member,
allow the member to challenge the expulsion and seek reinstatement as a member.
(2)
The amounts ((paid)) in ((on shares or deposited by a member who has
been expelled shall)) an expelled member's share and deposit accounts
must be promptly paid to the ((member)) person following
expulsion, and after deducting amounts due from the member(s) to the credit
union, including, but not limited to, any applicable penalties for early
withdrawal. Expulsion ((shall)) will not operate to relieve
((a member)) the person from outstanding liabilities owed to the
credit union.
Sec.
30. RCW
31.12.125 and 1994 c 256 s 74 and 1994 c 92 s 186 are each reenacted and
amended to read as follows:
A
credit union may:
(1)
Issue shares to and receive deposits from its members ((as provided in this
chapter)) in accordance with RCW 31.12.385 (as recodified by this act);
(2)
Make loans to its members ((as provided in this chapter)) in
accordance with RCW 31.12.317 and 31.12.406 (as recodified by this act);
(3)
Pay dividends or interest to its members in accordance with RCW 31.12.485
(as recodified by this act);
(4)
Impose reasonable charges for the services it provides to its members;
(5)
Impose financing charges and reasonable late charges in the event of default on
loans, subject to applicable law, and recover reasonable costs and expenses,
including, but not limited to, collection costs, and reasonable
attorneys' fees incurred both before and after judgment, incurred in the
collection of sums due ((it)), if provided for in the note or
agreement signed by the borrower;
(6)
Acquire, lease, hold, assign, pledge, ((hypothecate,)) sell, or
otherwise dispose of ((a possessory)) interests in personal
property and((, subject to RCW 31.12.435,)) in real property((, so
long as the property is necessary or incidental to the operation of the credit
union)) in accordance with RCW 31.12.435 (as recodified by this act);
(7)
Deposit and invest funds ((in excess of the amount approved for loans to
members as provided in this chapter)) in accordance with RCW 31.12.425
(as recodified by this act);
(8)
Borrow money, up to a maximum of fifty percent of its ((paid-in and
unimpaired)) total shares, deposits, and net capital ((and
surplus));
(9)
Discount or sell any of its assets, or purchase any or all of the assets of
another credit union, out-of-state credit union, or federal credit union.
However, a credit union may not discount or sell ((more than ten
percent)) all, or substantially all, of its assets without the ((prior
written)) approval of the director;
(10)
Accept deposits of deferred compensation of its members ((under the terms
and conditions of RCW 28A.400.240 and 41.04.250(2)));
(11)
Act as fiscal agent for and receive payments on shares and deposits from the
federal government or this state, and any agency or political subdivision
thereof;
(12)
Engage in activities and programs as requested by the federal government, this
state, and any agency or political subdivision thereof, when the
activities or programs are not inconsistent with this chapter;
(13)
Hold membership in ((other)) credit unions ((organized under this
chapter or other laws)), out-of-state credit unions, or federal credit
unions and in ((associations)) organizations controlled by or
fostering the interests of credit unions, including, but not limited to,
a central liquidity facility organized under state or federal law; ((and))
(14)
Pay additional dividends or interest to members, or an interest rate refund
to borrowers;
(15)
Enter into lease agreements, lease contracts, and lease‑purchase
agreements with members;
(16)
Procure for, or sell to its members group life, accident, health, and credit
life and disability insurance;
(17)
Impose a reasonable service charge for the administration and processing of
accounts that remain dormant for a period of time specified by the board;
(18)
Establish and operate on-premises or off-premises electronic facilities;
(19)
Enter into formal or informal agreements with another credit union for the
purpose of fostering the development of the other credit union;
(20)
Work with community leaders to develop and prioritize efforts to improve the
areas where their members reside by making investments in the community through
contributions to organizations that primarily serve either a charitable,
social, welfare, or educational purpose, or are exempt from taxation pursuant
to section 501(c)(3) of the Internal Revenue Code;
(21)
Limit the personal liability of its directors in accordance with provisions of
its articles of incorporation that conform with RCW 23B.08.320;
(22)
Indemnify its directors, supervisory committee members, officers, employees,
and others in accordance with provisions of its articles of incorporation or
bylaws that conform with RCW 23B.08.500 through 23B.08.600; and
(23)
Exercise such incidental powers as are necessary or ((requisite)) convenient
to enable it to ((carry on effectively)) conduct the business ((for
which it is incorporated)) of a credit union.
Sec.
31. RCW
31.12.136 and 1994 c 256 s 75 and 1994 c 92 s 187 are each reenacted and
amended to read as follows:
(1)
Notwithstanding any other provision of law, a credit union may exercise any of
the powers and authorities conferred as of December 31, 1993, upon ((a))
federal credit unions ((doing business in this state)).
(2)
Notwithstanding any other provision of law, and in addition to the
powers and authorities conferred under subsection (1) of this section, the
director may, by rule, authorize credit unions to exercise any of
the powers and authorities conferred at the time of the adoption of the rule
upon ((a)) federal credit unions ((doing business in this
state)), if the director finds that the exercise of the power and
authority serves the convenience and advantage of ((depositors and borrowers))
members of ((state-chartered)) credit unions, and maintains the
fairness of competition and parity between ((state-chartered)) credit
unions and federal((‑chartered)) credit unions.
(3)
The restrictions, limitations, and requirements applicable to specific powers or
authorities of federal credit unions ((shall)) apply to credit unions
exercising those powers or authorities permitted under this section but only
insofar as the restrictions, limitations, and requirements relate to ((exercising))
the specific exercise of the powers or authorities granted credit unions
solely under this section.
(4)
As used in this section, "powers and authorities" include without
limitation, powers and authorities in corporate governance matters.
Sec.
32. RCW
31.12.385 and 1994 c 256 s 83 and 1994 c 92 s 194 are each reenacted and
amended to read as follows:
(1)
Shares ((purchased)) held and deposits made in a credit union by
((an individual)) a natural person are governed by chapter 30.22
RCW. ((A member may purchase shares and make deposits in a credit union in
an amount that does not exceed such amounts as may be established by the board
from time to time.))
(2)
A credit union may require ((from a member)) ninety days notice of ((the))
a member's intention to withdraw shares or deposits. The notice
requirement may be extended with the written consent of the director.
(3)
A credit union will have a lien on all shares and deposits, including, but not
limited to, dividends, interest, and any other earnings and accumulations
thereon, of any share account holder or depositor, to the extent of any
obligation owed to the credit union by the share account holder or depositor.
Sec.
33. RCW
31.12.485 and 1984 c 31 s 50 are each amended to read as follows:
(((1)
At each annual, semiannual, quarterly, or monthly period the board may declare
a dividend from net earnings. The dividends shall be paid on all eligible
shares outstanding at the time of declaration and may be paid to members on
shares withdrawn during the period. Shares which became paid-up during the
dividend period shall be entitled only to a proportional part of the dividend
in accordance with a formula adopted by the board.
(2)))
Dividends may be declared from the credit union's earnings which remain
after the deduction of expenses, interest on deposits, and the amounts required
for ((regular, liquidity, and special)) reserves, or the
dividends may be declared in whole or in part from the undivided earnings that
remain from preceding periods.
(((3)
A member shall be given the option to receive declared dividends either by cash
payment or by a credit to the member's account in either shares or deposits.))
Sec.
34. RCW
31.12.406 and 1994 c 256 s 84 and 1994 c 92 s 195 are each reenacted and
amended to read as follows:
(1)
A credit union may make secured and unsecured loans to its members ((with
the approval of a credit committee or loan officer)) under policies
established by the board, subject to the loans to one borrower limits
provided for in RCW 31.12.317 (as recodified by this act). ((All
loans shall be documented in writing. Loans may be made for (a) consumer,
family, or household purposes, referred to in this section as "consumer
loans", or (b) business, investment, commercial, or agricultural purposes
which are)) Each loan must be evidenced by records adequate to support
enforcement or collection of the loan and review of the loan by the director.
Business loans must be in compliance with rules adopted by the director.
(2)
((A credit union may make to members:
(a)
Loans secured by the note of the member or other adequate security, including,
but not limited to, equity interests in real estate, automobiles, boats,
motorhomes, and travel trailers;
(b)
Student loans under student loan programs of this state or the United States;
(c)
Loans for the acquisition of a modular home or mobile home as defined by RCW
82.50.010, secured by a security interest in that modular home or mobile home,
owned by the member. A loan under this subsection and any prior indebtedness
secured by the home shall not exceed eighty‑five percent of the purchase
price or of the appraised value of the modular home or mobile home, whichever
is less;
(d)
Residential real estate loans under RCW 31.12.415;
(e)
Loans to its members under an act of congress known as the "FHA Title I,
National Housing Act of 1934," June 27, 1934 (12 U.S.C. Sec. 1701 to 1750,
inc.); and
(f)
Loans to credit union members in participation with other credit unions, credit
union organizations, or financial organizations. The credit union which
originates a loan under this subsection shall retain an interest of at least
ten percent of the face amount of the loan unless the loan is a real estate
loan in which case there is no retention requirement.)) A
credit union may obligate itself to purchase loans in accordance with RCW
31.12.425(1) (as recodified by this act), if the credit union's underwriting
policies would have permitted it to originate the loans.
(3)
Consumer loans ((shall)) must be given preference, and in the
event there are not sufficient funds available to satisfy all approved consumer
loan ((applicants)) applications, further preference ((shall))
must be given to small loans.
