{ADD 19-5-20. Regular reserve. -- ADD} {ADD Each credit union shall establish and maintain a regular reserve, as provided by the federal credit union act. The director or his or her designee shall approve or deny any charges to the reserve. ADD}
{ADD 19-5-21. Destruction of records. -- ADD} {ADD A credit union may, in accordance with such rules and regulations as the director or his or her designee may adopt, destroy such of its records that have become obsolete. ADD}
{ADD 19-5-22. Tax on deposits. -- ADD} {ADD The capital stock, corporate franchises, and personal property, but not the real estate, of credit unions shall be exempt from taxation; provided, however, that every such credit union shall annually pay to the general treasurer forty cents (40›) on each one hundred dollars ($100) deposited therewith in the same manner as in financial institutions, such sums to be ascertained from a report to be made by the credit union to the director or his or her designee, on or before the fifteenth day in July of each and every year, of the total amount of such deposits in the credit union on the last business day in June in that year, and to be paid on or before the first Monday in August. ADD}
{ADD 19-5-23. Conversion. -- ADD} {ADD A credit union may be converted into a federal credit union, and a federal credit union may be converted into a credit union by complying with all the requirements of applicable federal and state law.
A federal credit union shall become a credit union when its agreement to form shall have been approved by the director or his or her designee under this chapter and when it shall have filed a copy of its agreement to form with the National Credit Union Administration and complied with all other requirements of federal law.
A credit union shall become a federal credit union upon the granting of a federal credit union charter to it and the completion of all other requirements of federal law necessary to be completed to become an operating federal credit union, and upon the filing with the director or his or her designee a certified vote of the majority of the credit union members present at a meeting called, in accordance with the credit union's by-laws, for the purpose of considering a conversion to a federal charter. The converting credit union, shall then file with the director or his or her designee a certified copy of the federal credit union charter and shall surrender its copy of its agreement to form, or file proof that the agreement to form has been lost. ADD}
{ADD 19-5-24. Merger. -- ADD} {ADD Any credit union may, with approval of the director or his or her designee, merge with another credit union under the agreement to form of the surviving credit union, pursuant to any plan agreed upon by two-thirds (2/3) vote of those members present at a meeting called for the purpose, and approved by the affirmative vote of members representing two-thirds (2/3) of the members present of the credit union to be merged, either at a meeting of the members duly called for that purpose or in writing. The credit union being merged shall be required to mail notice of the meeting to its members. Notice of such meeting shall be mailed to all members of the surviving credit union in the discretion of the director or his or her designee. The director or his or her designee may waive any or all of the foregoing requirements with respect to notice or to votes of members of the merged credit union or the surviving credit union in order to avert insolvency or imminent failure.
Upon approval by the director or his or her designee and after such votes by the boards of directors and approval of the members of the credit union to be merged, the president and clerk or secretary of each credit union shall execute in triplicate a certificate of merger, which shall set forth all of the following:
(a) The time and place of the meeting of the board of directors at which the plan was agreed upon;
(b) The vote in favor of adoption of the plan;
(c) A copy of the resolution or other action by which the plan was agreed upon;
(d) The time and place of the meeting of the members at which the plan agreed upon was approved, if applicable;
(e) The vote by which the plan was approved by the members, if applicable and;
(f) The date the merger was approved by the director or his or her designee.
The certificates, in triplicate, and a copy of the plan of merger agreed upon shall be forwarded to the director or his or her designee and a copy of the certificate, certified by him or her, shall be returned to the merging credit unions within thirty (30) days. Upon any such merger so effected, all property, property rights, and interest of the merged credit union shall vest in the surviving credit union without deed, endorsement, or other instrument of transfer, and all debts, obligations and liabilities of the merged credit union shall be deemed to have been assumed by the surviving credit union under whose agreement to form the merger was effected. ADD}{ADD 19-5-25. Exercise of same powers as federal credit unions. -- ADD} {ADD A credit union may engage in any activity authorized by law or regulation for federal credit unions which, in the opinion of the director or his or her designee, is not unsafe and unsound for the credit union. ADD}
{ADD 19-5-26. Liquidity reserves. -- ADD} {ADD Every credit union shall maintain liquidity reserves equal to an amount as determined in the credit union's liquidity and funds management policy as established and adopted by the board of directors of the credit union. Failure to adopt an adequate funds management policy shall be considered an unsafe and unsound practice. ADD}
{ADD 19-5-27. Interstate credit unions. -- ADD} {ADD A credit union chartered in another state shall be permitted to do business in Rhode Island if credit unions may do business in that state, under terms and conditions no more onerous than the laws of the state of Rhode Island, as determined by the director or his or her designee. The standards for interstate activities shall be the same as those for financial institutions. ADD}
{ADD 19-5-28. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable. ADD}
SECTION 44. Title 19 of the General Laws entitled "Financial Institutions" is hereby amended by adding thereto the following chapter:
{ADD CHAPTER 6
BANK HOLDING COMPANIES ADD}
{ADD 19-6-1. Definitions. -- ADD} {ADD For purposes of this chapter:
The term "Rhode Island Bank Holding Company" is any company, association, partnership, corporation or any other entity, however formed that controls a regulated institution.
The terms "company", and "control" and "subsidiary" shall have the meaning set forth in the Bank Holding Company Act of 1956, 12 U.S.C. 1841 et seq. ADD}
{ADD 19-6-2. Examination powers. -- ADD} {ADD Whenever the director or his or her designee considers it advisable, he or she may make or cause to be made, an examination of each Rhode Island Bank Holding Company. The director or his or her designee(s) may also examine any deposit-taking subsidiary thereof which fails to meet its minimum capital requirements under applicable federal law or has received from its principal bank regulator, as its last composite rating based on capital, asset quality, management, earnings and liquidity (CAMEL) or similar regulatory rating, a three, four, five or other unsatisfactory rating. The director or his or her designee shall have the same examination power and authority as he or she has for the examination of regulated institutions. The total cost of these examinations shall be paid in the same manner as other regulated institutions, pursuant to this title. In lieu of any such examination, the director or his or her designee shall accept the report of an examination made within the last fifteen (15) months by any federal bank regulatory agency or the equivalent supervisory official of another state, pursuant to the laws of that state. ADD}
{ADD 19-6-3. Time and frequency of reports of Rhode Island bank holding companies. -- ADD} {ADD Every Rhode Island bank holding company shall file an annual financial report with the director or his or her designee, signed and sworn to by its president or a vice-president and also by its secretary, treasurer, or auditor, showing the condition of the Rhode Island bank holding company at the close of business on any past day specified by the director or his or her designee. The report shall be transmitted to the director or his or her designee within thirty (30) days of request, exclusive of Sundays and holidays. At the time of filing each report the sum of fifty dollars ($50.00) shall be paid by the Rhode Island bank holding company to the director to and for the use of the state. A penalty of twenty-five dollars ($25.00) per day for each day such report is delayed shall be paid to the director to and for the use of the state.
Copies of reports prepared for federal regulatory authorities may be filed in lieu of the above within the time frame required for federal reports, with the above fees. ADD}
{ADD 19-6-4. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable. ADD}
SECTION 45. Title 19 of the General Laws entitled "Financial Institutions" is hereby amended by adding thereto the following chapter:
{ADD CHAPTER 7
INTERSTATE BANKING, INTERSTATE BRANCHING AND BANK HOLDING COMPANY MERGERS AND ACQUISITIONS ADD}
{ADD 19-7-1. Definitions of terms. -- ADD} {ADD For the purposes of this chapter, the term or terms:
"Bank," "bank holding company." "company," "subsidiary" and "control" shall have the meanings set forth in the Federal Bank Holding Company Act of 1956, as amended, 12 U.S.C. Section 1841 et seq., except that "bank" shall also include financial institutions, as defined in this title and other forms of federally insured-deposit-taking institutions and bank holding companies shall include thrift holding companies as set forth in the Home Owners' Loan Act [12 U.S.C. section 1461 et seq.], whether organized with or without capital stock.
"Out-of-state bank" shall mean a bank whose principal office is located in any other state.
"Rhode Island Bank Holding Company" shall mean a bank holding company which controls a financial institution, provided that an out-of-state bank or bank holding company which acquired control of one or more financial institutions shall not be deemed to be a Rhode Island bank holding company, unless operations of its bank subsidiaries are principally conducted in this state.
"Out-of-state bank holding company" shall mean a holding company, for which the operations of its bank subsidiaries are principally conducted in any other state.
