Chapter 057
2013 -- S 0717
Enacted 06/03/13
A N A C T
RELATING TO
FINANCIAL INSTITUTIONS
Introduced By: Senators Gallo, and Lynch
Date Introduced: March 13, 2013
It is enacted by the
General Assembly as follows:
SECTION 1. Sections 19-1-1 and 19-1-3 of the General Laws in
Chapter 19-1 entitled
"Definitions and
Establishment of Financial Institutions" are hereby amended to read as
follows:
19-1-1.
Definitions. -- Unless otherwise specified, the
following terms shall have the
following meanings throughout this title:
(1) "Agreement to
form" means the agreement to form a financial institution or the
agreement to form a credit union, as applicable, pursuant to
this title, and includes, for financial
institutions organized before December 31, 1995, the articles of
incorporation or the agreement of
association of the financial institution, where applicable.
(2) "Board of
bank incorporation" means the board of bank incorporation as constituted
under this title or the predecessor of the board of bank
incorporation.
(3)(2)
"Branch" means any office or place of business, other than the main
office or
customer-bank-communication-terminal outlets as provided for in this title, at which
deposits are
received, or checks paid or money lent, or at which any trust
powers are exercised. Any financial
institution which had, on or before June 30, 2003, established an
office or place of business, other
than its main office, at which trust powers are exercised,
shall not be required to obtain the
approval of the director or the director's designee pursuant
to section 19-2-11 of the general laws
in chapter 2 of title 19 for any such offices
established as of that date.
(4)(3)
"Credit union" means a credit union duly organized under the laws of
this state.
(5)(4)
"Director" means the director of the department of business
regulation.
(6)(5)
"Division of banking" means the division within the department of
business
regulation responsible for the supervision and examination of
regulated institutions and/or
licensees under chapter 14 of this title.
(7)(6)
"Federal credit union" means a credit union duly organized under the
laws of the
(8)(7)
"Financial institution" means any entity, other than a credit union,
duly organized
under the laws of this state which has the statutory
authority to accept money on deposit pursuant
to title 19, including an entity which is prohibited
from accepting deposits by its own by-laws or
agreement to form; the term includes, but is not limited to
banks, trust companies, savings banks,
loan and investment banks and savings and loan
associations.
(9)(8)
"Main office" means, in the case of financial institutions or credit
unions, the
location stated in the agreement to form, as amended, and,
otherwise, the location recognized by
the institution's primary banking regulator as its main
office.
(10)(9)
"Person" means individuals, partnerships,
corporations, limited liability
companies or any other entity however organized.
(11)(10)
"Regulated institution" means any financial institution, credit union
or other
insured-deposit-taking institution which is authorized to do business in
this state including one
authorized by operation of an interstate banking statute which
allowed its original entry.
(12)(11)
"Retail installment contract" means any security agreement negotiated
or
executed in this state or under the laws of this state
including, but not limited to, any agreement in
the nature of a mortgage, conditional sale contract, or
any other agreement whether or not
evidenced by any written instrument to pay the retail purchase
price of goods, or any part thereof,
in installments over any period of time and pursuant to
which any security interest is retained or
taken by the retail seller for the payment of the purchase
price, or any part thereof, of the retail
installment contract.
(13)(12)
"Retail seller" means any person who sells or contracts to sell any
goods under
a retail installment contract to a retail buyer.
(14)(13)
"Superintendent" means the associate director and superintendent of
banking in
the department of business regulation.
(15)(14)
"Unimpaired capital" means the sum of all capital and allowance
accounts
minus estimated losses on assets, calculated in accordance
with generally accepted accounting
principles.
19-1-3.
Applications -- General. -- (a) The
director or the director's designee shall
assume and exercise all powers and duties of the board of
bank incorporation relative to All
applications filed by regulated institutions shall be made to
the director or the director’s designee
with other than the exceptions set forth in this
title. All applications filed with the division of
banking shall be acted upon by the director or the director's
designee, in writing.
(b) The director or the
director's designee shall cause notice of applications filed to be
published for three (3) consecutive weeks in a newspaper of
general circulation on the
department’s website and by any other method deemed by the
director or the director’s designee
to communicate with persons who are or may be interested
in the application. which The notice
shall include a provision allowing for a public comment
period. During this period, the
application shall be open for public inspection at the division
of banking. If, at the end of the
public comment period, there are no objectors to the application,
the director or the director's
designee may approve or deny the application. If there are any
objectors, the director or the
director's designee shall may hold a public
hearing to take testimony, under oath, and after
considering this testimony, shall approve or deny the
application. Any applicant aggrieved by any
order regarding an application may appeal pursuant to the
provisions of chapter 35 of title 42.
(c) The superintendent
shall collect a filing fee with respect to applications submitted to
the division of banking for consideration. All fees
pursuant to this section shall be paid to the
director for the use of the state. The fees to be charged for
each type of application shall be
established by the division of banking by regulation. The
division of banking shall publish a
notice, in a newspaper of general circulation, of a proposed
fee structure, receive comments on
the proposal and establish the fees at a public hearing,
the date of which shall be contained in the
notice of publication.
