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HF 1976

as introduced - 92nd Legislature (2021 - 2022) Posted on 03/08/2021 02:22pm

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 03/08/2021

Current Version - as introduced

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A bill for an act
relating to commerce; establishing certain rights for federal home loan banks with
respect to collateral pledged by insurer members; proposing coding for new law
in Minnesota Statutes, chapter 60B.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [60B.335] FEDERAL HOME LOAN BANK RIGHTS; COLLATERAL
PLEDGED BY INSURER-MEMBERS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Federal home loan bank" means a federal home loan bank established under the
federal Home Loan Bank Act, United States Code, title 12, section 1421 et seq.
new text end

new text begin (c) "Insurer-member" means an insurer that is a member of a federal home loan bank.
new text end

new text begin Subd. 2. new text end

new text begin Certain rights provided. new text end

new text begin (a) Notwithstanding any law to the contrary, a federal
home loan bank must not be stayed or prohibited from exercising the federal home loan
bank's rights regarding collateral pledged by an insurer-member.
new text end

new text begin (b) If a federal home loan bank exercises rights regarding collateral pledged by an
insurer-member subject to a delinquency proceeding, the federal home loan bank must
repurchase any outstanding capital stock that is in excess of the amount of federal home
loan bank stock that the insurer-member is required to hold as a minimum investment, to
the extent the federal home loan bank determines in good faith that the repurchase is (1)
permissible under applicable laws, regulations, regulatory obligations, and the federal home
loan bank's capital plan; and (2) consistent with the federal home loan bank's current capital
stock practices applicable to the federal home loan bank's entire membership.
new text end

new text begin Subd. 3. new text end

new text begin Process and timeline required. new text end

new text begin Following the appointment of a receiver for
an insurer-member, the federal home loan bank must, within ten business days after the
date a request is received from the receiver, provide a process and establish a timeline for:
new text end

new text begin (1) release of collateral that exceeds the amount required to support secured obligations
remaining after any repayment of loans, as determined in accordance with the applicable
agreements between the federal home loan bank and the insurer-member;
new text end

new text begin (2) release of any of the insurer-member's collateral remaining in the federal home loan
bank's possession following repayment in full of the insurer-member's outstanding secured
obligations;
new text end

new text begin (3) payment of fees owed by the insurer-member and the operation of the
insurer-member's deposits and other accounts with the federal home loan bank; and
new text end

new text begin (4) possible redemption or repurchase of federal home loan bank stock or excess stock
of any class that an insurer-member is required to own.
new text end

new text begin Subd. 4. new text end

new text begin Options; renew or restructure. new text end

new text begin Upon request from a receiver, the federal
home loan bank must provide the options available for an insurer-member subject to a
delinquency proceeding to renew or restructure a loan to defer associated prepayment fees,
subject to (1) market conditions, (2) the terms of any loans outstanding to the insurer-member,
(3) the federal home loan bank's applicable policies, and (4) the federal home loan bank's
compliance with federal laws and regulations.
new text end

new text begin Subd. 5. new text end

new text begin Void transfers prohibited. new text end

new text begin (a) Notwithstanding any law to the contrary, the
receiver for an insurer-member is prohibited from voiding any transfer of, or any obligation
to transfer, money or any other property arising under or in connection with (1) any federal
home loan bank security agreement; (2) any pledge, security, collateral, or guarantee
agreement; or (3) any other similar arrangement or credit enhancement relating to a federal
home loan bank security agreement made in the ordinary course of business and in
compliance with the applicable federal home loan bank agreement.
new text end

new text begin (b) A transfer may be avoided under this section if the transfer was made with intent to
hinder, delay, or defraud the insurer-member, the receiver for the insurer-member, or existing
or future creditors.
new text end

new text begin (c) This section does not affect a receiver's rights regarding advances to an
insurer-member in delinquency proceedings pursuant to Code of Federal Regulations, title
12, part 1266.4.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and
applies to delinquency proceedings filed on or after that date.
new text end