,i #aacth ,,congress #b;d ,session ,h4 ,r4 #dbeb ,,in ,,the ,,house ,,of ,,representatives ,march #ad1 #bjad ,mr4 ,rothfus introduced the following bill2 which was referred to the ,committee on ,financial ,services ,a ,,bill ,to amend the ,federal ,deposit ,insurance ,act to allow mutual capital certificates to satisfy capital requirements for mutual depositories1 to amend the ,revised ,statutes of the ,united ,states to establish mutual national banks1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,mutual ,bank ,choice and ,continuity ,act of #bjad4 #b4 ,treatment of mutual capital certificates 7a7 ,in general ,section #ch of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahcao7 is amended-- 7#a7 in subsection 7b77#b7-- 7,a7 by redesignating subparagraphs 7,f7 through 7,i7 as subparagraphs 7,h7 through 7,k71 respectively2 and 7,b7 by inserting after subparagraph 7,e7 the following new subparagraphs3 7,f7 ,mutual capital certificate ,the term mutual capital certificate means a financial instrument issued by a mutual depository pursuant to subsection 7c77#a77;,c7 that-- 7i7 is subordinate to all claims against such mutual depository2 7ii7 is unsecured by the assets of such mutual depository2 7iii7 does not permit preemptive rights2 7iv7 does not provide voting or member rights to the holder unless the board of directors of such mutual depository proposes to change the specific terms of any class of such certificates in a manner adverse to the interests of the holder2 7v7 is not eligible for use as collateral for any loan made by such mutual depository2 7vi7 if declared by the board of directors of such mutual depository1 entitles the holder to a payment of fixed1 variable1 or participating dividends2 and 7vii7 is not redeemable until the date that is #e years after the date of issuance1 except in the case of merger1 conversion1 or consolidation of such mutual depository1 or reorganization of such mutual depository into a mutual holding company or a ,federal mutual bank holding company 7as such term is defined in section #eacc;,a7a7 of the ,revised ,statutes of the ,united ,states74 7,g7 ,mutual depository ,the term mutual depository means an insured depository institution operating in a non-stock form1 including a ,federal non-stock depository and any form of non-stock depository provided for under ,state law1 the deposits of which are insured by an instrumentality of the ,federal ,government4 2 and 7#b7 in subsection 7c77#a7-- 7,a7 in subparagraph 7,a71 by inserting and subparagraph 7,c7 after subparagraph 7,b77ii72 and 7,b7 by inserting after subparagraph 7,b7 the following new subparagraph3 7,c7 ,mutual capital certificates ,a mutual depository is authorized to issue mutual capital certificates that shall qualify as common equity ,tier #a capital 7as such term is defined by the appropriate ,federal banking agency7 for purposes of any capital requirements mandated by any ,federal law or regulation4 4 7b7 ,regulations ,not later than #ahj days after the date of enactment of this section1 the appropriate ,federal banking agencies shall jointly issue regulations to implement this section4 #c4 ,chartering mutual national banks and establishing ,federal mutual bank holding companies 7a7 ,in general ,chapter #a of title ,,lxii of the ,revised ,statutes of the ,united ,states 7#ab ,u4,s4,c4 #ba et seq47 is amended by inserting after section #eacc the following new sections3 #eacc;,a4 ,mutual national banks 7a7 ,definitions ,in this section and in section #eacc;,b the following definitions shall apply3 7#a7 ,appropriate ,federal banking agency ,the term appropriate ,federal banking agency has the meaning given such term in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac74 7#b7 ,depository institution subsidiary ,the term depository institution subsidiary means an insured depository institution that is a subsidiary 7as such term is defined in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac77 of a ,federal mutual bank holding company4 7#c7 ,insured depository institution ,the term insured depository institution has the meaning given such term in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac74 7#d7 ,federal mutual bank holding company ,the term ,federal mutual bank holding company means a bank holding company operating in mutual form organized under section #eacc;,b that owns1 directly or indirectly1 a majority of the shares of voting stock of each depository institution subsidiary4 7#e7 ,modification of a ,federal mutual bank holding company ,the term modification of a ,federal mutual bank holding company means-- 7,a7 the sale of shares of common or preferred stock in a depository institution subsidiary to any party other than the parent ,federal mutual bank holding company of such depository institution subsidiary or a wholly owned subsidiary of that parent2 7,b7 the voluntary grant of a lien on shares of common or preferred stock in a depository institution subsidiary2 or 7,c7 any action that affects the corporate structure of the ,federal mutual bank