Minnesota Session Laws - 1983, Regular Session

  

                         Laws of Minnesota 1983 

                         CHAPTER 43--H.F.No. 268
           An act relating to financial institutions; credit 
          unions; removing the restrictions on the amounts that 
          credit unions may invest in the corporate credit union;
          removing the borrowing restrictions of the corporate 
          credit union; changing references to the central 
          credit union to reflect its name change; amending 
          Minnesota Statutes 1982, sections 52.04, subdivision 
          1; 52.09, subdivision 2; 52.15, subdivisions 1 and 2; 
          and 52.17, subdivision 2. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1982, section 52.04, 
subdivision 1, is amended to read: 
    Subdivision 1.  A credit union shall have has the following 
powers: 
    (1) To receive the savings of its members either as payment 
on shares or as deposits, including the right to conduct 
Christmas clubs, vacation clubs, and other such thrift 
organizations within its membership; 
    (2) To make loans to members for provident or productive 
purposes as provided in section 52.16; 
    (3) To make loans to a cooperative society or other 
organization having membership in the credit union; 
    (4) To deposit in state and national banks and trust 
companies authorized to receive deposits; 
    (5) To invest in any investment legal for savings banks or 
for trust funds in the state and, notwithstanding clause (2), to 
invest in and make loans of unsecured days funds (federal funds 
or similar unsecured loans) to financial institutions insured by 
an agency of the federal government and a member of the Federal 
Reserve System or required to maintain reserves at the Federal 
Reserve;  
    (6) To borrow money as hereinafter indicated; 
    (7) To adopt and use a common seal and alter the same at 
pleasure; 
    (8) To make payments on shares of and deposit with any 
other credit union chartered by this or any other state or 
operating under the provisions of the federal credit union act, 
in amounts not exceeding in the aggregate 25 percent of its 
unimpaired assets providing that.  However, payments on shares 
of and deposit with credit unions chartered by other states 
shall be are restricted to credit unions insured by the National 
Credit Union Administration.  The restrictions imposed by this 
clause shall do not apply to share accounts and deposit accounts 
of the Minnesota central corporate credit union in U.S. central 
credit union or to share accounts and deposit accounts of credit 
unions in the Minnesota corporate credit union; 
    (9) To contract with any licensed insurance company or 
society to insure the lives of members to the extent of their 
share accounts, in whole or in part, and to pay all or a portion 
of the premium therefor; 
    (10) To indemnify each director, officer, or committee 
member, or former director, officer, or committee member against 
all expenses, including attorney's fees but excluding amounts 
paid pursuant to a judgment or settlement agreement, reasonably 
incurred by him in connection with or arising out of any action, 
suit, or proceeding to which he is a party by reason of being or 
having been a director, officer, or committee member of the 
credit union, except with respect to matters as to which he 
shall be is finally adjudged in such the action, suit, or 
proceeding to be liable for negligence or misconduct in the 
performance of his duties.  Such The indemnification shall is 
not be exclusive of any other rights to which he may be entitled 
under any bylaw, agreement, vote of members, or otherwise; 
    (11) Upon written authorization from a member, retained at 
the credit union, to make payments to third parties by 
withdrawals from the member's share or deposit accounts or 
through proceeds of loans made to such member, or by permitting 
the credit union to make such those payments from the member's 
funds prior to deposit; to permit draft withdrawals from member 
accounts; however, this clause does not permit a credit union to 
establish demand deposits (checking accounts) for its members, 
provided that any but a credit union proposing to permit draft 
withdrawals shall notify the commissioner of banks, in the form 
prescribed, of its intent not less than 90 days prior to 
authorizing draft withdrawals; 
    (12) To inform its members as to the availability of 
various group purchasing plans which are related to the 
promotion of thrift or the borrowing of money for provident and 
productive purposes by means of informational materials placed 
in the credit union's office, through its publications, or by 
direct mailings to members by the credit union; 
    (13) To facilitate its members' voluntary purchase of types 
of insurance incidental to promotion of thrift or the borrowing 
of money for provident and productive purposes including, but 
not limited to the following types of group or individual 
insurance:  Fire, theft, automobile, life and temporary 
disability; to be the policy holder of a group insurance plan or 
a sub-group under a master policy plan and to disseminate 