(((4)
The director may by rule establish guidelines addressing the issue of unsafe
and unsound concentrations of credit and such other related safety and
soundness issues.))
Sec.
35. RCW
31.12.317 and 1994 c 256 s 92 are each amended to read as follows:
(1)
No loan may be made to any ((member)) borrower if ((such))
the loan would cause ((that member)) the borrower to be
indebted to the credit union upon consumer and business loans ((made
to the member)) in an aggregated amount exceeding ten thousand dollars or
((two and one-half)) twenty-five percent of the ((assets))
capital of the credit union, whichever is greater, without the approval
of the director.
(2)
The director by rule may establish limits on business loans ((for
business, investment, commercial, or agricultural purposes)) to one ((member))
borrower.
Sec.
36. RCW
31.12.425 and 1994 c 256 s 86 and 1994 c 92 s 197 are each reenacted and
amended to read as follows:
(((1)
The capital or surplus funds in excess of the amount for which loans are
approved may be deposited or invested in any of the following ways, so long as
the investment has not been in default as to principal or interest within five
years prior to the date of purchase)) A credit union may invest its
funds in excess of loans in any of the following, as long as they are deemed
prudent by the board:
(((a)
Accounts in banks or trust companies, including national banks located in this
state, or other states, the accounts of which are insured by the federal
deposit insurance corporation. The deposits made by a credit union under this
subsection may exceed the insurance limits established by the federal deposit
insurance corporation;
(b))) (1)
Loans held by credit unions, out-of-state credit unions, or federal credit
unions; loans to members held by other lenders; and loans to nonmembers held by
other lenders, with the approval of the director;
(2)
Bonds, securities, or other investments that are fully guaranteed as to
principal and interest by the United States government, and general obligations
of this state and its political subdivisions;
(((c)))
(3) Obligations issued by corporations designated under ((Section
9101 of Title)) 31 U.S.C. Sec. 9101, or obligations, participations
or other instruments issued and guaranteed by the federal national mortgage
association, federal home loan mortgage corporation, government national
mortgage association, or other government-sponsored enterprise;
(((d)))
(4) Participations or obligations which have been subjected by one or
more government agencies to a trust or trusts for which an executive
department, agency, or instrumentality of the United States has been named to
act as trustee;
(((e)))
(5) Share((s, share certificates,)) or ((share)) deposit((s))
accounts of other ((credit unions or savings and loan associations
organized or authorized to do business under the laws of this state, other
states, or the United States)) financial institutions, the accounts
of which are federally insured or insured or guaranteed by ((the
federal savings and loan insurance corporation, the national credit union
administration, the Washington credit union share guaranty association, or))
another insurer or guarantor approved by the director. The shares
and deposits made by a credit union under this subsection may exceed the
insurance or guarantee limits established by the organization insuring or
guaranteeing the institution into which the shares or deposits are made;
(((f)))
(6) Common trust or mutual funds whose investment portfolios
consist of securities issued or guaranteed by the federal government or an
agency of the government;
(((g)))
(7) Up to ((two)) five percent of ((a corporation))
the capital of the credit union, in debt or equity issued by an organization
owned by the Washington credit union league;
(((h)))
(8) Shares, stocks, loans, or other obligations of an organization ((of
which the membership or ownership is confined primarily to credit unions and
the)) whose primary purpose ((of which)) is to strengthen,
advance, or provide services to the credit union industry and credit union
members. Other than investment in an organization that is wholly owned by
the credit union and whose activities are limited exclusively to those ((determined
by the director to be)) authorized by RCW 31.12.125 (((2) through (9)
and (12) through (14))) (as recodified by this act), an investment
under this subsection (((1)(h) of this section)) shall be limited
to one percent of the ((total paid-in and unimpaired capital and surplus))
assets of the credit union, but a credit union may, in addition to the
investment, lend to the organization an amount not exceeding an additional one
percent of the ((total paid-in and unimpaired capital and surplus)) assets
of the credit union;
(((i)))
(9) Loans to ((other)) credit unions ((organized or authorized
to do business under the laws of this state, other states, or the United States)),
out-of-state credit unions, or federal credit unions. The aggregate of
loans issued under this subsection ((shall be)) is limited to
twenty-five percent of the ((paid‑in and unimpaired capital)) total
shares and deposits of the lending credit union; ((or
(j))) (10)
Key person insurance policies, the proceeds of which inure exclusively to the
benefit of the credit union; or
(11)
Other investments ((authorized in accordance with rules adopted)) approved
by the director ((consistent with this chapter)) upon written
application.
(((2)
The board may appoint an investment committee to make and manage the
investments under this section. An investment committee shall remain subject
to the supervision of the board.))
Sec.
37. RCW
31.12.435 and 1994 c 256 s 87 and 1994 c 92 s 198 are each reenacted and
amended to read as follows:
(1)
((Unless otherwise approved by the director,)) A credit union may
invest ((a reasonable amount of its funds)) in real property or
leasehold interests primarily for its own use in conducting business,
including, but not limited to, structures and fixtures attached to real
property, subject to the following limitations:
(a)
((The aggregate of its regular reserve and its undivided earnings equals))
The credit union's net capital equals at least five percent of the total
of its share and deposit accounts;
(b)
The board approves the investment ((in real property for its own use in
conducting business by a two-thirds majority vote of the total number of
directors)); and
(c)
The ((total)) aggregate of all such investments ((in
the property)) does not exceed seven and one-half percent of the ((aggregate))
total of its share and deposit accounts.
(2)
If the real property or leasehold interest is acquired for future expansion,
the credit union must satisfy the use requirement in subsection (1) of this
section within three years after the credit union makes the investment.
(3)
The director may, upon written application, waive any of the limitations listed
in subsection (1) or (2) of this section.
Sec.
38. RCW
31.12.445 and 1994 c 92 s 199 are each amended to read as follows:
This
section applies to all nonfederally insured credit unions.
(1)
At the end of each accounting period and before the payment of dividends to
members, a credit union shall set apart as a regular reserve an amount in
accordance with subsection (2) of this section.
(2)(a)
If a credit union has been in operation for four or more years and has assets
of at least five hundred thousand dollars, it shall reserve ten percent
of gross income until the regular reserve together with the allowance for
loan loss equals four percent of outstanding loans and then shall reserve
five percent of gross income until the regular reserve together with the
allowance for loan loss equals six percent of outstanding loans.
(b)
If a credit union has been in operation for less than four years or has assets
of less than five hundred thousand dollars, it shall reserve ten percent of
gross income until the regular reserve together with the allowance for loan
loss equals seven and one-half percent of outstanding loans and then shall
reserve five percent of gross income until the regular reserve together with
the allowance for loan loss equals ten percent of outstanding loans.
(c)
The director may authorize a credit union falling under subsection (2)(b) of
this section to follow the reserving requirements for credit unions falling
under subsection (2)(a) of this section.
(d)
In computing outstanding loans for purposes of reserving, a credit union may
exclude loans secured by shares and loans insured or guaranteed by the federal
government or the government of this state to the extent of the security,
insurance, or guarantee.
(3)
When the regular reserve falls below the percentage of outstanding loans
required under subsection (2) of this section, a credit union shall replenish
the regular reserve by again reserving a portion of gross income as set forth
in subsection (2) of this section.
(4)
The regular reserve and the investment((s)) thereof ((shall)) must
be held to meet contingencies or losses in the business of the credit union and
((shall)) may not be distributed to its members except in the
case of ((dissolution)) liquidation or with the permission of the
director.
Sec.
39. RCW
31.12.465 and 1994 c 92 s 201 are each amended to read as follows:
(1)
The director may((, if deemed necessary,)) require a credit union to
establish a liquidity reserve of up to five percent of ((unimpaired capital))
total shares, deposits, and capital. The liquidity reserve ((shall))
must be in cash or investments with maturities of one year or less.
(2)
The director may require a credit union to charge off or set up a special
reserve fund for delinquent loans or other assets.
Sec.
40. RCW
31.12.695 and 1994 c 256 s 91 and 1994 c 92 s 220 are each reenacted and
amended to read as follows:
(1)
For purposes of this section, the merging credit union is the credit
union whose charter ceases to exist upon ((merging)) merger with
the continuing credit union. The continuing credit union is the credit union
whose charter continues upon ((merging)) merger with the merging
credit union.
(2)
A credit union may be merged with another credit union with the approval of the
director and in accordance with requirements the director may prescribe. The
merger ((shall)) must be approved by a two-thirds majority
vote of the board of each credit union and a two‑thirds majority
vote of those members of the merging credit union voting on the merger at a ((special))
membership meeting ((called by the merging credit union board or by mail
ballot)). The requirement of approval by the members of the merging credit
union may be waived by the director if ((in the director's opinion))
the merging credit union is in imminent danger of insolvency.
(3)
The property, rights, and interests of the merging credit union transfer to and
vest in the continuing credit union without deed, endorsement, or instrument of
transfer, although instruments of transfer may be used if their use is deemed
appropriate. The debts and obligations of the merging credit union that are
known or reasonably should be known are assumed by the continuing credit
union. The continuing credit union shall cause to be published notice of
merger once a week for three consecutive weeks in a newspaper of general
circulation in the county in which the principal place of business of the merging
credit union is located. The notice of merger ((shall)) must also
inform creditors of the merging credit union how to make a claim on the
continuing credit union, and that if a claim is not made upon the
continuing credit union within thirty days of the last date of publication,
creditors' claims that are not known by the continuing credit union may be
barred. Unless a claim is filed as requested by the notice, or unless the debt
or obligation is known or reasonably should be known by the continuing credit
union, the debts and obligations of the merging credit union are discharged.