holding company and materially impacts the rights of its members4 7#f7 ,mutual capital certificate ,the term mutual capital certificate has the meaning given such term in section #ch7;b77#b7 of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahcao7b77#b774 7#g7 ,mutual depository ,the term mutual depository means an insured depository institution operating in a non-stock form1 including a ,federal non-stock depository and any form of non-stock depository provided for under ,state law1 the deposits of which are insured by an instrumentality of the ,federal ,government4 7#h7 ,mutual national bank ,the term mutual national bank means a mutual depository chartered by the ,comptroller of the ,currency under this section4 7#i7 ,mutuality ,the term mutuality means the quality of being an insured depository institution organized under a ,federal or ,state law providing for the organization of non-stock depository institutions1 or a holding company organized under a ,federal or ,state law providing for the organization of non-stock entities that control one or more depository institutions4 7#aj7 ,national bank ,the term national bank means a banking association organized pursuant to section #eacc4 7#aa7 ,mutual member ,the term mutual member means each tax liable depositor in a mutual depository's savings1 demand1 or other authorized depository accounts who is not a prior charter member4 7#ab7 ,prior charter member ,the term prior charter member means each tax liable depositor in a mutual national bank that maintains under its prior mutual depository charter pursuant to subsection 7d77#a77;,b74 7#ac7 ,state bank ,the term ,state bank has the meaning given such term in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac74 7#ad7 ,tax liable depositor ,the term tax liable depositor means the single person responsible for paying any ,federal taxes due on any interest paid on any deposits held within any savings1 demand1 or other authorized depository account4 7b7 ,chartering mutual national banks ,notwithstanding the provision designated the ,third of section #eacd1 in order to establish mutual institutions operating in non-stock form for the deposit of funds1 the extension of credit1 and provision of other services1 the ,comptroller of the ,currency may charter mutual national banks either de novo or through a conversion of any insured depository institution or any insured credit union 7as such term is defined in section #aja of the ,federal ,credit ,union ,act 7#ab ,u4,s4,c4 #ageb771 subject to regulations prescribed by the ,comptroller of the ,currency in accordance with this section4 ,the powers conferred by this section are intended to provide for the creation and maintenance of mutual national banks as bodies corporate existing in perpetuity for the benefit of their depositors and the communities in which they operate4 7c7 ,regulations 7#a7 ,regulations of the comptroller ,the ,comptroller of the ,currency is authorized to prescribe appropriate regulations for the organization1 incorporation1 examination1 operation1 and regulation of mutual national banks4 7#b7 ,applicability of capital stock requirements ,the ,comptroller of the ,currency shall prescribe regulations applicable to mutual national banks regarding the requirements of this title with respect to capital stock and the limitations imposed on national banks under this title based on capital stock4 7d7 ,conversions 7#a7 ,conversion of a mutual depository to a mutual national bank ,subject to such regulations as the ,comptroller of the ,currency may prescribe1 a mutual depository that elects to convert to a mutual national bank shall submit to the ,comptroller of the ,currency a notice of its election to convert on a specified date that is on or after the date that is #cj days after the date on which the notice is filed4 7,a7 ,charter ,the mutual depository shall be converted to a mutual national bank and the ,comptroller of the ,currency shall issue a charter described in subsection 7b7 on the specified date described in paragraph 7#a74 7,b7 ,option to maintain mutual depository charter ,after converting and receiving a charter under subparagraph 7,a71 such mutual national bank may continue to exercise the governance1 investments1 and authorities permitted under its prior mutual depository charter4 7#b7 ,conversion of a mutual national bank to a stock national bank ,subject to such regulations as the ,comptroller of the ,currency may prescribe for the protection of the rights of mutual members and for any other purpose the ,comptroller of the ,currency may consider appropriate1 any mutual national bank may reorganize as a national bank operating in stock form4 7#c7 ,conversion of a mutual national bank to a ,state bank ,any mutual national bank may convert to a ,state bank in accordance with regulations prescribed by the ,comptroller of the ,currency and applicable ,state law4 7e7 ,terminating mutuality ,a mutual national bank shall terminate mutuality by-- 7#a7 liquidating2 or 7#b7 converting to a national bank operating