Chapter 026
2013 -- H 5721
Enacted 05/24/13
A N A C T
RELATING TO
FINANCIAL INSTITUTIONS -- POWERS AND OPERATIONS
Introduced By: Representatives Keable, Kennedy, and Marcello
Date Introduced: February 28, 2013
It is enacted by the
General Assembly as follows:
SECTION 1. Section 19-3-3 of the General Laws in Chapter
19-3 entitled "Powers and
Operations" is hereby
amended to read as follows:
19-3-3.
Maximum aggregate liability of one person or company. --
(a) No financial
institution shall permit any person or entity to borrow or
guaranty an amount(s), directly or
indirectly, in the aggregate, which exceeds fifteen percent
(15%) of its unimpaired capital. In
calculating this limitation, a financial institution shall take
into account the credit exposure to any
such person or entity arising from derivative
transactions. The director shall have the authority to
establish the method for determining the credit exposure and
the extent to which the credit
exposure shall be taken into account. As used in this
subsection, "derivative transaction" includes
any transaction that is a contract, agreement, swap,
warrant, note or option that is based, in whole
or in part, on the value of, any interest in, or any
quantitative measure or the occurrence of any
event leading to, one or more commodities, securities,
currencies, interest or other rates, indices
or other assets. The director may adopt regulations
establishing the method for determining credit
exposure to derivative transaction and the extent to which the
credit exposure shall be taken into
account. The director shall apply the limitation included
herein to derivative transaction entered
into on or after January 1, 2013.
This limitation shall
not include:
(1) Obligations issued
by the
(2) General obligations
of the state of
(3) Loans or any
portion thereof which are insured or guaranteed by the
any agency thereof;
(4) Inter-bank
transactions involving the transfer of immediately available funds
resulting from credits to deposit balances at federal reserve
banks or from credit to new or
existing deposit balances due from a correspondent depository
institution (commonly known as
the sale of federal funds) with a maturity of one
business day or less; or
(5) Loans secured by
deposits within the financial institution where a perfected interest
in the deposits is on record.
(b) To the extent that
a deposit taking institution regulated by the federal office of thrift
supervision and insured by the federal deposit insurance
corporation is expressly permitted to
make loans that would exceed the limitations set forth in
this section, the lending limitations of
the office of thrift supervision shall apply. Nothing
herein shall limit the department of business
regulation from taking any action it deems appropriate to
maintain appropriate safety and
soundness standards relative to any loan or loans made by any financial
institutions.
SECTION 2. This act shall take effect upon passage.
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LC01671
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