Upon merger, the charter of the merging credit union ceases to exist.
Sec.
41. RCW
31.12.705 and 1994 c 92 s 221 are each amended to read as follows:
(1)
A credit union ((chartered under the laws of this state)) may convert ((itself))
into a federal credit union ((chartered under the laws of the United States))
as authorized by the federal credit union act. The conversion ((shall))
must be approved by a two-thirds majority vote of ((the)) those
members ((present)) voting at ((any regular or special)) a
membership meeting ((called for that purpose by the board. The meeting
shall be held within thirty days of being called and the secretary shall notify
the members and the director of the meeting and its purpose as provided by the
bylaws at least twenty days prior to the meeting)).
(2)
If the conversion is approved by the members, a copy of the resolution
certified by the board ((shall)) must be filed with the director
within ten days of approval. The board may effect the conversion ((from a
state-chartered credit union to a federal‑chartered credit union))
upon terms agreed by the board and the ((proper)) federal ((authorities
as provided by federal laws, rules, and regulations)) regulator.
(3)
A certified copy of the federal credit union charter or authorization issued ((to
the credit union)) by the ((proper)) federal ((authority shall))
regulator must be filed ((in)) with the ((director's
office)) director and thereupon the ((state-chartered))
credit union ceases to exist except for the purpose of winding up its affairs
and prosecuting or defending any litigation by or against the ((state-chartered))
credit union. For all other purposes, the credit union is converted
into a ((federal-chartered)) federal credit union and the ((state-chartered))
credit union may execute, acknowledge, and deliver to the successor federal
credit union the instruments of transfer, conveyance, and assignment that are
necessary or desirable to complete the conversion, and the property, tangible
or intangible, and all rights, titles, and interests that are agreed to by the
board and the ((proper)) federal ((authorities)) regulator.
(4)
Procedures, similar to those contained in subsections (1) through (3) of this
section, prescribed by the director ((shall)) must be followed
when a credit union ((chartered under the laws of this state)) merges ((with))
or converts ((to a credit union chartered under the laws of another state))
into an out-of-state or foreign credit union.
Sec.
42. RCW
31.12.715 and 1994 c 92 s 222 are each amended to read as follows:
(1)
A federal credit union located and conducting business in this state ((which
becomes inoperative because of a change in the laws under which it is chartered
or which is authorized to dissolve or convert to a state-chartered credit union
in accordance with federal law)) may convert into a ((state-chartered))
credit union organized and operating under this chapter.
(2)
The board of the federal credit union shall file with the director proposed
articles of incorporation and ((proposed)) bylaws, as provided by this
chapter for organizing a new ((state‑chartered)) credit union. If
approved by the director, the ((federal-chartered)) federal
credit union ((shall)) becomes a ((state-chartered))
credit union under the laws of this state, and the assets and
liabilities of the federal credit union will vest in and become
the property of the successor ((state‑chartered)) credit union
subject to all existing liabilities against the ((federal-chartered)) federal
credit union. ((Shareholders and)) Members of the federal credit
union may become ((shareholders and)) members of the successor ((state-chartered))
credit union.
(3)
Procedures, similar to those contained in subsections (1) and (2) of this
section, prescribed by the director ((shall)) must be followed
when ((a)) an out-of-state or foreign credit union ((chartered
under the laws of another state)) wishes to merge ((with)) or
convert ((to)) into a credit union ((chartered under the laws
of this state)) organized and operating under this chapter.
Sec.
43. RCW
31.12.526 and 1994 c 256 s 88 and 1994 c 92 s 205 are each reenacted and
amended to read as follows:
(1)
((A)) An out-of-state or foreign credit union ((organized and
qualified as a credit union in another state which has not had its authority to
operate in another state suspended or revoked may operate as a credit union
under this chapter if)) may not operate a branch in Washington unless:
(a)
The director has approved ((an)) its application to do business
in this state;
(b)
A credit union ((organized under the laws of this state)) is permitted
to do business in the state or jurisdiction in which the ((credit
union)) applicant is organized;
(c)
The interest rate charged by the ((credit union)) applicant on
loans made to members residing in this state does not exceed the maximum
interest rate permitted in the state or jurisdiction in which the ((credit
union)) applicant is organized, or exceed the maximum interest rate
((which)) that a credit union ((organized in this state)) organized
and operating under this chapter is permitted to charge on similar loans,
whichever is lower;
(d)
The ((credit union)) applicant has secured surety bond and
fidelity bond coverages satisfactory to the director;
(e)
The ((credit union has secured for the)) applicant's share and
deposit accounts ((of its members insurance or other surety satisfactory
to the director)) are insured under the federal share insurance program
or an equivalent share insurance program in compliance with RCW 31.12.039 (as
recodified by this act);
(f)
The ((credit union)) applicant submits to the director an annual
((audit or)) examination report of its most recently completed fiscal
year; ((and))
(g)
The applicant has not had its authority to operate in another state or
jurisdiction suspended or revoked;
(h)
If the applicant is a foreign credit union:
(i)
A treaty or agreement between the United States and the jurisdiction where the
applicant is organized requires the director to permit the applicant to operate
a branch in Washington; and
(ii)
The director determines that the applicant has substantially the same
characteristics as a credit union organized and operating under this chapter;
and
(i)
The ((credit union)) applicant complies with all other ((applicable))
provisions of this chapter and rules adopted by the director, except as
otherwise permitted by this section.
(2)
The director shall ((disapprove)) deny an application filed under
this section or, upon ((reasonable)) notice and an opportunity for
hearing, suspend or revoke the approval of an application, if the director
finds that the standards of organization, operation, and regulation of the ((credit
union)) applicant do not reasonably conform with the standards under
this chapter ((or that at least fifty percent of the members of the credit
union are, or are reasonably expected to be, residents of this state)). In
considering the standards of organization, operation, and regulation of the ((credit
union)) applicant, the director may consider the laws ((and
regulations)) of the state or jurisdiction in which the ((credit
union)) applicant is organized. A decision under this subsection
may be appealed under chapter 34.05 RCW.
(3)
In implementing this section, the director may cooperate with ((the administrators
of the)) credit union ((laws)) regulators in other states or
jurisdictions and may share with the ((administrators)) regulators
the information received in the administration of this chapter.
(4)
The director may enter into supervisory agreements with out‑of‑state
and foreign credit unions and their regulators to prescribe the applicable laws
governing the powers and authorities of Washington branches of the out-of-state
or foreign credit unions. The director may also enter into supervisory agreements
with the credit union regulators in other states or jurisdictions to prescribe
the applicable laws governing the powers and authorities of out-of-state or
foreign branches and other facilities of credit unions.
The
agreements may address, but are not limited to, corporate governance and
operational matters. The agreements may resolve any conflict of laws, and
specify the manner in which the examination, supervision, and application
processes must be coordinated with the regulators.
The
director ((shall)) may adopt rules for the periodic examination
and investigation of the affairs of an out-of-state or foreign credit
union operating in this state. The costs of examination and supervision ((shall))
must be fully borne by the out-of-state or foreign credit union.
Sec.
44. RCW
31.12.725 and 1994 c 92 s 223 are each amended to read as follows:
(1)
At a special board meeting ((specially)) called for the purpose
of liquidation, and upon the recommendation of at least two-thirds of
the total members of the board of a credit union, the members of a credit union
may elect to liquidate the credit union by a two-thirds majority
vote of ((the)) those members ((present elect to liquidate the
credit union)) voting.
(2)
Upon a vote to liquidate under subsection (1) of this section, a three-person
liquidating committee ((of three shall)) must be elected to
liquidate the assets of the credit union. The committee shall act ((under
the direction)) in accordance with any requirements of the director
and may be reasonably compensated by the board of the credit union. Each share
((of)) account holder and depositor at the credit union ((shall
be)) is entitled to his, her, or its proportionate part of
the assets in liquidation after all shares, deposits, and debts
have been paid. The proportionate allocation shall be based on account
balances as of a date determined by the board. For the purposes of
liquidation, shares and deposits are equivalent. The assets of the
liquidating credit union ((shall)) are not ((be)) subject
to contingent liabilities. Upon distribution of the assets, the credit union
((shall)) ceases to exist except for the purpose of discharging
existing liabilities and obligations.
(3)
Funds representing unclaimed dividends in liquidation and remaining in the
hands of the liquidating committee for six months after the date of the final
dividend ((shall)) must be deposited, together with all the books
and papers of the credit union, with the director. The director may,
one year after receipt, destroy such records, books, and papers as, in
the director's judgment, are obsolete or unnecessary for future reference. The
funds may be deposited in one or more ((trust companies, mutual savings
banks, savings and loan associations, or national or state banks)) financial
institutions to the credit of the director, in trust for the members
of the ((liquidating)) credit union entitled to the funds. The director
may pay ((to)) a ((person entitled to it that person's)) portion
of the funds to a person upon ((the)) receipt of satisfactory
evidence that the person is entitled to ((a portion of)) the funds. In
case of doubt or ((of)) conflicting claims, the director may require an
order of the superior court of the county in which the principal place of
business of the credit union was located, authorizing and directing
the payment of the funds. The director may apply the interest earned by the
funds toward defraying the expenses incurred in the holding and paying of the
funds. Five years after the receipt of the funds, the funds still remaining
with the director ((shall)) must be ((escheated)) remitted
to the state as unclaimed property.