information to its members concerning the insurance provided 
thereunder; to remit premiums to an insurer or the holder of a 
master policy on behalf of a credit union member, provided that 
if the credit union shall obtain obtains written authorization 
from the member for remittance by share or deposit withdrawals 
or through proceeds of loans made by the members, or by 
permitting the credit union to make the payments from the 
member's funds prior to deposit; and to accept from the insurer 
reimbursement for expenses incurred or in the case of credit 
life and accident and health insurance within the meaning of 
chapter 62B commissions for the handling of the insurance.  The 
amount reimbursed or the commissions received may constitute the 
general income of the credit union.  The directors, officers, 
committee members and employees of a credit union shall not 
profit on any insurance sale facilitated through the credit 
unions; 
    (14) To contract with another credit union to furnish 
services which either could otherwise perform.  Contracted 
services under this clause are subject to regulation and 
examination by the commissioner of banks like other services; 
    (15) In furtherance of the twofold purpose of promoting 
thrift among its members and creating a source of credit for 
them at legitimate rates of interest for provident purposes, and 
not in limitation of the specific powers hereinbefore conferred, 
to have all the powers enumerated, authorized, and permitted by 
this chapter, and such other rights, privileges and powers as 
may be incidental to, or necessary for, the accomplishment of 
the objectives and purposes of the credit union; 
    (16) To rent safe deposit boxes to its members provided if 
the credit union obtains adequate insurance or bonding coverage 
for losses which might result from the rental of safe deposit 
boxes; 
    (17) Notwithstanding the provisions of section 52.05, to 
accept deposits of public funds in an amount secured by 
insurance or other means pursuant to chapter 118; 
     (18) To accept and maintain treasury tax and loan accounts 
of the United States and to pledge collateral to secure the 
treasury tax or loan accounts, in accordance with the 
regulations of the Department of Treasury of the United States; 
     (19) To accept deposits pursuant to section 149.12, 
notwithstanding the provisions of section 52.05, if the deposits 
represent funding of prepaid funeral plans of members; 
     (20) To sell, in whole or in part, real estate secured 
loans provided that:  
     (a) The loan is secured by a first lien;  
     (b) The board of directors approves the sale;  
     (c) If the sale is partial, the agreement to sell a partial 
interest shall, at a minimum:  
     (i) Identify the loan or loans covered by the agreement;  
     (ii) Provide for the collection, processing, remittance of 
payments of principal and interest, taxes and insurance premiums 
and other charges or escrows, if any;  
     (iii) Define the responsibilities of each party in the 
event the loan becomes subject to collection, loss or 
foreclosure;  
     (iv) Provide that in the event of loss, each owner shall 
share in the loss in proportion to its interest in the loan or 
loans;  
     (v) Provide for the distribution of payments of principal 
to each owner proportionate to its interest in the loan or loans;
     (vi) Provide for loan status reports;  
     (vii) State the terms and conditions under which the 
agreement may be terminated or modified; and 
     (d) The sale is without recourse or repurchase unless the 
agreement:  
     (i) Requires repurchase of a loan because of any breach of 
warranty or misrepresentation;  
     (ii) Allows the seller to repurchase at its discretion; or 
     (iii) Allows substitution of one loan for another;  
     (21) In addition to the sale of loans secured by a first 
lien on real estate, to sell, pledge, discount, or otherwise 
dispose of, in whole or in part, to any source, a loan or group 
of loans, other than a self-replenishing line of credit;  
provided, that within a calendar year beginning January 1 the 
total dollar value of loans sold, other than loans secured by 
real estate or insured by a state or federal agency, shall not 
exceed 25 percent of the dollar amount of all loans and 
participating interests in loans held by the credit union at the 
beginning of the calendar year, unless otherwise authorized in 
writing by the commissioner.  
     Sec. 2.  Minnesota Statutes 1982, section 52.09, 
subdivision 2, is amended to read: 
    Subd. 2.  [PARTICULAR DUTIES.] It shall be the duty of The 
directors to have general management of shall manage the affairs 
of the credit union, particularly and shall: 
    (1) to act on applications for membership.  This power may 
be delegated to a membership chairman who serves at the pleasure 
of the board of directors and is subject to its rules.  The An 
application shall must contain a certification signed by the 
membership chairman or a member of the board showing the basis 
of membership; 
    (2) to determine interest rates on loans and on deposits.  