For the purposes of this chapter, the state in which operations of a bank holding company's bank subsidiaries are principally conducted is the state in which total deposits of all of its bank subsidiaries are the largest. ADD}
{ADD 19-7-2. Acquisitions authorized. -- ADD} {ADD (a) An out-of-state bank or bank holding company may acquire direct or indirect ownership or control of more than five percent (5%) of the voting stock of one or more financial institutions or Rhode Island bank holding companies, if the following conditions are met:
(1) The laws of the state in which the out-of-state bank is located, or in which operations of the bank subsidiaries of an out-of-state bank holding company are principally conducted, expressly authorize, under conditions no more restrictive than those imposed by the laws of Rhode Island, as determined by the director or his or her designee, the acquisition by a Rhode Island bank holding company or a financial institution of direct or indirect ownership or control of more than five percent (5%) of the voting stock of banks located in that state or bank holding companies, the operations of the bank subsidiaries of which are principally conducted in that state.
(2) The acquisition, including all of the terms and conditions thereof, shall have been approved in advance by the director or his or her designee as in the public interest, pursuant to a written order evidencing such approval. In determining whether the approval of a proposed acquisition by an out-of-state bank or bank holding company is in the public interest, the director or his or her designee shall consider, in addition to such other factors as he or she may in his or her discretion determine, whether the acquisition shall promote the safety and soundness of the financial institution whose voting stock is to be acquired and the needs and convenience of communities served by that financial institution, and whether the acquisition is likely to have a significant impact upon the state's economy, employment levels, and tax base. Any financial institution or Rhode Island bank holding company which is the subject of an acquisition hereunder shall be a party to the proceedings of the director or his or her designee and shall be entitled to seek judicial review of any final decision of the director or his or her designee. The procedures for notice and the conducting of hearings by the director or his or her designee and the rights of appeal from decisions of the director or his or her designee shall be governed by this title.
(b) The provisions of subsection (a) shall apply to mergers, acquisitions, consolidations, or purchases of assets and assumptions of liabilities irrespective of whether the transactions under those sections involve an out-of-state bank or out-of-state bank holding company.
(c) The provisions of this section shall only apply after September 29, 1995 to the extent consistent with and not preempted by federal law. ADD}
{ADD 19-7-3. Interstate mergers of stock financial institutions. -- ADD} {ADD (a) Any financial institution organized with capital stock may, subject to the approval of the director or his or her designee, merge or consolidate with one or more banks,
(1) each of which is organized with capital stock and is either a financial institution or an out-of-state bank, and
(2) at least one of which is an out-of-state bank, pursuant to a plan of merger or consolidation complying with the provisions of this section; provided, however that the following conditions shall apply prior to June 1, 1997 to the extent consistent and not preempted by federal laws.
(i) that the law of the state in which each such out-of-state bank has its principal office permits such a merger or consolidation and
(ii) the law of the state in which each such out-of-state bank has its principal office authorizes, under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director or his or her designee, to be the successor bank of such a merger or consolidation.
(b) The plan of merger or consolidation shall conform to the provisions of section 7-1.1-65 or 7-1.1-66, as the case may be, and to such other requirements as may be imposed by the laws applicable to each such bank not organized under the laws of this state.
(c) The plan of merger or consolidation shall require approval as follows:
(1) with respect to each financial institution, by the board of directors and shareholder of that Financial Institution pursuant to the applicable provisions of sections 7-1.1-65 to 7-1.1-67, inclusive, except that a plan of merger or consolidation must receive the affirmative vote of the holders of two -thirds (2/3) or more of the shares entitled to vote thereon; and
(2) with respect to each such bank not organized under the laws of this state, in accordance with the applicable provisions imposed by the laws under which it is organized. Thereafter, articles or merger or consolidation complying with the applicable provisions of section 7-1.1-68 and the applicable provisions of the laws under which each such bank not organized under the laws of this state is organized shall be executed in accordance with the applicable provisions and presented to the director or his or her designee for approval, by filing three (3) originals thereof with the director or his or her designee.
(d) Upon receipt of the articles of merger or consolidation, the director or his or her designee shall furnish the applicant a form of notice specifying the names of the constituent banks and assigning a date and place for public hearing on the plan of merger or consolidation. The applicant shall publish such notice at least once a week for three (3) successive weeks, in one (1) or more newspapers designated by the director or his or her designee. Upon a finding that the public interest so requires, the director or his or her designee may lessen the period and the manner prescribed for giving notice. In determining whether to approve a proposed merger or consolidation, the director or his or her designee shall consider whether the merger or consolidation is consistent with the safety and soundness of, and the needs and convenience of the communities served by, each financial institution. The procedures for conducting hearings by the director or his or her designee and the rights of appeal from decisions of the director or his or her designee shall be governed by the applicable provisions of this title.
(e) If the director or his or her designee approves the merger or consolidation in accordance with subsection (d) hereof, he or she shall endorse approval upon each original of the articles of merger or articles of consolidation and shall deliver the articles to the applicant. One (1) original of the articles of merger or articles of consolidation bearing such approval in writing shall be filed with the director or his or her designee and two (2) originals shall be filed with the secretary of state, who shall upon payment to him or her of twenty-five dollars ($25.00) issue a certificate of merger or certificate of consolidation pursuant to the provisions of section 7-1.1-68. Upon the issuance of the certificate or upon such later date, not more than thirty (30) days after the filing with the secretary of state of the articles of merger or articles of consolidation, as may be set forth in the plan, the merger or consolidation shall be effected pursuant to the provisions of this chapter with the effects set forth therein. At any time prior to the filing of the articles of merger or articles of consolidation with the secretary of state, the merger or consolidation may be abandoned pursuant to the provisions therefor, if any, set forth in the plan of merger or consolidation.
(f) Any shareholder of a financial institution which is a party to a plan of merger or consolidation under this section shall have the right to dissent from the corporate action involved in accordance with the provisions of section 7-1.1-73 and on the terms and conditions set forth in section 7-1.1-74.
(g) If the successor institution of such a merger or consolidation under this chapter is to be organized under laws other than the laws of this state, it shall file the following with the director or his or her designee contemporaneously with the application for approval of the merger or consolidation:
(1) An agreement that it may be served with process in this state in any proceeding for the enforcement of any obligation arising out of its business transacted in this state and any obligation of any of its predecessor financial institutions, including the enforcement of the rights of a dissenting shareholder of any such predecessor financial institution;
(2) An irrevocable appointment of the director as its agent to accept service of process in any proceeding in the courts of this state or the courts of the United States situated in this state; and
(3) An agreement that it will promptly pay to the dissenting shareholder of any predecessor financial institution
{ADD 19-7-4. Interstate mergers of mutual financial institutions. -- ADD} {ADD (a) Any financial institution organized without capital stock may, subject to the approval of the director or his or her designee, merge or consolidate with one (1) or more institutions, if:
(1) each of which is organized without capital stock and is either a financial institution or an out-of-state bank; and
(2) at least one (1) of which is an out-of-state bank, pursuant to a plan of merger or consolidation complying with the provisions of this section; provided, however, the following conditions shall apply prior to June 1, 1997 to the extent consistent with and not preempted by federal law.
(i) that the law of the state in which each such out-of-state bank has its principal office expressly permits such a merger or consolidation and
(ii) the law of the state in which each such out-of-state bank has its principal office expressly authorizes, under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director or his or her designee, a financial institution organized without capital stock under the laws of this state to be the successor bank of such a merger or consolidation.
(b) The plan of merger or consolidation shall conform to the relevant provisions of section 7-1.1-65 or 7-1.1-66, and to such other requirements as may be imposed by the laws applicable to each such bank not organized under the laws of this state.
(c) The plan of merger or consolidation shall require approval as follows:
(1) with respect to a mutual savings bank by a two-thirds (2/3) vote of the board of trustees thereof and majority vote of the depositors of the mutual savings bank present in person or by proxy, at a meeting called by the board of trustees; and
(2) with respect to each such bank not organized under the laws of this state, in accordance with the applicable provisions imposed by the laws under which it is organized. Thereafter, articles of merger or consolidation complying with the applicable provisions of section 7-1.1-68 and the applicable provisions of the laws under which each bank not organized under the laws of this state is organized shall be executed in accordance with such provisions and presented to the director or his or her designee for approval by filing three (3) originals thereof with the director or his or her designee.
(d) Upon receipt of the articles or merger or consolidation, the director or his or her designee shall furnish the applicant a form of notice specifying the names of the constituent banks and assigning a date and place for public hearing on the plan of merger or consolidation. The applicant shall publish such notice at least once a week for three (3) successive weeks, in one (1) or more newspapers designated by the director or his or her designee. Upon a finding that the public interest so requires, the director or his or her designee may lessen the period and the manner prescribed for giving notice. In determining whether to approve a proposed merger or consolidation, the director or his or her designee shall consider whether such merger or consolidation is consistent with the safety and soundness of, and the needs and convenience of the communities served by, each such institution. The procedures for conducting hearings by the director or his or her designee and the rights of appeal from decisions of the director or his or her designee shall be governed by the applicable provisions of this title.