Sec.
45. RCW
31.12.516 and 1994 c 92 s 204 are each amended to read as follows:
(1)
The powers of supervision and examination of credit unions and other persons
subject to this chapter and chapters 31.12A and 31.13 RCW are vested in the
director. The director shall require each credit union to conduct business in
compliance with this chapter and other laws that apply to credit unions, and
has the power to commence and prosecute actions and proceedings, to enjoin
violations, and to collect sums due the state of Washington from a credit union
((authorized to conduct business under this chapter)).
(2)
The director may adopt such rules as are reasonable or necessary to carry out
the purposes of this chapter and chapters 31.12A and 31.13 RCW. Chapter 34.05
RCW will, whenever applicable, govern the rights, remedies, and procedures
respecting the administration of this chapter.
(3)
The director shall have the power and broad administrative discretion to
administer and interpret the provisions of this chapter and chapters 31.12A and
31.13 RCW, to facilitate the delivery of financial services to the members of a
credit union.
(4)
The director may charge fees to credit unions and other persons subject to this
chapter and chapters 31.12A and 31.13 RCW, in order to cover the costs of the
operation of the division of credit unions, and to establish a reasonable
reserve for the division. The director may waive all or a portion of such
fees.
Sec.
46. RCW
31.12.545 and 1994 c 92 s 207 are each amended to read as follows:
(1)
The director shall make an examination and ((full)) investigation into
the affairs of each credit union at least once every eighteen months, unless
the director determines with respect to a credit union, that a less
frequent examination schedule will satisfactorily protect the financial
stability of the credit union and will satisfactorily assure compliance with
the provisions of this chapter. ((The actual cost of examination and
supervision shall be paid by the credit union examined. The director may waive
all or a portion of the examination costs payable by the credit union, in light
of the time and expense of the examination and the ability of the credit union
to pay the costs. The examination costs with respect to the first examination
of a credit union with assets under two hundred thousand dollars shall not be
payable by that credit union.))
(2)
The director may accept in lieu of an examination under subsection (1) of this
section the report of an examiner authorized to examine ((a)) an
out-of-state, federal, or foreign credit union ((under the laws of the
United States or another state)), or the report of an accountant,
satisfactory to the director, who has made and submitted a report of the
condition of the affairs of a credit union ((and, if approved)). The
director may accept such a report in lieu of part or all of an examination. If
accepted, the report ((shall have)) has the same force and
effect as an examination under subsection (1) of this section.
(((3)
Communications from the director to the board of a credit union regarding an
examination or report shall be read before the board at its first meeting
following the receipt of the communication and the fact that the communication
was read before the board shall be noted in the minutes of the meeting. The
board shall promptly respond to the director either by stating that steps have
been taken to comply with the communication or by stating that the board
objects to the communication and stating the reasons for the objection.))
Sec.
47. RCW
31.12.555 and 1994 c 256 s 89 and 1994 c 92 s 208 are each reenacted and
amended to read as follows:
(1)
The director may examine the affairs of:
(a)
A credit union service organization in which a credit union has an
interest((.));
(b)
A person ((or an entity)) that is not a credit union, out‑of‑state
credit union, federal credit union, or foreign credit union, and that has
an interest in a credit union service organization in which a credit union has
an interest ((is deemed to have consented to the examination. For the
purposes of this section and RCW 31.12.565, a sole proprietorship, partnership,
or corporation that is primarily in the business of managing one or more credit
unions shall be considered to be a credit union service organization.));
and
(c)
A sole proprietorship or organization primarily in the business of managing one
or more credit unions.
(2)
Persons subject to examination under this section are deemed to have consented
to the examination.
(3)
The director will establish the appropriate frequency of regular examinations
under this section, but no more frequently than once every eighteen months.
The cost of the examinations will be borne fully by the person examined.
Sec.
48. RCW
31.12.565 and 1994 c 256 s 90 and 1994 c 92 s 209 are each reenacted and
amended to read as follows:
(1)
The following are confidential and privileged and not subject to public
disclosure under chapter 42.17 RCW:
(a)
Examination reports and information obtained by the ((director's staff))
director in conducting examinations ((of credit unions and credit
union service organizations are confidential and privileged information and not
subject to public disclosure under chapter 42.17 RCW)) and
investigations under this chapter and chapters 31.12A and 31.13 RCW;
(b)
Examination reports and related information from other financial institution
regulators obtained by the director; and
(c)
Business plans and other proprietary information obtained by the director in
connection with a credit union's application or notice to the director.
(2)
Notwithstanding subsection (1) of this section, the director may furnish
examination reports prepared by the ((director's office)) director
to:
(a)
Federal agencies empowered to examine ((state-chartered)) credit unions;
(b)
Officials empowered to investigate criminal charges. The director may furnish
only that part of the report which is necessary and pertinent to the
investigation, and only after notifying the affected credit union and members
of the credit union who are named in that part of the examination report, or
other person examined, that the report is being furnished to the officials,
unless the officials requesting the report obtain a waiver of the notice
requirement for good cause from a court of competent jurisdiction;
(c)
The examined credit union or other person examined, solely for its
confidential use;
(d)
The attorney general in his or her role as legal advisor to the director;
(e)
Prospective merger partners or conservators, receivers, or liquidating
agents of a distressed credit union;
(f)
Credit union ((administrators)) regulators in other states or
jurisdictions regarding an out-of-state ((chartered)) or foreign
credit union ((doing)) conducting business in this state under
this chapter, or regarding a credit union ((chartered under this chapter
doing)) conducting business in ((another)) the other
state or jurisdiction;
(g)
A person ((or organization)) officially connected with the credit union or
other person examined, as officer, director, supervisory committee member,
attorney, auditor, accountant, independent attorney, independent auditor, or
independent accountant;
(h)
((Companies)) Organizations that have bonded the credit union to
the extent that information is relevant to the renewal of the bond coverage or
to a claim under the bond coverage;
(i)
((Companies, associations, or agencies)) Organizations insuring
or guaranteeing the shares of, or deposits in, the credit union;
or
(j)
Other persons ((or organizations)) as the director may determine necessary
to protect the public interest and confidence.
(3)
Examination reports furnished under subsection (2) of this section remain the
property of the ((director's office)) director and no person((,
agency, or authority)) to whom reports are furnished or any officer,
director, or employee thereof may disclose or make public the reports or
information contained in the reports except in published statistical
information that does not disclose the affairs of ((an individual or
corporation)) a person, except that nothing prevents the use in a
criminal prosecution of reports furnished under subsection (2)(b) of this
section.
(4)
In a civil action in which the reports or information are sought to be
discovered or used as evidence, a party upon notice to the director, may
petition the court for an in-camera review of the reports or information.
The court may permit discovery and introduction of only those portions of the
report or information which are relevant and otherwise unobtainable by
the requesting party. This subsection does not apply to an action brought or
defended by the director.
(5)
This section does not apply to investigation reports prepared by the director
((and the director's staff)) concerning an application for a new credit
union or a notice of intent to establish or relocate a branch of a
credit union, except that the director may adopt rules making ((confidential))
portions of the reports confidential, if in the director's opinion the
public disclosure of that portion of the report would impair the ability to
obtain information the director considers necessary to fully evaluate the
application.
(6)
Any person who knowingly violates a provision of this section is guilty of a
gross misdemeanor.
NEW
SECTION. Sec. 49. A
new section is added to chapter 31.12 RCW to read as follows:
A
credit union shall make at least two regular reports each year to the director
showing the assets and liabilities of the credit union. Each report must be
certified by the principal operating officer of the credit union. The director
shall designate the form, the due dates of, and the period covered by the
reports.
NEW
SECTION. Sec. 50. A
new section is added to chapter 31.12 RCW to read as follows:
Credit
unions will comply with the provisions of generally accepted accounting
principles as identified by rule of the director. In adopting rules to
implement this section, the director shall consider, among other relevant
factors, whether to transition small credit unions to generally accepted
accounting principles over a period of time.
Sec.
51. RCW
31.12.215 and 1994 c 92 s 190 are each amended to read as follows:
A
credit union desiring to establish a branch shall submit to the director a
notice of intent to establish a branch ((on a form provided by the director))
at least thirty days before conducting business at the branch.
Sec.
52. RCW
31.12.575 and 1994 c 92 s 210 are each amended to read as follows:
(1)
((The director may suspend a director or the principal operating officer of
a credit union if, in the opinion of the director, the director or principal operating
officer is dishonest, inefficient, incompetent, is willfully disobeying orders
of the director, or is in any way violating this chapter or the bylaws of the
credit union. The director shall give prompt notice of and the reasons for the
suspension to the board of the affected credit union.
(2)
Unless the director specifically provides otherwise in the order of suspension,
an order of suspension shall take effect immediately. The suspended person
shall be prohibited from all aspects of the operation of the credit union. The
suspended person shall be barred from the credit union premises and shall
surrender the possession of all property and records of the credit union. A
person who knowingly violates an order of suspension or who knowingly aids in
the violation of an order of suspension shall be guilty of a gross misdemeanor.