The interest period on deposits may be on a daily, monthly, 
quarterly, semi-annual or annual basis, and may be paid on all 
deposits whether or not the deposits have been withdrawn during 
the interest period.  Interest may be computed on a daily 
basis.  At the discretion of the board of directors, interest 
may need not be paid on deposit accounts of less than $10; 
    (3) to fix the amount of the surety bond which shall be 
required of all officers and employees handling money; 
    (4) to declare dividends, and to transmit to the members, 
recommended amendments to the bylaws; 
    (5) to fill vacancies in the board and in the credit 
committee until successors are chosen and qualify at the next 
annual meeting; 
    (6) to limit the number of shares and deposits which may be 
owned by a member, not to exceed ten percent of the outstanding 
shares and deposits, or $2,000, whichever is larger, and the 
maximum individual loan which can be made with and without 
security, including liability indirectly as a co-maker, 
guarantor, or endorser to ten percent of outstanding shares and 
deposits.  The ten percent share and deposit limitation shall is 
not be applicable to the Minnesota central Credit corporate 
credit union, or to credit unions insured by the National Credit 
Union Administration; 
    (7) to have charge of investments including loans to 
members, unless a credit committee is established pursuant to 
section 52.08 or paragraph (13) of this subdivision; 
    (8) to fix the salaries of the treasurer and other 
employees, which shall must be on a fixed monthly or annual 
basis, in dollars (not percentage); 
    (9) to designate the bank or banks in which the funds of 
the credit union shall will be deposited; 
    (10) to authorize the officers of the credit union to 
borrow money from any source, as provided in section 52.15; 
    (11) with the permission of the commissioner of banks to, 
suspend any member of the credit committee or supervisory 
committee if it deems this action to be necessary to the proper 
conduct of the credit union, and to call the members together to 
act on the suspension within a reasonable time after the 
suspension.  The members at the meeting may, by majority vote of 
those present, sustain the suspension and remove the committee 
members permanently or may reinstate the committee members;  
    (12) to provide financial assistance to the supervisory 
committee in carrying out its audit responsibilities; and 
    (13) if the bylaws so provide and no credit committee has 
been elected pursuant to section 52.08, to appoint a credit 
manager or a credit committee of not less than three members.  
     Sec. 3.  Minnesota Statutes 1982, section 52.15, 
subdivision 1, is amended to read: 
    Subdivision 1.  A credit union may borrow from any source, 
or sources, sums which shall not exceed exceeding in the 
aggregate 40 percent of its unimpaired assets.  For the purposes 
of this subdivision, "unimpaired assets" mean total assets less 
borrowings, including all forms of indebtedness, accounts 
payable, and any amount by which reserves and undivided earnings 
will not be adequate to meet the reserve requirements caused by 
classified assets.  
     Sec. 4.  Minnesota Statutes 1982, section 52.15, 
subdivision 2, is amended to read: 
    Subd. 2.  Notwithstanding the provisions of subdivision 1, 
a credit union, with the prior written approval of the 
commissioner of banks, may borrow additional sums to meet its 
liquidity needs.  For purposes of this subdivision, "liquidity 
needs" means the needs of a credit union for:  
    (a) Short-term adjustment credit to cushion deposit or 
share outflows pending an orderly adjustment of assets and 
liabilities;  
    (b) Seasonal needs arising from a combination of expected 
patterns of movement in share and deposit accounts and loans; 
and 
    (c) Protracted adjustment needs in the event of unusual or 
emergency circumstances of a longer-term nature resulting from 
national, regional or local difficulties.  Applications for 
written approval shall include the specific dollar amount or 
increase in the aggregate percentage with respect to unimpaired 
assets that may be borrowed by the credit union and the period 
of time the additional borrowed sums will be needed.  The 
commissioner's approval must state the specific dollar amount or 
increase in the aggregate percentage being approved and the 
period of time for which the approval is effective.  
    Sec. 5.  Minnesota Statutes 1982, section 52.17, 
subdivision 2, is amended to read: 
    Subd. 2.  [REQUIRED LIQUIDITY.] Every credit union shall 
maintain a reserve in the form of liquid assets at a level 
reasonably necessary to meet anticipated withdrawals, 
commitments, and loan demand.  Reserves shall must be in cash 
and balances due from solvent banks or which may be, in whole or 
in part, in short term obligations guaranteed as to principal 
and interest by the U.S. government or in certificates of 
deposit of a federally insured bank or in a passbook or other 
account in a federally insured savings and loan association or 
in balances due from the Minnesota central corporate credit 
union or ICU services corporation or U.S. central credit union.  
The commissioner of banks may prescribe the required amount of 
reserves for any individual credit union from time to time based 
upon examination findings or other reports relating to the 
credit union that are available to the commissioner.  The 
determination by the commissioner of a required amount of 
reserves for a credit union shall not be considered a rule as 
defined by section 14.02, subdivision 4.  Reserves for an 
individual credit union as prescribed by the commissioner 
pursuant to this section shall be enforced in accordance with 
sections 46.24 and 46.30 to 46.33.  
     Sec. 6.  [EFFECTIVE DATE.] 
     This act is effective June 1, 1983. 
    Approved April 19, 1983