(e) If the director or his or her designee approves the merger or consolidation in accordance with subsection (d) hereof, he or she shall endorse his or her approval upon each original of the articles of merger or articles of consolidation and shall deliver the articles to the applicant. One (1) original of the articles of merger or articles of consolidation bearing such approval in writing shall be filed with the director or his or her designee. Two (2) originals shall be filed with the secretary of state, who shall upon payment to him or her of twenty-five dollars ($25.00) issue a certificate of merger or certificate of consolidation pursuant to the provision of section 7-1.1-68. Upon the issuance of the certificate or upon such later date, not more than thirty (30) days after the filing with the secretary of state of the articles of merger or articles of consolidation, as may be set forth in the plan, the merger or consolidation shall be effected pursuant to the provisions of this chapter with the effects set forth therein. At any time prior to the filing of the articles or merger or articles of consolidation with the secretary of state, the merger or consolidation may be abandoned pursuant to the provisions therefor, if any, set forth in the plan of merger or consolidation.
(f) A merger or consolidation may be approved and effected pursuant to the provisions of this section, notwithstanding that the capital to liabilities ratio of the constituent banks exceeds such percentage of any of the other constituent banks, and no constituent bank having such excess of percentage shall be required to pay an extra dividend or make any distribution to its shareholders or depositors, nor shall any such shareholder or depositor have any appraisal or dissenting right with respect to the merger or consolidation.
(g) If the successor bank of such a merger or consolidation is to be organized under laws other than the laws of this state, it shall file the following with the director or his or her designee contemporaneously with the application for approval of the merger or consolidation:
(1) An agreement that it may be served with process in this state in any proceeding for the enforcement of any obligation arising out of its business transacted in this state and any of its predecessor financial institutions; and
(2) An irrevocable appointment of the director as its agent to accept service of process in any proceeding in the courts of this state or the courts of the United States situated in this state. ADD}
{ADD 19-7-5. General effect of merger or consolidation. -- ADD} {ADD Upon the merger or consolidation of a financial institution with one (1) or more banks in accordance with the provisions of this chapter:
(a) All of the property of each predecessor bank, including all its right, title, and interest in and to all assets of any conceivable value or benefit then existing, belonging or pertaining to it, shall immediately, by act of law and without conveyance or transfer, and without any further act or deed, vested in and become that of the successor bank, which shall have, hold, and enjoy the right, privilege, interest, or asset in its own right as fully and to the same extent as when it was possessed, held, or enjoyed by the predecessor bank; and the successor bank shall be deemed to be a continuation of the entity and identity of the predecessor bank, and all the rights, obligations, and relations of the predecessor bank to or in respect to any person, estate, creditor, depositor, trustee, or beneficiary of any trust and, in respect to any executorship or trusteeship or trust or other fiduciary function, including appointments, designations, and nominations, shall remain unimpaired. The successor bank shall succeed to all such rights, obligations, relations, and trusts including appointments, designations and nominations, and the duties and liabilities connected therewith, and shall execute and perform each and every such trust and relation in the same manner as if the successor bank had itself assumed the trust or relation, including the obligations and liabilities connected therewith. If the predecessor bank be acting as administrator, co-administrator, executor, co-executor, trustee or co-trustee of, or in respect to, any estate or trust being administered under the laws of this state and, to the extent permitted by the laws thereof, the laws of any other state, such relations as well as any other similar fiduciary relations, and all rights, privileges, duties, and obligations connected therewith shall remain unimpaired and shall continue into and in the successor bank, irrespective of the date when any such relation may have been created or established, irrespective of the date of any trust agreement relating thereto or the death of any testator or decedent whose estate is being administered.
(b) Nothing done in connection with the merger or consolidation of such bank shall, in respect to any executorship, trusteeship or similar fiduciary relation, be deemed to be or to effect, under the laws of this state, a renunciation of any letters of administration or letters testamentary pertaining to that relation, or a removal or resignation from any executorship or trusteeship, nor shall such act or any other thing done be deemed to be of the same effect as if the executor or trustee had died or otherwise become incompetent to act.
(c) A pending action or other judicial proceeding to which any of the constituent banks is a party shall not be deemed to have abated or to have discontinued by reason of the merger or consolidation, but may be prosecuted to final judgment, order, or decree in the same manner as if the merger or consolidation had not occurred; or the successor bank may be substituted as a party to any action or proceeding to which the predecessor bank was a party, and any judgment, order, or decree may be rendered for or against the successor bank that might have been rendered for or against the predecessor bank, if the merger or consolidation had not occurred.
(d) After merger or consolidation, a foreclosure of a mortgage begun by any predecessor bank may be completed by the successor bank, and publication begun by the predecessor bank may be continued in the name of the successor bank. Any certificate of possession, affidavit of sale, or foreclosure deed relative to the foreclosure shall be executed by the proper officers in behalf of whichever of the constituent banks actually took possession or made the sale, but any such instrument executed on behalf of the successor bank shall recite that it is the successor of the predecessor bank which commenced the foreclosure.
(e) A new name may be adopted as the name of the successor bank as part of the plan of merger or consolidation, and it shall, without further action, become the name of the successor bank upon the effective date of the merger or consolidation.
(f) The offices and branches of any bank merged or consolidated under the provisions of this chapter may be maintained as branch offices of the successor bank with the written permission of, and under such conditions, if any, as set forth by, the director or his or her designee, whether or not the branch offices shall be in more than one (1) state. ADD}
{ADD 19-7-6. Interstate purchases of assets and assumptions of liabilities. -- ADD} {ADD (a) In addition to any other power granted under the laws of this state, a financial institution may, with the approval of the director or his or her designee, purchase all or part of the assets of, and assume all or part of the liabilities of, and out-of-state bank and operate any office or branch of the out-of-state bank acquired in connection therewith.
(b) An out-of-state bank may, with the approval of the director or his or her designee, purchase substantially all of the assets and assume substantially all of the liabilities of a financial institution and operate any office or branch of the bank acquired in connection therewith; provided, however, that the law of the state in which the out-of-state bank has its principal office;
(1) permits such a purchase of assets, assumption of liabilities, and operation of offices and branches, and
(2) authorizes, under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director or his or her designee, a financial institution to purchase assets, assume liabilities, and operate offices and branches in such state. No out-of-state bank shall apply to the director or his or her designee for approval of such a purchase, assumption, and operation unless the purchase, assumption and operation shall first be approved as follows:
(A) with respect to financial institutions having capital stock, by the board of directors and shareholders thereof pursuant to the applicable provisions of section 7-1.1-72, except that such purchase, assumption, and operation must receive the affirmative vote of two-thirds (2/3) or more of the shareholders entitled to vote thereon;
(B) with respect to a mutual savings bank organized under this title, by a two-thirds (2/3) vote of the board of trustees thereof and a majority vote of the depositors of the mutual savings bank present in person or by proxy, at a meeting called by the board of trustees; and
(C) with respect to each such bank not organized under the laws of this state, in accordance with the applicable provisions imposed by the laws under which it is organized.
(c) Upon the filing of an application to purchase assets and assume liabilities under this section, together with duplicate originals of the agreement of purchase and assumption entered into in connection therewith, the director or his or her designee shall furnish the applicant a form of notice specifying the names of the purchasing financial institution and the selling financial institution and the location of the offices or branches to be acquired and assigning a date and place for public hearing on the application. The applicant shall publish such notice at least once a week for three (3) successive weeks, in one (1) or more newspapers designated by the director or his or her designee. Upon a finding that the public interest so requires, the director or his or her designee may lessen the period and the manner prescribed for giving notice.
In determining whether to approve the application, the director or his or her designee shall consider whether the purchase, assumption, and operation is consistent with the safety and soundness of, and the needs and convenience of the communities served by, each financial institution that is a party to the agreement. The procedures for conducting hearings by the director or his or her designee and the rights of appeal from decisions of the director or his or her designee shall be governed by the applicable provisions of this title. If the director or his or her designee approves the application, he or she shall endorse his or her approval upon each original of the agreement of purchase and assumption and shall deliver the agreement to the applicant. One (1) original of the agreement bearing the director's or his or her designee's approval in writing shall be filed with the director or his or her designee and the other shall be retained by the applicant as evidence of the approval. The applicant shall cause notice of any abandonment of a transaction approved pursuant to this subsection to be filed with the director or his or her designee, and in the event of such abandonment, any approval granted hereunder shall be null and void.
(d) A shareholder of a selling financial institution shall have the right to dissent from the corporate action involved in accordance with the provisions of section 7-1.1-73 and on the terms and conditions set forth in section 7-1.1-74. No shareholder or depositor of a financial institution without capital stock which is a party to an agreement of purchase and assumption shall have any appraisal or dissenting right with respect to such corporate action.
(e) An out-of-state bank that is to be the purchasing bank shall file the following with the director or his or her designee contemporaneously with the filing of any application for approval under this section:
(1) An agreement that it may be served with process in this state in any proceeding for the enforcement of any obligation arising out of its business transacted in this state and any obligation assumed by it; and
(2) An irrevocable appointment of the director as its agent to accept service of process in any proceeding in the courts of this state or the courts of the United States situated in this state.