(3)
Upon receipt of the notice of suspension, the board shall within twenty days
call a meeting of its members to consider the causes of the suspension. The
board shall give at least seven days' notice of the time and place of the
meeting to the director unless the director agrees to accept shorter notice.
If the board finds the director's objection to be well-founded, the board shall
remove the suspended person immediately.
(4)
If the board fails to remove the suspended person as provided in subsection (3)
of this section, the director may remove that person after reasonable notice
and an opportunity to be heard under chapter 34.05 RCW. The suspension shall
remain in effect for twenty days after the board meeting at which the board
considers the suspension, during which time the director may call a hearing
under this subsection. If the director calls a hearing, the suspension shall
remain in effect until the time of the hearing.)) The
director may serve a credit union director, supervisory committee member,
officer, or employee with written notice of the director's intent to remove the
person from office or to prohibit the person from participating in the conduct
of the affairs of the credit union whenever, in the opinion of the director:
(a)
The person has committed a material violation of law or an unsafe or unsound
practice;
(b)(i)
The credit union has suffered or is likely to suffer substantial financial loss
or other damage; or
(ii)
The interests of the credit union's share account holders and depositors could
be seriously prejudiced by reason of the violation or practice; and
(c)
The violation or practice involves personal dishonesty, recklessness, or
incompetence.
(2)
The notice must contain a statement of the facts constituting the alleged
violation or practice and must fix a time and place at which a hearing will be
held to determine whether a removal or prohibition order should be issued
against the person. The hearing must be set not earlier than ten days nor
later than thirty days after service of the notice, unless a later date is set
by the director at the request of any of the parties.
Unless
the person appears at the hearing, the person will be deemed to have consented
to the issuance of the removal or prohibition order. In the event of this
consent, or if upon the record made at the hearing the director finds that any
violation or practice specified in the notice of intention has been
established, the director may issue and serve upon the person an order removing
the person from office at the credit union or an order prohibiting the person
from participating in the conduct of the affairs of the credit union.
(3)
A removal order or prohibition order becomes effective at the expiration of ten
days after the service of the order upon the person, except that a removal
order or prohibition order issued upon consent becomes effective at the time
specified in the order. An order remains effective unless it is stayed,
modified, terminated, or set aside by action of the director or a reviewing
court.
Sec.
53. RCW
31.12.585 and 1994 c 92 s 211 are each amended to read as follows:
(1)
The director may issue and serve ((upon)) a credit union with a
notice of charges if, in the opinion of the director, the credit
union has committed or is about to commit:
(a)
((Is engaging or has engaged in an unsafe or unsound practice in conducting
the business of the credit union;)) A material violation of law; or
(b)
((Is violating or has violated a material provision of any law, rule, or any
condition imposed in writing by the director in connection with the granting of
any application or other request by the credit union or any written agreement
made with the director; or
(c)
Is about to do the acts prohibited in (a) or (b) of this subsection if the
opinion that the threat exists is based upon reasonable cause)) An
unsafe or unsound practice.
(2)
The notice ((shall)) must contain a statement of the facts
constituting the alleged violation or the practice and ((shall)) must
fix a time and place at which a hearing will be held to determine whether an
order to cease and desist should issue against the credit union. The hearing
((shall)) must be set not earlier than ten days nor later than
thirty days after service of the notice, unless a later date is set by
the director at the request of ((the credit union)) any of the
parties.
Unless
the credit union appears at the hearing by a duly authorized representative, it
shall be deemed to have consented to the issuance of the cease and desist
order. In the event of this consent, or if upon the record made at the
hearing the director finds that any violation or practice specified in the notice
of charges has been established, the director may issue and serve upon the
credit union an order to cease and desist from the violation or practice. The
order may require the credit union and its directors, supervisory committee
members, officers, employees, and agents to cease and desist from the
violation or practice and may require the credit union to take affirmative
action to correct the conditions resulting from the violation or practice.
(3)
A cease and desist order ((shall)) becomes effective at the
expiration of ten days after the service of the order upon the credit union ((concerned)),
except that a cease and desist order issued upon consent ((shall))
becomes effective at the time specified in the order ((and shall)).
The order remains effective ((as provided therein)) unless it
is stayed, modified, terminated, or set aside by action of the director or a
reviewing court.
Sec.
54. RCW
31.12.595 and 1994 c 92 s 212 are each amended to read as follows:
If
the director determines that the ((act)) violation or practice
specified in RCW 31.12.585 (as recodified by this act) is likely to
cause ((insolvency or substantial dissipation of assets or earnings of the
credit union or to otherwise seriously prejudice the interests of its
depositors, members, or shareholders)) an unsafe or unsound condition at
the credit union, the director may issue a temporary order requiring the
credit union to cease and desist from the violation or practice. The order ((shall))
becomes effective upon service on the credit union and ((shall))
remains effective unless set aside, limited, or suspended by a court in
proceedings under RCW 31.12.605 (as recodified by this act) pending the
completion of the administrative proceedings under the notice, and until
the director dismisses the charges specified in the notice or until the
effective date of a cease and desist order issued against the credit union
under RCW 31.12.585 (as recodified by this act).
Sec.
55. RCW
31.12.605 and 1984 c 31 s 62 are each amended to read as follows:
Within
ten days after a credit union has been served with a temporary cease and desist
order, the credit union may apply to the superior court in the county of its
principal place of business for an injunction setting aside, limiting, or
suspending the order pending the completion of the administrative proceedings
under RCW 31.12.585 (as recodified by this act). The superior court ((shall
have)) has jurisdiction to issue the injunction.
Sec.
56. RCW
31.12.625 and 1994 c 92 s 214 are each amended to read as follows:
(1)
An administrative hearing provided for in RCW 31.12.575 or
31.12.585 ((shall)) (as recodified by this act) may be held at such
place as is designated by the director and must be conducted in accordance
with chapter 34.05 RCW. The hearing shall be private unless the director
determines that a public hearing is necessary to protect the public interest
after fully considering the views of the party afforded the hearing.
(2)
Within sixty days after the hearing, the director shall render a decision which
((shall)) includes findings of fact upon which the decision is
based ((and)). The director shall issue and serve upon each party
to the proceeding an order or orders consistent with RCW 31.12.575 or
31.12.585 (as recodified by this act).
(3)
Unless a petition for review is timely filed in the superior court of the
county in which the principal place of business of the credit union is located,
and until the record in the proceeding has been filed as provided therein, the
director may at any time modify, terminate, or set aside any order upon such
notice and in such manner as the director may deem proper. Upon filing the
record, the director may modify, terminate, or set aside an order only with the
permission of the court or the party or parties to the proceeding.
The
judicial review provided in this section will be exclusive for orders issued
under RCW 31.12.575 and 31.12.585 (as recodified by this act).
(4)
Any party to the proceeding, or any person subject to an order, temporary
order, or injunction issued under RCW 31.12.575, 31.12.585, 31.12.595, or
31.12.615 (as recodified by this act), may obtain a review of any order issued
and served under subsection (1) of this section, other than an order issued
upon consent, by filing a written petition requesting that the order be
modified, terminated, or set aside, in the superior court of the county in
which the principal place of business of the affected credit union is located.
The petition must be filed within ten days after the date of service of the
order. A copy of the petition must be immediately served upon the director and
the director must then file the record of the proceeding in court. The court
has jurisdiction, upon the filing of the petition, to affirm, modify,
terminate, or set aside, in whole or in part, the order of the director. The
jurisdiction of the court becomes exclusive upon the filing of the record. However,
the director may modify, terminate, or set aside the order with the permission
of the court. The judgment and decree of the court is final subject to
appellate review under the rules of the court.
(5)
The commencement of proceedings for judicial review under subsection (4) of
this section may not operate as a stay of any order issued by the director
unless specifically ordered by the court.
(6)
Service of any notice or order required to be served under RCW 31.12.575,
31.12.585, or 31.12.595 (as recodified by this act), must be accomplished in
the same manner as required for the service of process in civil actions in
superior courts of this state.
NEW
SECTION. Sec. 57. A
new section is added to chapter 31.12 RCW to read as follows:
The
director may apply to the superior court of the county in which the principal
place of business of the affected credit union is located for the enforcement
of any effective and outstanding order issued under RCW 31.12.575, 31.12.585,
31.12.595, and 31.12.615 (as recodified by this act), and the court has
jurisdiction to order compliance therewith. No court has jurisdiction to
affect by injunction or otherwise the issuance or enforcement of any such
order, or to review, modify, suspend, terminate, or set aside any such order,
except as provided in RCW 31.12.605, 31.12.615, and 31.12.625 (as recodified by
this act).
Sec.
58. RCW
31.12.655 and 1994 c 92 s 216 are each amended to read as follows:
The
director may request a special meeting of the board of a credit union if the
director believes that a special meeting is necessary for the welfare of the
credit union or the purposes of this chapter. The director's request for a
special board meeting ((shall)) must be made in writing to
the secretary of the board and the request ((shall)) must be
handled in the same manner as a call for a special meeting under RCW 31.12.195 (as
recodified by this act). The director may require the attendance of all of
the directors ((of the board)) at the special board meeting, and
an absence ((of a director)) unexcused by the director constitutes a
violation of this chapter.
Sec.