in stock form under subsection 7d77#b7 or to a ,state bank under subsection 7d77#c74 7f7 ,status and rights of members 7#a7 ,in general ,the status of a mutual member or prior charter member is primarily as a depositor and secondarily as a holder of a contingent right to participate in the equity of such mutual national bank upon a liquidation or conversion pursuant to subsection 7e74 7#b7 ,member rights 7,a7 ,prior charter member rights ,the status and rights of a prior charter members shall be governed by the law of the prior mutual depository charter4 7,b7 ,mutual member rights ,each mutual member of a mutual national bank that receives a charter pursuant to subsection 7b7 shall have the following rights3 7i7 ,the right to vote for delegates to the board of directors of such mutual national bank4 7ii7 ,the right to attend any meeting of mutual members called by the board of directors of such mutual national bank4 7iii7 ,any other rights agreed upon by contract between the mutual member and the mutual national bank4 7#c7 ,certain voting rights ,on questions requiring action by its mutual members1 the mutual national bank shall provide in its charter that each such mutual member shall have either-- 7,a7 one vote per mutual member2 or 7,b7 one vote for each #ajj1 or fraction thereof1 of the withdrawal value of the mutual member's account1 but not more than #a1jjj votes per mutual member4 7#d7 ,continuity of rights ,if a mutual national bank converts to a ,federal mutual bank holding company pursuant to section #eacc;,b1 a mutual member or prior charter member of such mutual national bank shall have the same rights with respect to that ,federal mutual bank holding company as such member had with respect to the mutual national bank immediately prior to such conversion4 7#e7 ,conversion rights ,if the board of directors of a mutual national bank1 in its sole discretion1 determines that a conversion described in paragraph 7#b7 or 7#c7 of subsection 7d7 is in the best interests of the community in which such bank operates1 and the mutual members or prior charter members of such bank approve the conversion through a special proxy1 then on a record date set by the board of directors such members shall have the first right to subscribe for and purchase stock in the converted bank4 7#f7 ,liquidation rights ,if a mutual national bank is liquidated by operation of law1 or if the board of directors of a mutual national bank1 in its sole discretion1 determines a liquidation of such bank is in the best interests of the community in which such bank operates and the mutual members or prior charter members of such bank approve the liquidation1 then on the date of liquidation1 members of the liquidated mutual national bank shall have the right to have credited to their accounts1 on a pro rata basis1 any residual assets that remain after the liquidation of such bank4 7g7 ,proxies 7#a7 ,in general ,a mutual member may give a perpetual proxy to a committee of the board of directors of the mutual depository in writing or electronically4 ,such proxy may be used to vote on any issue requiring approval of the mutual members4 7#b7 ,use of proxies ,a proxy given under paragraph 7#a7 may vote on the conversion of a mutual depository to a mutual national bank and any concurrent or subsequent reorganization to a ,federal mutual bank holding company1 except that absent a finding by the appropriate ,federal banking agency of the mutual depository that action is needed to avoid loss to the ,deposit ,insurance ,fund of the ,federal ,deposit ,insurance ,corporation or to protect the stability of the ,united ,states financial system1 such proxy may not be used to vote in favor of-- 7,a7 terminating mutuality for a mutual national bank or a ,federal mutual bank holding company2 or 7,b7 permitting the modification of a ,federal mutual bank holding company4 7#c7 ,effect of conversion or reorganization ,a proxy given under paragraph 7#a7 shall continue to be valid after the conversion of a mutual depository to a mutual national bank pursuant to subsection 7d77#a77;,a7 and any concurrent or subsequent reorganization to a ,federal mutual bank holding company4 7#d7 ,revoking a proxy ,a mutual member may revoke a proxy given under paragraph 7#a7 in writing or electronically4 ,the revocation shall be effective not later than #f business days after it is made4 7h7 ,conforming references ,unless otherwise provided by the ,comptroller of the ,currency-- 7#a7 any reference in any ,federal law to a national bank operating in stock form1 including a reference to the term national banking association1 member bank1 national bank1 national association1 bank1 insured bank1 insured depository institution1 or depository institution shall be deemed to refer also to a mutual national bank2 7#b7 any reference in any ,federal law to the term board of directors1 director1 or directors of a national bank operating in stock form shall be deemed to refer also to the board of a mutual national bank2 and 7#c7 any terms in ,federal law that