(f) The offices or branches acquired pursuant to an agreement of purchase and assumption approved by the director or his or her designee may be operated as branch offices of the purchasing bank with the written permission of, and under such conditions, if any, as may be approved by the director or his or her designee, whether or not the branch offices shall be in more than one (1) state. ADD}
{ADD 19-7-7. Powers authorized. -- ADD} {ADD If organized under laws other than the laws of this state, a successor bank or purchasing bank shall have and may exercise within this state the powers and privileges granted to financial institutions. A successor financial institution or purchasing financial institution shall have and may exercise in this state the powers and privileges granted to it under the laws of this state, and, in any state under the laws of which one (1) or more of its predecessor banks was organized or in which it operates a branch, the powers and privileges granted to it under the laws of that state or states. ADD}
{ADD 19-7-8. Special definitions applicable to mergers, etc. -- ADD} {ADD For purposes of this chapter:
(a) the surviving or new bank resulting from a merger or consolidation, as the case may be, shall be called the "successor financial institution" or "successor bank", as applicable;
(b) each bank discontinuing its corporate existence pursuant to a merger or consolidation shall be called a "predecessor financial institution" or "predecessor bank", as applicable;
(c) the bank purchasing assets and assuming liabilities and acquiring offices and branches under an agreement of purchase and assumption shall be called the "purchasing financial institution" or "purchasing bank", as applicable;
(d) the bank selling assets and permitting its liabilities to be assumed and transferring branches and offices under such an agreement shall be called the "selling financial institution" or "selling bank", as applicable;
{ADD 19-7-9. Interstate branches. -- ADD} {ADD Upon obtaining the consent of the director or his or her designee, a financial institution may establish a branch or branches outside of this state and an out-of-state bank may establish a branch or branches within this state, provided that in the case of an out-of-state bank, the law of the state in which it is principally located authorizes under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director or his or her designee, a financial institution to establish a branch in that state. The director or his or her designee shall approve an application for a branch if the applicant has satisfied the standards and followed the procedures set forth for the establishment of branches for financial institutions in addition to the requirements of this section. ADD}
{ADD 19-7-10. Federally chartered institutions. -- ADD} {ADD To the extent it is empowered to do so, this state authorizes banks organized under the laws of the United States which have a main office in Rhode Island to merge or consolidate with and to acquire assets and assume liabilities of out-of-state banks and to have assets and liabilities assumed by out-of-state banks. ADD}
{ADD 19-7-11. Examination of mergers and acquisitions. -- ADD} {ADD The director or his or her designee may make or cause to be made, an examination of each bank in order to fulfill the requirements of this chapter. The total cost of these examinations shall be borne by the bank so examined and shall be governed by the same terms and conditions as the examinations of regulated institutions. In lieu of any such examination, the director or his or her designee may accept the report of an examination made by the equivalent supervisory official of another state, pursuant to the laws of that state. ADD}
{ADD 19-7-12. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable. ADD}
SECTION 46. Title 19 of the General Laws entitled "Financial Institutions" is hereby amended by adding thereto the following chapter:
{ADD CHAPTER 8 ADD}
{ADD DEPOSITORY CHANGE IN CONTROL ACT ADD}
{ADD 19-8-1. Definitions. -- ADD} {ADD For the purposes of this chapter the terms:
For purposes of this chapter regulated institution shall also include a Rhode Island bank holding company. ADD}
{ADD 19-8-2. Application to director or his or her designee. -- ADD} {ADD Any person who, acting directly or indirectly or through or in concert with one (1) or more other persons, shall acquire control of any financial institution through purchase, assignment, transfer, pledge or other disposition of voting stock of a financial institution, shall make application to the director or his or her designee, in the prescribed manner. ADD}
{ADD 19-8-3. Review of application. -- ADD} {ADD Upon receiving such application, the director or his or her designee shall:
(a) Conduct an investigation of the competence, experience, integrity, and financial ability of each person by whom such acquisition is to be made; and
(b) Make an independent determination of the accuracy and completeness of any information prescribed. ADD}
{ADD 19-8-4. Contents of application. -- ADD} {ADD Except as otherwise provided, an application filed pursuant to this section shall contain the following information:
(a) The identity, personal history, business background and experience of each person by whom or on whose behalf the acquisition is to be made, including their material business activities and affiliations during the past five (5) years, and a description of any material pending legal or administrative proceedings in which he or she is a party, and any pending or prior criminal indictment or conviction of such person by a state or federal court.
(b) A statement of the assets and liabilities of each person by whom or on whose behalf the acquisition is to be made, as of the end of the fiscal year for each of the five (5) years immediately preceding the date of the application, together with related statements of income and source and application of funds for each of the fiscal years then concluded, all prepared in accordance with generally accepted accounting principles consistently applied, and an interim statement of the assets and liabilities for each such person, together with related statements of income and source and application of funds, as of a date not more than ninety (90) days prior to the date of the filing of such application.
(c) The terms and conditions of the proposed acquisitions and the manner in which the acquisition is to be made.
(d) The identity, source and amount of the funds or other consideration used or to be used in making the acquisition, and if any part of these funds or other consideration has been or is to be borrowed or otherwise obtained for the purpose of making the acquisition, a description detailing the transaction, the names of the parties, and any arrangements, agreements or understandings with such persons.
(e) Any plans or proposals which any acquiring party making the acquisition may have to liquidate the regulated institution, to sell its assets or merge it with any company or to make any other major change in its business or corporate structure or management.
(f) The identification of any person employed, retained or to be compensated by the acquiring party, or by any person on his or her behalf, to make solicitations or recommendations to stockholders for the purpose of assisting in the acquisition, and a description of the terms of such employment, retainer, or arrangement for compensation.
(g) Copies of all invitations or tenders or advertisements making a tender offer to stockholders for purchase of their stock to be used in connection with the proposed acquisition.
(h) Any additional information in such form as the director or his or her designee may require. ADD}
{ADD 19-8-5. Issuance or denial of application. -- ADD} {ADD The director or his or her designee may disapprove any proposed acquisition if:
(a) The proposed acquisition of control would result in a monopoly or would be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the business of banking;
(b) The effect of the proposed acquisition of control may be substantially to lessen competition or to tend to create a monopoly or would in any other manner be in restraint of trade, and the anticompetitive effects of the proposed acquisition of control are not outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served;
(c) The financial condition of any acquiring person is such as might jeopardize the financial stability of the regulated institution or prejudice the interests of the depositors of the regulated institution;
(d) The competence, experience, or integrity of any acquiring person or of any of the proposed management personnel indicates that it would not be in the interest of the depositors of the regulated institution, or in the interest of the public to permit such person to control the regulated institution;
(e) Any acquiring person neglects, fails or refuses to furnish the information required; or
(f) The acquisition thereof would not promote the public convenience and advantage. ADD}
{ADD 19-8-6. Notice of change in control. -- ADD} {ADD Whenever such a change in control occurs, each regulated institution shall report promptly to the appropriate banking regulator any change or replacement of its chief executive officer or any director occurring in the next twelve (12) month period. Said report shall contain a statement of the past and current business and professional affiliations of the new chief executive officer or directors. ADD}
{ADD 19-8-7. Waiver of application and hearing process in the public interest. -- ADD} {ADD The application process and public hearing requirement may be waived by the director or his or her designee, in writing when, in the public interest, the change in control results from any regulatory action in order to prevent a probable failure or default of the regulated institution. ADD}
{ADD 19-8-8. Rules and regulations. -- ADD} {ADD The director or his or her designee may adopt reasonable rules and regulations for the implementation and administration of the provisions of this chapter. ADD}
{ADD 19-8-9. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable. ADD}
SECTION 47. Title 19 of the General Laws entitled "Financial Institutions" is hereby amended by adding thereto the following chapter:
{ADD CHAPTER 9 ADD}
{ADD COMMUNITY OBLIGATIONS AND BANKING OFFENSES ADD}
{ADD 19-9-1. Definitions. -- ADD} {ADD For purposes of this chapter: ADD} {ADD The term "Lending Institution" shall include regulated institutions, credit unions, banks, trust companies, savings banks, loan and investment companies, and any person which makes loans of money or negotiates the lending of money for another in any state or jurisdiction. ADD}
{ADD 19-9-2. Escrow accounts -- Interest. -- ADD} {ADD (a) Every mortgagee holding funds of a mortgagor in escrow for the payment of taxes and insurance premiums with respect to mortgaged property located in this state shall pay or credit interest on such funds at a rate of not less than four percent (4%) per annum, which interest payment shall be credited annually on December 31. If the mortgage debt is paid prior to December thirty-first in any year, the interest to the date of payment shall be paid to the mortgagor. The provision of this section shall apply only with respect to mortgages on owner-occupied residential property consisting of not more than four (4) living units. The provisions of this section shall not be waived. No mortgagee holding such funds in escrow for the payment of taxes shall also charge an annual "tax service fee" or other such annual fee for ascertaining whether or not such real estate taxes have in fact been paid. Any mortgagee violating the provisions of this section shall be fined not more than one hundred dollars ($100) for each offense. ADD}