59. RCW
31.12.665 and 1994 c 92 s 217 are each amended to read as follows:
(((1)))
The director may attend a ((regular or special)) meeting of the board of
a credit union if the director believes that attendance at the meeting is
necessary for the welfare of the credit union, or the purposes of this
chapter, or if the board has requested the director's attendance. The
director shall provide reasonable notice to the board before attending a
meeting.
(((2)
A communication from the director to the board shall upon the request of the
director be read to the board at its next meeting and the fact that the
communication was read shall be noted in the minutes.))
NEW
SECTION. Sec. 60. A
new section is added to chapter 31.12 RCW to read as follows:
The
director may place a credit union under supervisory direction in accordance
with sections 61 through 63 of this act, appoint a conservator for a credit
union in accordance with sections 64 through 67 of this act, appoint a
liquidating agent for a credit union in accordance with RCW 31.12.675 and
31.12.685 (as recodified by this act), or appoint a receiver for a credit union
in accordance with sections 70 through 86 of this act, if the credit union:
(1)
Consents to the action;
(2)
Has failed to comply with the requirements of the director while the credit
union is under supervisory direction;
(3)
Has committed or is about to commit a material violation of law or an unsafe or
unsound practice, and such violation or practice has caused or is likely to
cause an unsafe or unsound condition at the credit union; or
(4)
Is in an unsafe or unsound condition.
NEW
SECTION. Sec. 61. A
new section is added to chapter 31.12 RCW to read as follows:
(1)
As authorized by section 60 of this act, the director may determine to place a
credit union under supervisory direction. Upon such a determination, the
director shall notify the credit union in writing of:
(a)
The director's determination; and
(b)
Any requirements that must be satisfied before the director shall terminate the
supervisory direction.
(2)
The credit union must comply with the requirements of the director as provided
in the notice. If the credit union fails to comply with the requirements, the
director may appoint a conservator, liquidating agent, or receiver for the
credit union, in accordance with this chapter. The director may appoint a
representative to supervise the credit union during the period of supervisory
direction.
(3)
All costs incident to supervisory direction will be a charge against the assets
of the credit union to be allowed and paid as the director may determine.
NEW
SECTION. Sec. 62. A
new section is added to chapter 31.12 RCW to read as follows:
During
the period of supervisory direction, the director may prohibit the credit union
from engaging in any of the following acts without prior approval:
(1)
Disposing of, conveying, or encumbering any of its assets;
(2)
Withdrawing any of its accounts at other financial institutions;
(3)
Lending any of its funds;
(4)
Investing any of its funds;
(5)
Transferring any of its property; or
(6)
Incurring any debt, obligation, or liability.
NEW
SECTION. Sec. 63. A
new section is added to chapter 31.12 RCW to read as follows:
During
the period of supervisory direction, the credit union may request the director
to review an action taken or proposed to be taken by the representative,
specifying how the action is not in the best interests of the credit union.
The request stays the action, pending the director's review of the request.
NEW
SECTION. Sec. 64. A
new section is added to chapter 31.12 RCW to read as follows:
(1)
As authorized by section 60 of this act, the director may, upon due notice and
hearing, appoint a conservator for a credit union. The director may appoint
himself or herself or another qualified party as conservator of the credit
union. The conservator shall immediately take charge of the credit union and
all of its property, books, records, and effects.
(2)
The conservator shall conduct the business of the credit union and take such
steps toward the removal of the causes and conditions that have necessitated
the appointment of a conservator, as the director may direct. The conservator
is authorized to, without limitation:
(a)
Take all necessary measures to preserve, protect, and recover any assets or
property of the credit union, including any claim or cause of action belonging
to or which may be asserted by the credit union, and administer the same in his
or her own name as conservator; and
(b)
File, prosecute, and defend any suit that has been filed or may be filed by or
against the credit union that is deemed by the conservator to be necessary to
protect all of the interested parties or a property affected thereby.
The
conservator shall make such reports to the director from time to time as may be
required by the director.
(3)
All costs incident to conservatorship will be a charge against the assets of
the credit union to be allowed and paid as the director may determine.
(4)
If at any time the director determines that the credit union is not in
condition to continue business under the conservator in the interest of its
share account holders, depositors, or creditors, and grounds exist under
section 60 of this act, the director may proceed with appointment of a
liquidating agent or receiver in accordance with this chapter.
NEW
SECTION. Sec. 65. A
new section is added to chapter 31.12 RCW to read as follows:
During
the period of conservatorship, the credit union may request the director to
review an action taken or proposed to be taken by the conservator, specifying
how the action is not in the best interest of the credit union. The request
stays the action, pending the director's review of the request.
NEW
SECTION. Sec. 66. A
new section is added to chapter 31.12 RCW to read as follows:
Any
suit filed against a credit union or its conservator, during the period of
conservatorship, must be brought in the superior court of Thurston county. A
conservator for a credit union may file suit in any superior court or other
court of competent jurisdiction against any person for the purpose of
preserving, protecting, or recovering any asset or property of the credit
union, including, but not limited to, any claims or causes of action belonging
to or asserted by the credit union.
NEW
SECTION. Sec. 67. A
new section is added to chapter 31.12 RCW to read as follows:
The
conservator shall serve until the purposes of the conservatorship have been
accomplished. If rehabilitated, the credit union must be returned to management
or new management under such conditions as the director may determine.
Sec.
68. RCW
31.12.675 and 1994 c 92 s 218 are each amended to read as follows:
(1)
((The articles of incorporation of a credit union may be suspended or
revoked, the credit union placed in involuntary liquidation, and a liquidating
agent appointed upon a finding by the director that the credit union is
insolvent.
(2)
Except as otherwise provided in this chapter,)) As
authorized by section 60 of this act, the director may appoint a liquidating
agent for a credit union. Before appointing a liquidating agent, the
director((, before suspending or revoking the articles of incorporation of a
credit union and placing the credit union in liquidation,)) shall issue and
serve notice on the credit union ((concerned of the intention to suspend or
revoke the articles and)) an order directing the credit union to show cause
why its articles of incorporation should not be suspended or revoked, in
accordance with chapter 34.05 RCW.
(((3)))
(2) If the ((director finds that the credit union is insolvent and
the)) credit union fails to adequately show cause, the ((articles of
incorporation shall be suspended or revoked and the credit union placed in
involuntary liquidation. The)) director shall serve ((on)) the
credit union with an order directing the suspension or revocation ((and
an order directing the)) of the articles of incorporation, placing the
credit union in involuntary liquidation ((and appointment of)),
appointing a liquidating agent under this section and RCW 31.12.685 (as
recodified by this act), and providing a statement of the findings
on which the order is based.
(((4)))
(3) The suspension or revocation ((shall)) must be
immediate and complete. Once the articles of incorporation are suspended or
revoked, the credit union shall cease conducting business. The credit union
may not accept any payment ((on)) to share((s)) or
deposit((s)) accounts, may not grant or pay out any new or
previously approved loans, may not invest any of its assets, and may not
declare or pay out any previously declared dividends. The liquidating agent of
a credit union whose articles have been suspended or revoked may accept
payments on loans previously paid out and may accept income from investments
already made.
Sec.
69. RCW
31.12.685 and 1994 c 92 s 219 are each amended to read as follows:
(1)
((The director shall designate the liquidating agent in the order directing
the involuntary liquidation of the credit union under RCW 31.12.675.)) On
receipt of the order placing the credit union in involuntary liquidation, the
officers and directors of the credit union ((concerned)) shall deliver
to the liquidating agent possession and control of all books, records, assets,
and property of the credit union.
(2)
The liquidating agent shall proceed to convert the assets to cash, collect all
debts due to the credit union and wind up its affairs in accordance with ((the))
any instructions and procedures issued by the director. If a
liquidating agent agrees to absorb and serve the membership of ((a
distressed)) the credit union, the director may approve a
pooling of assets and liabilities rather than a distribution of assets.
(3)
Each share account holder and depositor at the credit union is entitled to a
proportionate allocation of the assets in liquidation after all shares,
deposits, and debts have been paid.
The
proportionate allocation shall be based on account balances as of a date
determined by the board. For the purposes of liquidation, shares and deposits
are equivalent.
(4)
The liquidating agent shall cause a notice of liquidation to be
published ((notice of liquidation)) once a week for three consecutive
weeks in a newspaper of general circulation in the county in which the
principal place of business of the ((liquidating)) credit union is
located. The notice of liquidation ((shall)) must inform
creditors of the ((liquidating)) credit union on how to make a
claim upon the liquidating agent, and that if a claim is not made upon
the liquidating agent within thirty days of the last date of publication,
the creditor's claim ((shall be)) is barred. The liquidating
agent shall provide personal notice of liquidation to the creditors of record,
informing them that if they fail to make a claim upon the liquidating agent
within thirty days of the service of the notice, the creditor's claim ((shall
be)) is barred. If a creditor fails to make a claim upon the
liquidating agent within the times required to be specified in the notices of
liquidation, the creditor's claim ((shall be)) is barred.
All contingent liabilities of the ((liquidated)) credit union ((shall
be)) are discharged upon the director's order to liquidate the
credit union. The liquidating agent shall, upon completion, certify to the
director that the distribution or pooling of assets of the credit union is
complete.