may apply only to a national bank operating in stock form1 including the terms stock1 share1 shares of stock1 capital stock1 common stock1 stock certificate1 stock certificates1 certificates representing shares of stock1 stock dividend1 transferable stock1 each class of stock1 cumulate such shares1 par value1 or preferred stock shall not apply to a mutual national bank4 #eacc;,b4 ,federal mutual bank holding companies 7a7 ,reorganization of mutual national bank as a ,federal mutual bank holding company 7#a7 ,in general ,subject to approval under the ,bank ,holding ,company ,act of #aief 7#ab ,u4,s4,c4 #ahda et seq471 a mutual national bank may reorganize into a ,federal mutual bank holding company by submitting a reorganization plan to the ,board of ,governors of the ,federal ,reserve ,system 7hereinafter referred to as the ,board of ,governors74 7#b7 ,plan approval ,a reorganization plan submitted under paragraph 7#a7 requires the approval of-- 7,a7 a majority of the board of directors of the mutual national bank2 and 7,b7 a majority of mutual members or prior charter members of the mutual national bank at a meeting held at the call of the board of directors of such bank under the procedures prescribed by the charter or bylaws of such bank4 7#c7 ,conversion to a ,federal mutual bank holding company ,upon the approval of the reorganization plan submitted under paragraph 7#a7 and the issuance of the appropriate charters-- 7,a7 the substantial part of the assets and liabilities of the mutual national bank1 including all of the insured liabilities1 shall be transferred to a national bank1 a majority of the shares of voting stock of which is owned1 directly or indirectly1 by the mutual national bank that is to become a ,federal mutual bank holding company2 and 7,b7 the mutual national bank shall become a ,federal mutual bank holding company4 7b7 ,ownership of depository institution subsidiaries ,to avoid terminating mutuality1 a ,federal mutual bank holding company must own1 directly or indirectly1 at least a majority of the shares of voting stock of each of its depository institution subsidiaries4 7c7 ,terminating mutuality 7#a7 ,liquidating or converting ,a ,federal mutual bank holding company shall terminate mutuality by liquidating or converting to a bank holding company operating in stock form4 7#b7 ,no termination ,notwithstanding paragraph 7#a71 a reorganization of a mutual depository or a modification of a ,federal mutual bank holding company may not terminate mutuality4 7d7 ,retention of capital ,in connection with a reorganization described in subsection 7a71 a mutual national bank may retain capital at the holding company level in order to comply with the capital requirements of the ,board of ,governors for holding companies4 7e7 ,other conversions 7#a7 ,conversion of a ,state mutual bank holding company to a ,federal mutual bank holding company ,subject to such regulations as the ,board of ,governors may prescribe1 a mutual bank holding company organized under ,state law that elects to convert to a ,federal mutual bank holding company-- 7,a7 shall submit to the ,board of ,governors a notice of its election to convert on a specified date that is on or after the date that is #cj days after the date on which the notice is filed2 and 7,b7 shall be converted to a ,federal mutual bank holding company on such specified date4 7#b7 ,maintenance of original powers1 governance1 and authorities ,upon conversion to a ,federal mutual bank holding company1 the entity may continue to exercise the powers1 governance1 and authorities permitted to it as a mutual bank holding company organized under ,state law4 7#c7 ,conversion of ,federal mutual bank holding company to bank holding company ,subject to such regulations as the ,board of ,governors may prescribe1 any ,federal mutual bank holding company that is organized under subsection 7a7 may reorganize as a bank holding company operating in stock form4 7f7 ,rights of mutual holding company members ,each tax liable depositor in a savings1 demand1 or other authorized depository account in depository institution subsidiary shall have the same rights with respect to the ,federal mutual bank holding company as such depositor would have had if the depository institution subsidiary had been a mutual national bank4 7g7 ,regulation ,a ,federal mutual bank holding company shall be-- 7#a7 chartered by the ,board of ,governors and subject to its regulation and supervision2 and 7#b7 regulated under the ,bank ,holding ,company ,act of #aief 7#ab ,u4,s4,c4 #ahda et seq47 on terms1 and subject to limitations1 comparable to those applicable to any other bank holding company4 7h7 ,capital improvement 7#a7 ,pledge of stock of national bank subsidiary ,this section shall not prohibit a ,federal mutual bank holding company from pledging all or a portion of the stock of the national bank chartered as part of a transaction described in subsection 7a7 to raise capital for such national bank4 7#b7 ,issuance of nonvoting shares ,this section shall not prohibit a