{ADD (b) Mortgages insured or guaranteed by the farmers' home loan administration, federal housing administration, or the veterans' administration, or a private mortgage insurer licensed to do business in the state of Rhode Island or made pursuant to the provisions of chapter 55 of title 42 shall be exempt from the requirements of this section. ADD}
{ADD (c) The director or his or her designee shall adopt such regulations as are necessary to carry out the provisions of this section. ADD}
{ADD 19-9-3. Mortgages -- Appraisal fees. -- ADD} {ADD Every lending institution which accepts an application for a mortgage loan which requires the payment of an appraisal fee, shall, prior to the payment of the appraisal fee inform the applicant that if the mortgage is not approved, the appraisal fee may not be refunded to the customer. ADD}
{ADD Every lending institution which accepts an application for a mortgage loan and which, at the applicant's expense, engages a real estate appraiser to conduct an appraisal of the subject real estate shall, upon written request, provide the applicant with a copy of the appraisal. ADD}
{ADD 19-9-4. Credit needs of local communities. -- ADD} {ADD Each regulated institution, as defined herein, to which the Community Reinvestment Act of 1977, United States Public Laws 95-128 [12 U.S.C. sections 2901 to 2905], and as subsequently amended from time to time, applies, shall file with the division of banking, a copy of each report and document which it is required to prepare for or file with one or more federal agencies pursuant to the provisions of that law and the rules and regulations promulgated thereunder. Each regulated institution, as defined herein, to which the Community Reinvestment Act of 1977, United States Public Laws 95-128 [12 U.S.C. sections 2901 to 2905], and as subsequently amended from time to time, does not apply, shall file with the division of banking such reports as it may require, but in substantially the same form as the reports required to be filed pursuant to the Community Reinvestment Act by the regulated institutions to which the act applies. Where a regulated institution has filed such reports or documents with the division of banking an update of the reports or documents shall be required at such time as the regulated institution requests the director or his or her designee to take any action on any application to which the provisions of this title apply. ADD}
{ADD (a) When taking any action on an application made by a regulated institution under this title, the director or his or her designee shall take into account, among other factors, an assessment, in writing, of the record of performance of the regulated institution in helping to meet the credit needs of its entire community, consistent with safe and sound operation of the regulated institution and an assessment of the economic impact of the matter which is the subject of the application. The assessment and any written communications from the division of banking to a regulated institution relating to the assessment shall be made available to the public upon request. In making the assessment, the director or his or her designee shall review all reports and documents filed with the division of banking pursuant to this section and any signed, written comments received by it or the division of banking which specifically relate to the regulated institution's performance in helping to meet the credit needs of its community. In addition, the director or his or her designee shall consider the following factors in assessing a regulated institution's record of performance: ADD}
{ADD (1) The most recent public Community Reinvestment Act rating by the applicable federal banking regulatory agency; ADD}
{ADD (2) Any practices intended to discourage application for types of credit set forth in the regulated institution's Community Reinvestment Act statement(s); ADD}
{ADD (3) The geographic distribution of the regulated institution's credit extensions, credit applications, and credit denials; ADD}
{ADD (4) Evidence of prohibited discriminatory or other illegal credit practices; ADD}
{ADD (5) The regulated institution's participation, including investments, in local community development and redevelopment projects or programs; ADD}
{ADD (6) The regulated institution's origination of residential mortgage loans, housing rehabilitation loans, home improvement loans and small business or small farm loans within its community or the purchase of such loans originated in its community; ADD}
{ADD (7) The regulated institution's participation in governmental-insured, guaranteed, or subsidized loan programs for housing, small businesses, or small farms; ADD}
{ADD (8) The effect of the matter which is the subject of the application upon the economy of the neighborhood, city or town, region, or state, including number of and types of jobs and tax base; ADD}
{ADD (9) Other factors that, in the judgment of the director or his or her designee, reasonably bear upon the extent to which a regulated institution is helping to meet the credit needs and economy of the entire community. ADD}
{ADD (b) In assessing the record of performance of a regulated institution pursuant to the provision of subdivision (a), the director or his or her designee may, where he or she deems it appropriate, if not otherwise required by law, provide for public hearing when an objection to the regulated institution's application has been submitted. ADD}
{ADD (c) An assessment of a regulated institution's record of performance under subdivision (a) may be the basis for denying an application under the provisions of this section. ADD}
{ADD (d) When taking an action pursuant to subdivision (a), the director or his or her designee shall request from the applicant regulated institution and from the appropriate federal bank regulatory authorities any documents other than those required to be filed with the division of banking by this section or by other applicable statutes or regulations. ADD}
{ADD (e) Notwithstanding any other provision of this title of the general laws or any other law of the state of Rhode Island to the contrary, the term "Regulated Institution" shall not include credit unions not open to the general public through its own by-laws. ADD}
{ADD The director or his or her designee is hereby authorized and empowered to promulgate rules and regulations effectuating the provisions of this section. ADD}
{ADD 19-9-5. Mortgagor to be offered title insurance. -- ADD} {ADD Every lending institution which accepts an application for a mortgage loan on property located in this state and which engages a title attorney to search the title of the subject real estate shall require the attorney to offer to the prospective mortgagor, at the usual premium rate, an owner's policy title for the real estate. In the event the prospective mortgagor does not wish to purchase this title insurance, then the prospective mortgagor shall have the right to reject the offer of title insurance, provided the rejection is in writing and signed. ADD}
{ADD 19-9-6. Lending Institutions -- Title attorney. -- ADD} {ADD Every lending institution which accepts an application for any residential mortgage loan or any commercial mortgage loan and which requires that a title attorney search the title of the subject real estate or which requires a policy of title insurance shall permit the prospective mortgagor to select a qualified title attorney or title insurance company of his, her or its own choice to search the title of the subject real estate and to furnish such title insurance. Provided, further, that the lending institution shall not unreasonably disapprove a title insurance policy provided or paid for directly or indirectly by a borrower. Such disapproval shall be deemed unreasonable if it is not based solely on reasonable standards uniformly applied, relating only to the extent of coverage required or the financial soundness of an insurer. Such standards shall not discriminate against any particular insurer, nor shall such standards call for the disapproval of an insurance policy because such policy contained coverage in addition to that required. Acceptance of a title insurance company's policy by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, shall be conclusive proof that said title insurance company meets the reasonable standards required by this section whether or not the borrower is applying for a residential or a commercial mortgage loan. ADD}
{ADD In the event the prospective mortgagor does not select a qualified title attorney or title insurance company, then the prospective mortgagor shall sign a waiver permitting the lending institution to select an attorney. If any lending institution violates this section, any aggrieved party may file a complaint in the superior court of the county in which the aggrieved party shall dwell or has his, her or its principal place of business, or Providence county, if the superior court at such aforesaid county shall not be in session, or if such party is a nonresident or has no principal place of business in this state, of such other county as may be agreed upon by the parties to such petition, and serve upon such lending institution a petition for an order of such court for the enforcement of this section, and such petition may request and such court shall have jurisdiction to grant after notice and hearing, an order: ADD}
{ADD (a) Granting injunctive relief to restrain the lending institution from engaging in the alleged or suspected violation; ADD}
{ADD (b) Awarding reasonable attorney's fees, costs and expenses of the action; ADD}
{ADD (c) Granting such other relief as may be required, until the person or lending institution complies with the requirements of this section. ADD}
{ADD 19-9-7. Attorney's opinions. -- ADD} {ADD (a) Except as provided in subsection (b) through (d), no lending institution making a loan in this state or any attorney, agent or representative for such lending institution shall directly or indirectly, as a condition of the making of a loan or advance, require any attorney representing a borrower in such loan transaction to give an opinion in relation to the validity, binding effect, or enforceability of any of the loan documents or the availability of remedies thereunder. ADD}
{ADD (b) Subsection (a) shall not apply to any transaction in which the state, or any municipality in the state, or any department, agency, authority, or instrumentality of the state is the borrower. ADD}
{ADD (c)Subsection (a) shall not apply to transactions involving the public sale or underwriting of bonds, debentures, or other securities. ADD}
{ADD (d) Subsection (a) shall not prohibit, as part of a loan transaction, any requirement or condition with respect to opinions dealing with the authority and status of a borrower and matters relating to collateral. ADD}
