SF4444

Purpose

To give Minnesota credit unions additional options for insuring member accounts, regulate a new credit union share guaranty option, and adjust related oversight and receivership rules. The bill allows credit unions to obtain insurance from either the National Credit Union Administration (NCUA) or an approved credit union share guaranty corporation, and it creates new requirements and oversight for those guaranty arrangements.

Main Provisions

• Section 1: Receiver appointment authority

  • The commissioner of commerce may ask the court to appoint the National Credit Union Administration Board (NCUA) or an approved share insurance provider as receiver of a credit union.
  • This can happen when deposits are insured by the NCUA or the approved insurer and the credit union is suspended or facing a consent cease-and-desist order.
  • If the receiver accepts and the court appoints them, the receiver has the powers and privileges similar to those under state law and the Federal Credit Union Act for a receiver, including matters involving the credit union’s board of directors.

• Section 2: Insurance requirement for accounts

  • All credit unions must maintain insurance for member shares and deposit accounts either under the NCUA Act (Title II) or through an approved credit union share guaranty corporation.
  • If a credit union fails to have insured accounts, it must dissolve or merge with another insured credit union.

• Section 3: Credit union share guaranty corporation accounts insured

  • Adds a requirement that a credit union share guaranty corporation must insure member accounts up to a guaranteed amount that is at least equal to the account balance.
  • The guaranteed amount cannot exceed the greater of $250,000 or the primary guaranteed amount insured by the NCUA.
  • The commissioner may examine the guaranty corporation and charge reasonable costs for the examination; such funds go to the state’s special revenue fund.
  • A credit union may not voluntarily terminate insurance with the NCUA Share Insurance Program or the guaranty corporation without the commissioner's approval.

• Section 4: Certificate of approval

  • No credit union may receive a state certificate of approval unless it has a commitment for insurance of member shares and deposits under Title II of the NCUA Act or from an approved guaranty corporation.

Significant Changes from Existing Law

• Creates a pathway for credit unions to be insured by a private, state-approved credit union share guaranty corporation, expanding options beyond the NCUA.
• Establishes minimum and capped coverage amounts for guaranty corporation accounts, with a new emphasis on a blended model of insurance.
• Adds explicit oversight and cost-recovery provisions for the guaranty corporation through state examinations and assessments.
• Allows the state to appoint the NCUA or a guaranty provider as receiver of a troubled credit union under specific conditions.
• Tightens requirements for obtaining a state certificate of approval, tying approval to a defined insurance commitment.

Terminology to Note

• National Credit Union Administration (NCUA) Board
• Credit union share insurance provider
• Credit union share guaranty corporation
• Title II of the National Credit Union Act
• Receiver
• Consent cease and desist order
• Certificate of approval
• Special revenue fund
• Insurance accounts (member shares and deposits)

Relevant Terms - NCUA, Title II NCUA Act, receiver, credit union, insured accounts, guaranty corporation, insurance commitment, certificate of approval, consent cease and desist order, National Credit Union Act, financial institutions, independent insurance provider.