national bank chartered as part of a transaction described in subsection 7a7 from issuing any nonvoting shares or less than #ej percent of the voting shares of such national bank to any person other than the ,federal mutual bank holding company4 7i7 ,insolvency and liquidation 7#a7 ,in general ,notwithstanding any other provision of law1 the ,board of ,governors may file a petition under chapter #g of title #aa1 ,united ,states ,code1 with respect to a ,federal mutual bank holding company upon-- 7,a7 the default of any depository institution subsidiary1 the stock of which is owned by the ,federal mutual bank holding company2 or 7,b7 a foreclosure on a pledge by the ,federal mutual bank holding company described in subsection 7h77#a74 7#b7 ,distribution of net proceeds ,except as provided in paragraph 7#c71 the net proceeds of any liquidation of any ,federal mutual bank holding company under paragraph 7#a7 shall be transferred to persons who hold an interest in such ,federal mutual bank holding company4 7#c7 ,recovery by ,,fdic ,if the ,federal ,deposit ,insurance ,corporation incurs a loss as a result of the default of any depository institution subsidiary that is liquidated under paragraph 7#a71 the ,federal ,deposit ,insurance ,corporation shall succeed to the interests of the depositors of the depository institution subsidiary as members of the ,federal mutual bank holding company to the extent of the ,federal ,deposit ,insurance ,corporation's loss4 7j7 ,conforming references ,unless otherwise provided by the ,board of ,governors-- 7#a7 any reference in any ,federal law to a bank holding company operating in stock form shall be deemed to refer also to a ,federal mutual bank holding company2 7#b7 any reference in any ,federal law to the term board of directors1 director1 or directors of a national bank operating in stock form shall be deemed to refer also to the board of a ,federal mutual bank holding company2 and 7#c7 any terms in ,federal law that may apply only to a national bank operating in stock form1 including the terms stock1 shares1 shares of stock1 capital stock1 common stock1 stock certificate1 stock certificates1 certificates representing shares of stock1 stock dividend1 transferable stock1 each class of stock1 cumulate such shares1 par value1 or preferred stock shall not apply to a ,federal mutual bank holding company unless the ,board of ,governors of the ,federal ,reserve ,system determines that context requires otherwise4 7k7 ,limitation on ,federal regulation of mutual depositories ,except as otherwise provided in ,federal law1 the ,comptroller of the ,currency1 the ,board of ,governors of the ,federal ,reserve ,system1 and the ,federal ,deposit ,insurance ,corporation may not adopt or enforce any regulation that contravenes the corporate mutual governance rules prescribed by ,state law or regulation for mutual depositories unless the ,comptroller1 ,board of ,governors1 or ,corporation finds that the ,federal regulation is necessary to assure the safety and soundness of the mutual depository4 4 7b7 ,table of contents amendment ,the table of sections for chapter #a of title ,,lxii of the ,revised ,statutes of the ,united ,states 7#ab ,u4,s4,c4 #ba et seq47 is amended by inserting after the item relating to section #eacc the following new items3 ,sec4 #eacc;,a4 ,mutual national banks4 ,sec4 #eacc;,b4 ,federal mutual bank holding companies4 4 7c7 ,appropriate ,federal banking agency for ,federal mutual bank holding companies ,section #c7q77#c7 of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac7q77#c77 is amended-- 7#a7 in subparagraph 7,f71 by striking 2 and and inserting a semicolon at the end2 7#b7 in subparagraph 7,g71 by striking the period at the end and inserting 2 and2 and 7#c7 by inserting after subparagraph 7,g7 the following new subparagraph3 7,h7 supervisory or regulatory proceedings arising from the authority given to the ,board of ,governors under section #eacc;,b of the ,revised ,statutes of the ,united ,states4 4 #d4 ,conversion of a mutual holding company to a ,federal mutual bank holding company 7a7 ,in general ,a mutual holding company1 including any form of mutual depository holding company provided for under ,state law1 may convert to a ,federal mutual bank holding company by filing with the ,board of ,governors of the ,federal ,reserve ,system a notice of its election to convert on a specified date that is on or after the date that is #cj days after the date on which the notice is filed1 and such mutual holding company shall be converted to a ,federal mutual bank holding company on such specified date4 7b7 ,definitions ,in this section the following definitions apply3 7#a7 ,federal mutual bank holding company ,the term ,federal mutual bank holding company has the meaning given such term in section #eacc;,a7a7 of the ,revised ,statutes of the ,united ,states4 7#b7 ,mutual holding company ,the term mutual holding company has the meaning given such term in section #aj7o77#aj7 of the ,home ,owners' ,loan ,act 7#ab ,u4,s4,c4 #adfg;a7o77#aj774