{ADD (e) No opinion obtained in violation of this section may be relied on for any purpose, and no such opinion shall give rise to or form the basis for any action against any attorney or firm rendering such opinion. Any leading institution, and any attorney, agent or representative of any lending institution knowingly violating this section shall be subject to such action as may be lawfully imposed by the regulatory authority or court which has licensing or disciplinary authority over the lending institution, attorney or other individual in question. ADD}
{ADD 19-9-8. Lending Institutions -- Negative amortization loans. -- ADD} {ADD Notwithstanding the provisions of any other laws, any person doing business under and as permitted by any law of this state or of the United States relating to lending institutions is authorized in connection with the making of any loan to contract for the accrual of interest, at a rate of interest equal to or less than the note or contractual rate of interest, on unpaid interest accruing during previous billing or payment periods. Accrued and unpaid interest which is thus added to the principal balance of the loan for the purposes of further interest accrual shall for the purposes of chapter 26 of title 6 be deemed to constitute additional net proceeds or additional principal of the loan, but shall for all other purposes and all other laws constitute interest on the original loan. ADD}
{ADD 19-9-9. Mortgages issued -- Payoffs. -- ADD} {ADD Every lending institution or other entity which owns or services a loan, secured by a mortgage on property located in this state shall: ADD}
{ADD (a) Provide to the obligor within five (5) business days after receipt of a written request the exact payoff due the lender on the loan; ADD}
{ADD (b) Permit the payoff to be made to it or, in the case of a mortgage owned or serviced by its subsidiary or affiliate or servicing agent, permit the payoff to be made at the subsidiary's or affiliate's principal place of business located in this state; ADD}
{ADD (c) Accept as final interest due the lender on any such payoff the interest calculated as of the business day full payment is made to the lending institution or servicing agent; and ADD}
{ADD (d) Issue, or provide, to the mortgagor or his or her agent or real estate closing officer a discharge of the mortgage securing the loan within thirty (30) days after full payment of the payoff and final interest by separate instrument of release of the mortgage or as provided in section 34-26-3. ADD}
{ADD 19-9-10. Disbursement requirements -- Purchase money loans -- Dwellings. -- ADD} {ADD Any lending institution providing a purchase money first mortgage loan on a property within this state containing less than four (4) living units shall make disbursement of the loan proceeds on or before the date upon which the conveyance and/or mortgage documents are to be recorded. The disbursement shall be in the form of cash, wired funds, government check, cashier's check or other immediately available funds. The disbursement shall be made to the agent responsible for settlement. Should the disbursement not be made as provided in this section, no interest shall be charged for the first thirty (30) days following the closing date. ADD}
{ADD 19-9-11. Control of deposits by minors. -- ADD} {ADD Every person not under guardianship, who may make a deposit personally in any regulated institution may control, transfer, or withdraw the money so deposited, and the dividends or interest that have accrued or may accrue thereon, notwithstanding that person, at the time of exercising such control or of making the transfer or withdrawal, may be a minor. ADD}
{ADD 19-9-12. Trust deposits -- Death of trustee. -- ADD} {ADD If a deposit is made with any regulated institution by one person in trust for another, the name and residence of the person for whom it is made shall be disclosed, and it shall be credited to the depositor as trustee for that person; and if no other notice of the existence and terms of a trust has been given in writing to the regulated institution, the deposit, with the interest thereon, may, in case of the death of the trustee, be paid to the person for whom the deposit was made or to that person's legal representative. ADD}
{ADD 19-9-13. Checks of trustees. -- ADD} {ADD When a deposit is made in a regulated institution in the name of two (2) or more persons as trustees and a check is drawn upon the trust account by any trustee or trustees authorized by the other trustee or trustees to draw checks upon the trust account, neither the payee nor other holder nor the bank is bound to inquire whether it is a breach of trust to authorize the trustee or trustees to draw checks upon the trust account, and the payee or other holder or the regulated institution is not liable unless the circumstance be such that the action of the payee or other holder or the regulated institution amounts to bad faith. ADD}
{ADD 19-9-14. Deposits payable to survivor. -- ADD} {ADD When a deposit has been or shall be made in any regulated institution in the name of two (2) persons and payable to either or to the survivor, such deposit, or any part thereof, or any interest or dividend thereon, may be paid to either of those persons, whether the other be living or not, or to the guardian, executor, or administrator of the survivor, and the receipt of the person so paid shall be valid and sufficient release and discharge on account of the payment so made. ADD}
{ADD 19-9-15. Pledge of passbook accounts. -- ADD} {ADD Any deposit evidenced by a passbook in a regulated institution may be pledged by delivery of the passbook to the pledgee, with an order for its transfer; but no such pledge shall be effective to secure the deposit against any person other than the pledgor or his or her executor or administrator, unless an actual transfer of the deposit shall have been made upon the books of the regulated institution or the order for the transfer shall have been disclosed to , and a copy filed with, the regulated institution holding such deposit. ADD}
{ADD 19-9-16. Replacement of lost or destroyed passbook. -- ADD} {ADD When any person to whom a passbook, share certificate, membership certificate, stock certificate, deposit certificate, or other form of investment contract has been issued by any regulated institution, or by any insured-deposit-taking-institution duly organized under the laws of the United States, states in writing, under oath, to the regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States, which issued such book, certificate, or other form of investment contract, that the book, certificate, or other form of investment contract has not been hypothecated, but has been lost or destroyed, and shall make written application for the issue of a duplicate book, certificate, or other form of investment contract and of the written application, by advertising in a newspaper published in or nearest to, or of general circulation in, the city or town where the regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States is located, or if the book, certificate, or other form of investment contract has been issued by a branch of the regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States is located, then in a newspaper published in or nearest to, or of general circulation in, the city or town where such branch is located, and if the book, certificate, or other form of investment contract shall not be presented to the regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States, which issued it, and the existence of the passbook, certificate, or other form of investment contract shall not have been made known to the regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States within fifteen (15) days after the date of the advertisement, the regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States, may upon proof that public notice by advertisement has been given, issue a duplicate book, certificate, or other form of investment contract therefor, and upon such delivery, the regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States, shall be discharged from all liability on account of the issue of the original book, certificate, or other form of investment contract. References in this section to an issuing regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States shall be taken to include any successor regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States. ADD}
{ADD 19-9-17. Charge-free savings accounts for minors. -- ADD} {ADD Every regulated institution shall provide for charge-free savings accounts to persons aged seventeen (17) years or less; provided, however, that the provisions of this section shall not apply to those accounts having a balance of five hundred dollars ($500) or more. ADD}
{ADD 19-9-18. Depositor identification. -- ADD} {ADD All regulated institutions shall, unless they have reason to doubt the validity of the identification, accept as sufficient identification for the cashing of checks and other banking transactions, involving municipal, state, or federal funds in amounts less than seven hundred and fifty dollars ($750), duly authorized Rhode Island identification cards issued pursuant to the provision of section 3-8-6(b) or the picture identification card issued by the department of elderly affairs or an operators or chauffeur's license issued pursuant to chapter 10 of title 31. ADD}
{ADD 19-9-19. Checks on consumer deposit accounts to show date account was opened. -- ADD} {ADD All checks, drafts, or similar negotiable or nonnegotiable instruments or orders of withdrawal which are drawn against funds held by a regulated institution, as defined in this title, in a consumer deposit account opened after December 31, 1985, shall clearly display on the face thereof the month and year in which the account was opened. This section does not apply to temporary checks, drafts, or similar negotiable or nonnegotiable instruments or orders of withdrawal. ADD}
{ADD For purposes of this section the term "consumer deposit account" shall mean a demand or other similar deposit account established and maintained by a natural person with a regulated institution and operated primarily for personal, family, or household purposes. ADD}
{ADD No liability or penalty shall be imposed on any depositor, regulated institution, or printer for an unintentional failure to comply with this section. ADD}
{ADD 19-9-20. Withdrawal from time deposit accounts. -- ADD} {ADD Except as required by federal law, no regulated institution or other insured-deposit-taking institutions duly organized under the laws of the United States shall assess any penalty for early withdrawal from any time deposit account if the owner of the account has died or been declared mentally incompetent by a court of competent jurisdiction. ADD}
{ADD 19-9-21. Passbook savings accounts -- Service charge prohibited. -- ADD} {ADD It shall be unlawful for any regulated institution or other insured-deposit-taking-institution duly organized under the laws of the United States, to charge any service charge whatsoever for the holding of passbook savings deposits or accounts. ADD}