(d) The superintendent
is hereby authorized to promulgate rules and regulations for the
implementation of this section, including, but not limited to, the
establishment of specific time
periods within which a decision for the various types of
applications must be rendered by the
division of banking.
(e) Any party adversely
affected by a decision of the director or the director's designee
may make written demand upon the director or the director’s
designee within thirty (30) days
notification of the decision from which the party is appealing. concerning an
agreement to form
or an application filed for interstate mergers,
interstate acquisitions or interstate branches may
appeal the director's or the director's designee's decision
by filing an application of appeal with
the board of bank incorporation within ten (10) days
after the issuance of the decision. The board
of bank incorporation shall thereupon review the
decision considering the public interest, the
public convenience and advantage, the effect on the tax base
of the state and the effect on the
citizens of the state and issue its own decision which shall
govern. A hearing conducted
pursuant
to this section shall be conducted pursuant to the
Administrative Procedures Act, chapter 42-35.
(f) Anyone adversely
affected by a decision of the director or the director’s designee
board of bank incorporation may appeal the decision by filing an appeal with the
superior court
pursuant to section 42-35-15 of the general laws within thirty (30) days after entry of decision. A
copy of the notice of appeal shall be forthwith served
upon the legal counsel/clerk of the board of
bank incorporation. The board of bank incorporation shall
certify and file in the court a copy of
the record upon which the decision was entered within
thirty (30) days after receipt of the notice
of appeal.
SECTION 2. Section 19-1-2 of the General Laws in Chapter
19-1 entitled "Definitions
and Establishment of Financial Institutions" is
hereby repealed.
19-1-2.
Board of bank incorporation. -- (a)
(i) There is hereby authorized, created and
established within the department of business regulation a five
(5) member board of bank
incorporation, (hereinafter the "board"), all of whom
shall be voting members and serve without
compensation. Three (3) who serve as ex-officio shall be the
director of the department of
business regulation (hereinafter the "director") or
his or her designee, the general treasurer or his
or her designee, and the attorney general or his or her
designee. The other two (2) members of the
board shall be members of the general public qualified by
training or experience in the fields of
finance or banking, appointed by the governor with the advice
and consent of the senate. In
appointing public members pursuant to this section, the governor
shall solicit and give due
consideration of the recommendations of the general treasurer with
respect thereto. The designee
of a member serving as ex-officio shall be a subordinate
from within the department of the ex-
officio member and shall represent him or her at all meetings
of the board. No one shall be
eligible for public appointment unless he or she is a resident
of this state. The board shall elect a
chair and may elect from among its own members such other
officers as they deem necessary.
(ii) The board is a
public policy appellate board established to consider appeals from a
decision of the director or the director's designee concerning
major banking matters which affect
the citizens and tax base of the state and to exercise
the powers and perform the duties conferred
or imposed upon it by this title.
(iii) Newly
appointed and qualified public members and designees of ex-officio
members shall, within six (6) months of their qualification
or designation, attend a training course
that shall be developed with board approval and conducted
by the director or his or her designee
and shall include instruction in the provisions of
chapters 19-1, 42-46, 36-14, and 38-2 of Rhode
Island general laws; and the
board's rules and regulations.
The director of the department of
administration shall, within ninety (90) days of the effective date
of this act, prepare and
disseminate training materials relating to the provisions of
chapters 42-46, 36-14 and 38-2.
(iv)
Public members of the board shall be removable by the appointing
authority for
cause only, and removal solely for partisan or personal
reasons unrelated to capacity or fitness for
the office shall be unlawful.
(v)
Three (3) members of the board of bank incorporation shall constitute a quorum
for
the transaction of business. A majority vote of those
present shall be required for action. No
vacancy in the membership of the board shall impair the right
of a quorum to exercise all of the
rights and perform all of the duties of the board. Any
vacancy which may occur in the board shall
be filled by the governor with the advice and consent of
the senate, for the remainder of the
unexpired term in the same manner as the member's predecessor
as prescribed in this section.
(vi)
Those members of the board as of the effective date of this act who are
members of
the general assembly shall cease to be members of the
board on the effective date of this act, and
the governor shall thereupon nominate one new member who
shall serve an initial term of three
(3) years and one new member who
shall serve an initial term of four (4) years. Thereafter, all
appointed members of the board shall be appointed to terms of
four (4) years and be eligible for
reappointment.
(b) (i) The board of bank incorporation
may adopt, and amend from time to time, rules
and regulations for the orderly conduct of its affairs
and for the administration of its duties
pursuant to this title. The board of bank incorporation shall
collect a filing fee with respect to
applications submitted to it. All fees pursuant to this section
shall be paid to the director, to and
for the use of the board of bank incorporation. The fees
to be charged for each type of application
shall be established annually at the board of bank
incorporation's first public hearing. The board
of bank incorporation shall publish notice of its
proposed fee structure at least once a week for
three (3) successive weeks in a newspaper of general
circulation.