NEW
SECTION. Sec. 70. A
new section is added to chapter 31.12 RCW to read as follows:
As
authorized by section 60 of this act, the director may without prior notice
appoint a receiver to take possession of a credit union. The director may
appoint the national credit union administration or other qualified party as
receiver. Upon appointment, the receiver is authorized to act without bond.
Upon acceptance of the appointment, the receiver shall have and possess all the
powers and privileges provided by the laws of this state with respect to the
receivership of a credit union, and be subject to all the duties of and
restrictions applicable to such a receiver, except insofar as such powers,
privileges, duties, or restrictions are in conflict with any applicable
provision of the federal credit union act.
Upon
taking possession of the credit union, the receiver shall give written notice
to the directors of the credit union and to all persons having possession of
any assets of the credit union. No person with knowledge of the taking of
possession by the receiver shall have a lien or charge for any payment
advanced, clearance made, or liability incurred against any of the assets of
the credit union, after the receiver takes possession, unless approved by the
receiver.
NEW
SECTION. Sec. 71. A
new section is added to chapter 31.12 RCW to read as follows:
Within
ten days after the receiver takes possession of a credit union's assets, the
credit union may serve notice upon the receiver to appear before the superior
court of the county in which the principal place of business of the credit
union is located and at a time to be fixed by the court, which may not be less
than five or more than fifteen days from the date of the service of the notice,
to show cause why the credit union should not be restored to the possession of
its assets.
The
court shall summarily hear and dismiss the complaint if it finds that the
receiver was appointed for cause. However, if the court finds that no cause
existed for appointment of the receiver, the court shall require the receiver
to restore the credit union to possession of its assets and enjoin the director
from further appointment of a receiver for the credit union without cause.
NEW
SECTION. Sec. 72. A
new section is added to chapter 31.12 RCW to read as follows:
Upon
taking possession of a credit union, the receiver shall proceed to collect the
assets of the credit union and preserve, administer, and liquidate its business
and assets.
With
the approval of the Thurston county superior court or the superior court of the
county in which the principal place of business of the credit union is located,
the receiver may sell, compound, or compromise bad or doubtful debts, and upon
such terms as the court may direct, borrow, mortgage, pledge, or sell all or
any part of the real and personal property of the credit union. The receiver
may deliver to each purchaser or lender an appropriate deed, mortgage,
agreement of pledge, or other instrument of title or security. The receiver
may employ an attorney or other assistants to assist in carrying out the
receivership, subject to such surety bond as the director may require. The
premium for any such bond must be paid out of the assets of the credit union.
In
carrying out the receivership, the receiver may without limitation arrange for
the merger or consolidation of the credit union in receivership with another
credit union, out-of-state credit union, or federal credit union, or may
arrange for the purchase of the credit union's assets and the assumption of its
liabilities by such a credit union, in whole or in part, or may arrange for
such a transaction with another type of financial institution as may be
otherwise permitted by law. The receiver shall give preference to transactions
with a credit union or a federal credit union that has its principal place of
business in this state.
NEW
SECTION. Sec. 73. A
new section is added to chapter 31.12 RCW to read as follows:
The
receiver shall publish once a week for four consecutive weeks in a newspaper of
general circulation in the county where the credit union's principal place of
business is located, a notice requiring all persons having claims against the
credit union to file proof of claim not later than ninety days from the date of
the first publication of the notice. The receiver shall mail similar notices
to all persons whose names appear as creditors upon the books of the credit
union. The assets of the credit union are not subject to contingent claims.
After
the expiration of the time fixed in the notice, the receiver has no power to
accept any claim except the claim of a depositor or share account holder, and
all other claims are barred. Claims of depositors or share account holders may
be presented after the expiration of the time fixed in the notice and may be
approved by the receiver. If such a claim is approved, the depositor or share
account holder is entitled to its proportion of prior liquidation dividends, if
sufficient funds are available for it, and will share in the distribution of
the remaining assets.
The
receiver may approve or reject any claim, but shall serve notice of rejection
upon the claimant by mail or personally. An affidavit of service of the notice
of rejection will serve as prima facie evidence that notice was given. No
action may be brought on any claim after three months from the date of service
of the notice of rejection.
NEW
SECTION. Sec. 74. A
new section is added to chapter 31.12 RCW to read as follows:
Upon
taking possession of the credit union, the receiver shall make an inventory of
the assets and file the list in the office of the county clerk. Upon the
expiration of the time fixed for the presentation of claims, the receiver shall
make a list of claims presented, segregating those approved and those rejected,
to be filed in the office of the county clerk. The receiver shall also make
and file with the office of the county clerk a supplemental list of claims at
least fifteen days before the declaration of any liquidation dividend, and in
any event at least every six months.
Objection
may be made by any interested person to any claim approved by the receiver.
Objections to claims approved by the receiver will be resolved by the court
after providing notice to both the claimant and objector, as the court may
prescribe.
NEW
SECTION. Sec. 75. A
new section is added to chapter 31.12 RCW to read as follows:
All
expenses incurred by the receiver in relation to the receivership of a credit
union, including, but not limited to, reasonable attorneys' fees, become a
first charge upon the assets of the credit union. The charges shall be fixed
and determined by the receiver, subject to the approval of the court.
NEW
SECTION. Sec. 76. A
new section is added to chapter 31.12 RCW to read as follows:
At
any time after the expiration of the date fixed for the presentation of claims,
the receiver, subject to the approval of the court, may declare one or more
liquidation dividends out of the funds remaining after the payment of expenses.
NEW
SECTION. Sec. 77. A
new section is added to chapter 31.12 RCW to read as follows:
When
all expenses of the receivership have been paid, as well as all proper claims
of share account holders, depositors, and other creditors, and proper provision
has been made for unclaimed or unpaid debts and liquidation dividends, and
assets of the credit union still remain, the receiver shall wind up the affairs
of the credit union and distribute its assets to those entitled to them. Each
share account holder and depositor at the credit union is entitled to a
proportionate share of the assets remaining. The proportionate allocation
shall be based on account balances as of a date determined by the board. For
the purposes of liquidation, shares and deposits are equivalent.
NEW
SECTION. Sec. 78. A
new section is added to chapter 31.12 RCW to read as follows:
Any
liquidation dividends to share account holders, depositors, or other creditors
of the credit union remaining uncalled for and unpaid in the hands of the
receiver for six months after the order of final distribution, must be
deposited in a financial institution to each share account holder's,
depositor's, or creditor's credit. The funds must be held in trust for the
benefit of the persons entitled to the funds and, subject to the supervision of
the court, must be paid by the receiver to them upon presentation of
satisfactory evidence of their right to the funds.
NEW
SECTION. Sec. 79. A
new section is added to chapter 31.12 RCW to read as follows:
(1)
The receiver shall inventory, package, and seal uncalled for and unclaimed
personal property left with the credit union, including, but not limited to,
property held in safe deposit boxes, and arrange for the packages to be held in
safekeeping. The credit union, its directors and officers, and the receiver,
shall be relieved of responsibility and liability for the property held in
safekeeping. The receiver shall promptly send to each person in whose name the
property stood on the books of the credit union, at the person's last known
address, a registered letter notifying the person that the property will be
held in the person's name for a period of not less than two years.
(2)
After the expiration of two years from the date of mailing the notice, the receiver
shall promptly send to each person in whose name the property stood on the
books of the credit union, at the person's last known address, a registered
letter providing notice of sale. The letter must indicate that the receiver
will sell the property set out in the notice, at a public auction at a
specified time and place, not less than thirty days after the date of mailing
the letter. The receiver may sell the property unless the person, prior to the
sale, presents satisfactory evidence of the person's right to the property. A
notice of the time and place of the sale must be published once within ten days
prior to the sale in a newspaper of general circulation in the county where the
sale is to be held.
(3)
Any property, for which the address of the owner or owners is not known, may be
sold at public auction after it has been held by the receiver for two years. A
notice of the time and place of the sale must be published once within ten days
prior to the sale in a newspaper of general circulation in the county where the
sale is to be held.
(4)
Whenever the personal property left with the credit union consists either
wholly or in part, of documents, letters, or other papers of a private nature,
the documents, letters, or papers may not be sold, but must be retained by the
receiver and may be destroyed after a period of five years.
NEW
SECTION. Sec. 80. A
new section is added to chapter 31.12 RCW to read as follows:
The
proceeds of the sale less any amounts for costs and charges incurred in
safekeeping and sale must be deposited by the receiver in a financial
institution, in trust for the benefit of the person entitled to the property.
The sale proceeds must be paid by the receiver to the person upon presentation
of satisfactory evidence of the person's right to the funds.
NEW
SECTION. Sec. 81. A
new section is added to chapter 31.12 RCW to read as follows:
Upon
the completion of a receivership through merger, purchase of assets and assumption
of liabilities, or liquidation, the director shall terminate the credit union's
authority to conduct business and certify that fact to the secretary of state.
Upon certification, the credit union shall cease to exist and the secretary of
state shall note that fact upon his or her records.
NEW
SECTION. Sec. 82. A
new section is added to chapter 31.12 RCW to read as follows:
If
at any time after a receiver is appointed, the director determines that all
material deficiencies at the credit union have been corrected, and that the
credit union is in a safe and sound condition to resume conducting business,
the director may terminate the receivership and permit the credit union to
reopen upon such terms and conditions as the director may prescribe. Before
being permitted to reopen, the credit union must pay all of the expenses of the
receiver.