{ADD 19-9-22. Violations by officers and employees. -- ADD} {ADD Every president, director, officer, trustee, cashier, treasurer, teller, clerk, employee or agent of any regulated institution or other depository, who, without authority of the directors or trustees, issues or puts forth any certificate of deposit, draws any order or bill of exchange, makes any acceptance, assigns any note, bond, draft, bill of exchange, mortgage, judgment, or decree, or who makes any false entry in any book, report, or statement of the regulated institution or other depository, with intent in either case to injure or defraud the regulated institution or other depository, or any company, corporation, or person, or to deceive any officer of the regulated institution or other depository, the director of business regulation, or any agent appointed by the director to examine the affairs of that regulated institution or other depository; and any person who with like intent aids or abets any officer, clerk or agent in violation of this section, upon conviction thereof, shall be fined not exceeding fifty thousand dollars ($50,000) or be imprisoned not to exceed twenty (20) years or both. ADD}
{ADD 19-9-23. Theft, embezzlement or misapplication by regulated institution, lending, credit and insurance officer or employee. -- ADD} {ADD Every president, director, officer, trustee, cashier, treasurer, teller, clerk, or agent of any regulated institution, insurance company, or other depository, who embezzles, abstracts, purloins or willfully misapplies any of the moneys, funds or credits entrusted to the custody or care of such regulated institution, insurance company or other depository, and any person who with like intent aids or abets any officer, clerk or agent in violation of this section, upon conviction thereof, shall be fined not exceeding two hundred fifty thousand dollars ($250,000), or be imprisoned not to exceed twenty (20) years, or both. ADD}
{ADD 19-9-24. Fraudulent checks -- Small amounts. -- ADD} {ADD Any person who shall purchase any goods, materials or services, make payment for that purchase by check, draft, or order for payment of money, and take possession of the goods or materials, or have the benefit of the service, and who subsequently orders payment stopped on the check, draft, or order for payment, or who with intent to defraud, shall make, draw, utter, or deliver any check, draft, or order for the payment of money, in an amount not exceeding one thousand dollars ($1,000), upon any regulated institution or other depository, knowing at the time of such making, drawing, uttering, or delivering that the maker or drawer has not sufficient funds in, or credit with, that regulated institution or other depository for the payment of that check, draft, or order, in full, upon its presentation, shall, upon conviction thereof, be fined not more than five hundred dollars ($500) or be imprisoned not exceeding one (1) year, or may be subjected to both such fine and imprisonment. Provided, however, with regard to the purchase of any goods or materials it shall not be in violation of this section if goods or materials shall be returned to the vendor within three (3) business days of the filing of the stop payment order. The word "credit" as used herein shall be construed to mean an arrangement or understanding with the regulated institution or other depository for the payment of such check, draft, or order. Any person violating any of these provisions may be prosecuted and proceeded against in any judicial district or in any county in which the offense was committed, or in which the check, draft, or order was uttered or delivered. ADD}
{ADD 19-9-25. Fradulent checks -- Large amounts. -- ADD} {ADD Any person who shall purchase any goods, materials or services, make payment for that purchase by check, draft, or order for payment of money, and take possession of the item, and who subsequently orders payment stopped on the check, draft, or order for payment, or who with intent to defraud, shall make, draw, utter, or deliver any check, draft, or order for the payment of money, in an amount exceeding one thousand dollars ($1,000), upon any regulated institution or other depository, knowing at the time of such making, drawing, uttering, or delivering that the maker or drawer has not sufficient funds in, or credit with, that regulated institution or other depository for the payment of the check, draft, or order, in full, upon its presentation, shall, upon conviction thereof, be fined not more than two thousand dollars ($2,000) or be imprisoned not exceeding two (2) years, or may be subjected to both such fine and imprisonment. Provided, however, with regard to the purchase of any goods or materials it shall not be in violation of this section if goods or materials shall be returned to the vendor within three (3) business days of the filing of stop payment order. The word "credit" as used herein shall be construed to mean an arrangement or understanding with the regulated institution or other depository for the payment of such check, draft, or order. Any person violating any of these provisions may be prosecuted and proceeded against in any judicial district or in any county in which the offense was committed, or in which the check, draft, or order was uttered or delivered. ADD}
{ADD 19-9-26. Prima facie evidence of intent to defraud -- Prosecutions. -- ADD} {ADD As against the maker or drawer thereof, the making, drawing, uttering, or delivering of a check, draft, or order for the payment of money upon any regulated institution or other depository, payment of which is refused by the drawee for the reason that the maker or drawer has not sufficient funds in, or credit with, such regulated institution or other depository for the payment of such check, draft, or order in full upon its presentation, or for the reason that the maker or drawer has stopped payment on a check, draft, or order for the payment of money for the purchase of any goods, materials or service, shall be prima facie evidence of intent to defraud within the meaning of sections 19-9-24 and 19-9-25; provided, that these shall not be prima facie evidence of intent to defraud within the meaning hereof if the maker or drawer shall pay the check, draft or order, or deposit and leave with the drawee for its payment the amount due thereon within seven (7) days after he or she receives written notice from the payee by certified mail, return receipt requested, at the last address of the maker or drawer which is available in the records of the payee. If said check, draft, or order has not been paid within seven (7) business days after the maker or drawer receives written notice by certified mail, return receipt requested, or if there is a return of such notice undelivered and the payee presents an affidavit containing facts within his or her own knowledge that the maker or drawer was not residing at the last address available in the records of the payee, the payee shall forthwith notify the prosecuting officer of the city or town where the check, draft, or order was written of that fact, and the prosecuting officer shall prosecute all violations of sections 19-9-24, 19-9-25, and 19-9-26 within ten (10) business days of such notice. ADD}
{ADD 19-9-27. Check kiting. -- ADD} {ADD (a) Notwithstanding the provisions of section 19-9-24 or section 19-9-25, any person, natural or otherwise, who shall utilize any scheme, device or artifice, commonly known as a check kite or check kiting, for purposes of defrauding any regulated institution or other depository, any vendor of goods, materials or services, or for the purpose of deception of any investor, potential investor or purchaser as to the financial condition or status of such person, in an amount not exceeding one thousand dollars ($1,000) shall be fined not exceeding five hundred dollars ($500) or imprisoned not exceeding one year, or both.
(b) Notwithstanding the provisions of section 19-9-24 or section 19-9-25, any person, natural or otherwise, who shall utilize any scheme, device or artifice, commonly known as a check kite or check kiting, for purposes of defrauding any regulated institution or other depository or any vendor of goods, materials or services, or for the purposes of deception of any investor, potential investor or purchaser as to the financial condition or status of such person in an amount exceeding one thousand dollars ($1,000), shall be fined not exceeding ten thousand dollars ($10,000) or imprisoned not exceeding ten (10) years, or both.
(c) For purposes of this section, a check kite or check kiting shall mean the practice of taking advantage of the time that elapses between the deposit or negotiation of a check, draft or other negotiable instrument in one regulated institution or other depository and its collection or presentment in another regulated institution or other depository with the intent to defraud. ADD}
{ADD 19-9-28. False statement to obtain loan. -- ADD} {ADD Any person who knowingly makes a false statement to any regulated institution, licensee or other depository, respecting the financial condition of any person, firm, or corporation, for the purpose of obtaining a loan from such regulated institution, licensee or other depository, whether for that person's own use or for the use of any other person, firm, or corporation, shall be punished by imprisonment for not less than six (6) months nor more than five (5) years. ADD}
{ADD 19-9-29. Bank fraud. -- ADD} {ADD Any person who knowingly makes a false statement to any regulated institution or other depository, or who knowingly executes, or attempts to execute, a scheme or artifice to defraud, or willingly overvalues any land, property or security, for the purpose of influencing in any way the action of such regulated institution or other depository, whether for that person's own use or for the use of any other person, firm, or corporation, in violation of this section, upon conviction thereof, shall be fined not exceeding two hundred fifty thousand dollars ($250,000), or be imprisoned not to exceed fifteen (15) years, or both. For the purposes of this section, the term "scheme or artifice to defraud" includes a scheme or artifice to deprive another of the intangible right of honest services. ADD}
{ADD 19-9-30. Injunctions against fraud. -- ADD} {ADD (a) The attorney general of the state of Rhode Island is hereby empowered to bring an action in the name of the state in any court of competent jurisdiction for restraining orders and injunctive relief to restrain and enjoin violations or threatened violation of the provisions of sections 19-9-23 and 19-9-29.
(b) If any person, firm, corporation or other legal entity is alienating or disposing of property, or intends to alienate or dispose of property, obtained as a result of a violation of section(s) 19-9-23 and/or 19-9-29 or property which is traceable to such violation the attorney general may commence a civil action in any court of competent jurisdiction:
(1) To enjoin such alienation or disposition of property; or
(2) For a restraining order to:
(i) Prohibit any person from withdrawing, transferring, removing, dissipating, or disposing of any such property or property of equivalent value; and
(ii) Appoint a temporary receiver to administer such restraining order.