(ii) Within ninety
(90) days after the end of each fiscal year during which the board has
conducted business, the board shall approve and submit an
annual report to the governor, the
speaker of the house of representatives, the president of the
senate, and the secretary of state of its
activities during that fiscal year. The report shall provide: an
operating statement summarizing
meetings or hearings held, meeting minutes if requested,
subjects addressed, decisions rendered,
rules or regulations promulgated, studies conducted,
policies and plans developed, approved, or
modified, and programs administered or initiated; a
consolidated financial statement of all funds
received and expended including the source of the funds, a
listing of any staff supported by these
funds, and a summary of any clerical, administrative or
technical support received; a summary of
performance during the previous fiscal year including
accomplishments, shortcomings and
remedies; a synopsis of hearings, complaints, suspensions, or
other legal matters related to the
authority of the board; a summary of any training courses held
pursuant to subsection 19-1-
2(a)(iv); a briefing on
anticipated activities in the upcoming fiscal year; and findings and
recommendations for improvements. The report shall be posted
electronically on the general
assembly and the secretary of state's websites as prescribed
in section 42-20-8.2 of the Rhode
Island general laws. The director of the department of administration
shall be responsible for the
enforcement of this provision.
SECTION 3. Section 19-2-3 of the General Laws in Chapter
19-2 entitled "Creation and
Expansion" is hereby
amended to read as follows:
19-2-3.
Application to form financial institution -- Issuance or denial of certificate.
--
The subscribers to the agreement to form shall make
application to the director or the director's
designee for a certificate that public convenience and
advantage will be promoted by the
establishment of the financial institution, which certificate the
director or the director's designee
is hereby authorized to grant. The decision on the
certificate may be appealed to the board of
bank incorporation
pursuant to this title chapter 19-1.
SECTION 4. Section 19-4-12 of the General Laws in Chapter
19-4 entitled "Regulatory
Oversight" is hereby
amended to read as follows:
19-4-12. Order to
cease unlawful or unsafe practices -- Impairment of capital --
Appeal. -- (a) Whenever it appears to the director or the director's
designee that a regulated
institution has violated its agreement to form, or any law or
regulation, or is conducting its
business in an unauthorized or unsafe manner, or the regulated
institution has been notified by its
federal deposit insurer of its intent to terminate deposit
insurance, the director or the director's
designee may exercise any or all of the following powers:
(1) Restrict the
withdrawal of deposits when he or she finds the restriction necessary for
the protection of depositors;
(2) Order any person to
cease violating any provision of the banking laws of this state or
any rule or regulation issued thereunder,
or cease engaging in any unsafe or unsound or deceptive
banking or credit union practices;
(3) Order that capital
be restored, to the extent that the capital of the financial institution
or credit union has been impaired;
(4) Suspend or remove
any director, committee member, officer, or employee who
becomes ineligible to hold his or her position or who, after
receipt of an order to cease under this
chapter, violates the banking laws of this state or a rule,
regulation, or order issued thereunder, or
who is reckless or incompetent in the conduct of the
financial institution's or credit union's
business. Each suspension or removal order shall specify the
grounds therefor, and a copy of the
order shall be sent to the financial institution or credit
union concerned.
(b) Any action taken
pursuant to subsection (a) may be taken in the director's or the
director's designee's discretion before or after affording the
regulated institution and/or affected
individuals an opportunity for hearing. When an action is not
preceded by an opportunity for
hearing, such an opportunity must be afforded to the
regulated institution and/or affected
individuals within a reasonable time after the action; provided
further, that a request for hearing
subsequent to an action by the director or the director's
designee shall not act to stay the action of
the director or the director's designee pending the
outcome of the hearing, although the director or
the director's designee may, in his or her discretion,
grant a stay. All hearings shall be conducted
pursuant to the Administrative Procedures Act, chapter 42-35.
(c) Whenever the
regulated institution fails to comply with an order of the director or the
director's designee, or file required reports, or fails to pay
any final judgment recovered against it
in any court of this state within sixty (60) days after
the rendition of the order, or pay fees or
forfeitures, or do any other act required under this title, the
superintendent may give notice to the
board of bank incorporation and the regulated institution
of those failures and may request that
the regulated institution's right to do business be
suspended. The board of bank incorporation
shall hold a hearing within a reasonable time after
issuance of the notice, at which time the
superintendent and the regulated institution shall have the
opportunity to present evidence as to
whether the regulated institution's right to do business
should or should not be suspended. After
the hearing, if it appears to the board of bank
incorporation that the regulated institution is in an
insolvent condition, or is violating its agreement to form or
any law or regulation under this title,
or that it is conducting its business in an unsafe,
unauthorized, deceptive, or dishonest manner,
the board of bank incorporation may give notice to the
regulated institution that it is no longer
authorized to do business. Any of these regulated institutions
not in an insolvent condition may be
reauthorized by the board of bank incorporation to resume its
business upon complying with the
terms and conditions set forth by the board of bank
incorporation pursuant to the laws or
regulations under this title. Any regulated institution aggrieved
by an order of the board of bank
incorporation may appeal that order to the superior court pursuant
to chapter 35 of title 42.
SECTION 5. This act shall take effect upon passage.
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LC01384
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