NEW
SECTION. Sec. 83. A
new section is added to chapter 31.12 RCW to read as follows:
The
receiver or director, as appropriate, may at any time after the expiration of
one year from the order of final distribution, or from the date when the
receivership has been completed, destroy any of the remaining files, records,
documents, books of account, or other papers of the credit union that appear to
be obsolete or unnecessary for future reference as part of the receivership
files.
NEW
SECTION. Sec. 84. A
new section is added to chapter 31.12 RCW to read as follows:
The
pendency of any proceedings for judicial review of the appointment of a
receiver may not operate to prevent the payment or acquisition of the share and
deposit liabilities of the credit union by the national credit union
administration or other insurer or guarantor of the share and deposit
liabilities of the credit union. During the pendency of the proceedings, the
receiver shall make credit union facilities, books, records, and other relevant
credit union data available to the insurer or guarantor as may be necessary or
appropriate to enable the insurer or guarantor to pay out or to acquire the
insured or guaranteed share and deposit liabilities of the credit union. The
national credit union administration and any other insurer or guarantor of the
credit union's share and deposit liabilities, together with their directors,
officers, agents, and employees, and the director and receiver and their agents
and employees, will be free from liability to the credit union, its directors,
members, and creditors, for or on account of any action taken in connection
with the receivership.
NEW
SECTION. Sec. 85. A
new section is added to chapter 31.12 RCW to read as follows:
No
receiver may be appointed by any court for any credit union, except that a
court otherwise having jurisdiction may in case of imminent necessity appoint a
temporary receiver to take possession of and preserve the assets of the credit
union. Immediately upon appointment, the clerk of the court shall notify the
director in writing of the appointment and the director shall appoint a
receiver to take possession of the credit union and the temporary receiver
shall upon demand surrender possession of the assets of the credit union to the
receiver. The receiver may in due course pay the temporary receiver out of the
assets of the credit union, subject to the approval of the court.
NEW
SECTION. Sec. 86. A
new section is added to chapter 31.12 RCW to read as follows:
Every
transfer of a credit union's property or assets, and every assignment by a
credit union for the benefit of creditors, made in contemplation of insolvency,
or after it has become insolvent, to intentionally prefer one creditor over
another, or to intentionally prevent the equal distribution of its property and
assets among its creditors, is void. Every credit union director, officer, or
employee making any such transfer is guilty of a felony.
An
officer, director, or employee of a credit union who fraudulently receives any
share or deposit on behalf of the credit union, knowing that the credit union
is insolvent, is guilty of a felony.
Sec.
87. RCW
31.12.635 and 1994 c 92 s 215 are each amended to read as follows:
(1)
It is unlawful for a director, supervisory committee member, officer,
employee, or agent of a credit union to knowingly violate or consent to a
violation of this chapter. Unless otherwise provided by law, a violation of
this subsection is a misdemeanor under chapter 9A.20 RCW.
(2)
It is unlawful for a person to perform any of the following acts:
(a)
To knowingly subscribe to, make, or cause to be made a false statement or entry
in the books of a credit union;
(b)
To knowingly make a false statement or entry in a report required to be made to
the director; or
(c)
To knowingly exhibit a false or fictitious paper, instrument, or security to a
person authorized to examine a credit union.
(((2)))
A violation of this ((section)) subsection is a class C felony
under chapter 9A.20 RCW.
NEW
SECTION. Sec. 88. The
following acts or parts of acts are each repealed:
(1) RCW
31.12.095 and 1994 c 92 s 183;
(2) RCW
31.12.165 and 1984 c 31 s 18;
(3) RCW
31.12.206 and 1994 c 92 s 189 & 1984 c 31 s 22;
(4) RCW
31.12.315 and 1994 c 256 s 81 & 1984 c 31 s 33;
(5) RCW
31.12.355 and 1994 c 92 s 193;
(6) RCW
31.12.376 and 1984 c 31 s 39;
(7) RCW
31.12.395 and 1984 c 31 s 41;
(8) RCW
31.12.415 and 1994 c 256 s 85, 1994 c 92 s 196, & 1984 c 31 s
43;
(9) RCW
31.12.455 and 1994 c 92 s 200 & 1984 c 31 s 47;
(10) RCW
31.12.475 and 1994 c 92 s 202 & 1984 c 31 s 49;
(11) RCW
31.12.495 and 1984 c 31 s 51;
(12) RCW
31.12.506 and 1994 c 92 s 203 & 1984 c 31 s 52;
(13) RCW
31.12.535 and 1994 c 92 s 206 & 1984 c 31 s 55;
(14) RCW
31.12.645 and 1984 c 31 s 66;
(15) RCW
31.12.903 and 1984 c 31 s 77;
(16) RCW
31.12.904 and 1984 c 31 s 80;
(17) RCW
31.12.905 and 1994 c 92 s 224 & 1984 c 31 s 81; and
(18) RCW
43.320.125 and 1996 c 274 s 1.
NEW
SECTION. Sec. 89. The
following sections are codified or recodified within chapter 31.12 RCW in the
following order:
RCW
31.12.005.
(1)
The following sections are recodified and designated as a subchapter of chapter
31.12 RCW under the subchapter designation "Credit Union
Organization":
RCW
31.12.015;
RCW
31.12.025;
RCW
31.12.035;
RCW
31.12.055;
RCW
31.12.065;
RCW
31.12.075; and
RCW
31.12.085.
(2)
The following sections are recodified and designated as a subchapter of chapter
31.12 RCW under the subchapter designation "Corporate Governance":
RCW
31.12.105;
RCW
31.12.115;
RCW
31.12.185;
RCW
31.12.195;
RCW
31.12.225;
RCW
31.12.235;
RCW
31.12.246;
RCW
31.12.255;
RCW
31.12.265;
section
19 of this act;
RCW
31.12.275;
RCW
31.12.285;
RCW
31.12.326;
RCW
31.12.335;
RCW
31.12.345;
RCW
31.12.365; and
RCW
31.12.306.
(3)
The following sections are recodified and designated as a subchapter of chapter
31.12 RCW under the subchapter designation "Membership":
RCW
31.12.045;
RCW
31.12.145;
RCW
31.12.155; and
RCW
31.12.295.
(4)
The following sections are recodified and designated as a subchapter of chapter
31.12 RCW under the subchapter designation "Powers of Credit Unions":
RCW
31.12.125;
RCW
31.12.136;
RCW 31.12.037; and
RCW 31.12.039.
(5)
The following sections are recodified and designated as a subchapter of chapter
31.12 RCW under the subchapter designation "Members' Accounts":
RCW
31.12.385; and
RCW
31.12.485.
(6)
The following sections are recodified and designated as a subchapter of chapter
31.12 RCW under the subchapter designation "Loans to Members":
RCW
31.12.406; and
RCW
31.12.317.
(7)
The following sections are recodified and designated as a subchapter of chapter
31.12 RCW under the subchapter designation "Investments":
RCW
31.12.425; and
RCW
31.12.435.
(8)
The following sections are recodified and designated as a subchapter of chapter
31.12 RCW under the subchapter designation "Reserves":
RCW
31.12.445; and
RCW
31.12.465.
(9)
The following sections are recodified and designated as a subchapter of chapter
31.12 RCW under the subchapter designation "Mergers, Conversions, and
Voluntary Liquidations":
RCW
31.12.695;
RCW 31.12.705;
RCW
31.12.715;
RCW
31.12.526; and
RCW
31.12.725.
(10)
The following sections are recodified and designated as a subchapter of chapter
31.12 RCW under the subchapter designation "Examination and
Supervision":
RCW
31.12.516;
RCW
31.12.545;
RCW
31.12.555;
RCW
31.12.565;
section
49 of this act;
section
50 of this act;
RCW
31.12.215;
RCW
31.12.575;
RCW
31.12.585;
RCW
31.12.595;
RCW
31.12.605;
RCW
31.12.615;
RCW
31.12.625;
section
57 of this act;
RCW
31.12.655;
RCW
31.12.665;
section
60 of this act;
section
61 of this act;
section
62 of this act;
section
63 of this act;
section
64 of this act;
section
65 of this act;
section
66 of this act;
section
67 of this act;
RCW
31.12.675;
RCW
31.12.685;
section
70 of this act;
section
71 of this act;
section
72 of this act;
section
73 of this act;
section
74 of this act;
section
75 of this act;
section
76 of this act;
section
77 of this act;
section
78 of this act;
section
79 of this act;
section
80 of this act;
section
81 of this act;
section
82 of this act;
section
83 of this act;
section
84 of this act;
section
85 of this act; and
section
86 of this act.
(11)
The following sections are recodified and designated as a subchapter of chapter
31.12 RCW under the subchapter designation "Miscellaneous":
RCW
31.12.720;
RCW 31.12.740;
RCW 31.12.735;
RCW
31.12.635;
Section
92 of this act; and
RCW
31.12.902.
NEW
SECTION. Sec. 90.
Section 35 of this act takes effect July 1, 1998.
NEW
SECTION. Sec. 91.
Section 50 of this act takes effect January 1, 1999.
NEW
SECTION. Sec. 92.
Except for sections 35 and 50 of this act, this act takes effect January 1,
1998.
NEW SECTION. Sec. 93. If
any provision of this act or its application to any person or circumstance is
held invalid, the remainder of the act or the application of the provision to
other persons or circumstances is not affected.