(c) A permanent or temporary injunction or restraining order shall be granted without bond. The court shall proceed as soon as practicable to the hearing and determination of such an action, and may, at any time before final determination, enter such a restraining order or prohibition, or take such other action, as is warranted to prevent a continuing and substantial injury to the state or to any person or class or persons for whose protection the action is brought. ADD}
{ADD 19-9-31. False rumors as to condition of regulated institution. -- ADD}
{ADD Every person who shall willfully or maliciously instigate, make, circulate, or transmit to another or others any statement, untrue in fact, derogatory to the financial condition or affecting the solvency or financial standing of any regulated institution or other insured deposit-taking institution duly organized under the laws of the United States doing business in this state, or who shall counsel, aid, procure, or induce another to start, transmit, or circulate any such statement or rumor, shall, upon conviction thereof, be punished by imprisonment for a term not exceeding one year or by a fine not exceeding five hundred dollars ($500), or by both such fine and imprisonment. ADD}{ADD 19-9-33. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable. ADD}
SECTION 48. Title 19 of the General Laws entitled "Financial Institutions" is hereby amended by adding thereto the following chapter:
{ADD CHAPTER 10 ADD}
{ADD VOLUNTARY LIQUIDATION ADD}
{ADD 19-10-1. Power to liquidate -- Appointment of agent. -- ADD} {ADD Any financial institution or credit union, being in a solvent condition, may, subject to the approval of the director or his or her designee, liquidate and be closed by a vote of its stockholders owning two-thirds (2/3) of its capital stock or in the case of a mutually owned savings bank, two-thirds (2/3) of its depositors or in the case of credit unions, two thirds (2/3) of its members. For the purpose of closing the affairs of any financial institution or credit union, the directors shall submit a plan of liquidation to the director or his or her designee for approval. ADD}
{ADD 19-10-2. Notice of liquidation. -- ADD} {ADD Whenever a vote is taken to go into liquidation, it shall be the duty of the board of directors or trustees to cause notice of this fact to be certified, under the seal of the financial institution or credit union by its president, cashier, or treasurer, to the director or his or her designee. If the director or his or her designee approves of the act of the financial institution or credit union, he or she shall certify such decision upon the certificate setting forth the vote of the financial institution or credit union. The financial institution or credit union shall then publish a notice setting forth the vote and notifying creditors to present their claims against the financial institution or credit union for payment, which notice shall be published once each week for eight (8) successive weeks in a newspaper of general circulation in which the financial institution or credit union is located. ADD}
{ADD 19-10-3. Application of receivership provisions -- Powers of court. -- ADD} {ADD During the period of the liquidation, the financial institution or credit union shall be subject to the same provisions provided in this title for the regulation of such financial institutions or credit unions in the hands of receivers. Nothing in this chapter shall be construed to abridge the jurisdiction of the superior court sitting in equity over the financial institution or credit union. ADD}
{ADD 19-10-4. Delivery of unclaimed funds and property to general treasurer. -- ADD} {ADD Whenever the final dividend in liquidation shall be declared by any receiver or officer or agent of any financial institution or credit union, now or hereafter in the hands of a receiver or officer or agent for purposes of liquidation, and two (2) years shall elapse from the time of the commencement of payment of that dividend, or whenever no dividend has been declared by the receiver of any insolvent financial institution or credit union within three (3) years of the commencement of receivership, it shall be lawful for any receiver or officer or agent, at any time thereafter, upon the allowance of his or her account by the superior court, or in the case of voluntary liquidation upon such allowance by the financial institution or credit union, and upon the order of the court or the financial institution or credit union to pay over all the funds of the financial institution or credit union remaining in his or her hands, whether arising from unclaimed dividends or otherwise, to the general treasurer of this state, to be deposited in the general treasury and to deliver all the remaining property of the financial institution or credit union to the general treasurer, upon his or her receipt for it and upon payment and delivery, the powers, obligations, duties, and liabilities of the receiver or officer or agent shall terminate. ADD}
{ADD 19-10-5. Advertisement and payment of unclaimed funds. -- ADD} {ADD It shall be the duty of the receiver or officer or agent at the time of payment to deliver to the general treasurer a list of the unclaimed deposits and dividends in the financial institution or credit union, with the names of the parties entitled to the deposits and dividends, as shown by the books of the financial institution or credit union. Any person claiming any such dividend shall be entitled to payment of any money in the general treasury not otherwise appropriated on producing evidence satisfactory to the general treasurer of the validity of his or her claim. The state controller is hereby authorized and directed to draw his or her order or orders on the general treasurer in favor of the claimant on the presentation of the proper vouchers. It shall be the duty of the general treasurer to advertise each year, during the period of three (3) years from and after receiving the funds of the financial institution or credit union, a list of the unclaimed dividends in any such financial institution or credit union and of the persons supposed to be entitled thereto once a week at least, for three (3) successive weeks, in one or more of the public newspapers published in the city or town in which the financial institution or credit union is located. ADD}
{ADD 19-10-6. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable. ADD}
SECTION 49. Title 19 of the General Laws entitled "Financial Institutions" is hereby amended by adding thereto the following chapter:
{ADD CHAPTER 11 ADD}
{ADD CONSERVATORSHIP ADD}
{ADD 19-11-1. Appointment of conservator on application by stockholders or directors. -- ADD} {ADD Whenever any financial institution or credit union shall petition the director for the appointment of a conservator of its property, assets, and affairs for the benefit of its depositors and other creditors, and in order to provide opportunity for a reorganization of its affairs, the director may and is authorized and empowered to appoint himself or herself or a deputy a conservator of that financial institution or credit union, the petition in each such case to be made in pursuance of a vote therefor adopted by a majority of the board of directors or under the same conditions which could allow the director to petition the court for the appointment of a receiver. ADD}
{ADD 19-11-2. Removal of conservator -- Vacancies. -- ADD} {ADD In the case the director, at any time, shall deem it for the best interest of any financial institution or credit union or its creditors that any such conservator shall be removed from office, the director may so order and may appoint a successor to that office. ADD}
{ADD 19-11-3. Employment of assistance by conservator. -- ADD} {ADD Each conservator, with the approval of the director, may engage legal counsel and procure such other expert assistance and advice as the conservator considers necessary or desirable in the administration of the affairs of the financial institution or credit union, and with like approval may engage the employees and retain such of the officers and employees of the financial institution or credit union as he or she deems necessary or desirable. ADD}
{ADD 19-11-4. Possession and management of property -- Notice to debtors and persons in possession. -- ADD} {ADD Each conservator, immediately after appointment and qualification, shall take and have possession and management of the property and business of the financial institution or credit union and thereafter shall take such action in the name and behalf of the financial institution or credit union as may be necessary or desirable to carry on its business and to conserve its assets pending reorganization or the disposition of the assets as provided by law, all under the direction and control of the director or his or her designee. ADD}
{ADD Immediately after taking possession of the property and business of any such financial institution or credit union, the conservator shall give notice in writing of his or her taking possession to all persons holding or having possession of any assets of the financial institution or credit union and to all persons indebted to such financial institution or credit union; and no financial institution, federally chartered institution, credit union, federal credit union, association, firm or individual, having been notified of the appointment of the conservator or otherwise having knowledge of his or her appointment, shall have or acquire any lien or charge upon or against any of the property of the financial institution or credit union for any payment, advance, or clearance or any obligation thereafter made or incurred. ADD}
{ADD 19-11-5. Creditors' rights as in receivership. -- ADD} {ADD During the time that any conservator remains in charge of the property and affairs of any financial institution or credit union in accordance with the provisions of this chapter, the rights of creditors and all other parties in respect to bringing and prosecuting suits and proceedings against the financial institution or credit union and the conservator shall, except as otherwise provided in this chapter, be the same as if the conservator was a receiver of the property and affairs of that financial institution or credit union duly appointed and qualified in and by appropriate judicial proceedings instituted for that purpose. ADD}
{ADD 19-11-6. Collection of assets -- Continuation of business -- General powers of conservator. -- ADD} {ADD Each conservator, upon such terms and conditions and in accordance with such orders, rules and regulations, general and special, as may be prescribed from time to time by the director or his or her designee, shall, so far as possible, collect all moneys and other assets due and payable to the financial institution or credit union and do all acts necessary to continue its business and to conserve its assets, and may sell or compound bad or doubtful claims and demands due to the financial institution or credit union and with the written authorization of the director or his or her designee, may at any time, in the name and upon the credit of the financial institution or credit union, borrow money for any purpose and pledge and deliver to the lender the whole or any part of the property and assets of the financial institution or credit union as security for the repayment of any loan, and may sell all or any part of the real and personal property and other assets of the financial institution or credit union, and in the name of the financial institution or credit union may take mortgages on real property from purchasers to secure the whole or part of the purchase price and may prosecute and defend suits and other proceedings at law and in equity to which the financial institution or credit union is a party, and execute, acknowledge, and deliver deeds, assignments, mortgages, releases, promissory notes, and other instruments which the conservator may consider necessary, proper, and desirable to effectuate any sales, pledges, or mortgages of real or personal property and any obligation to repay loans any compromise and any other transaction which may be performed or entered into by the conservator under the powers and authority which may be conferred upon him or her. All deeds and other instruments, so executed and delivered, shall be valid and effectual for all purposes to the same extent and with the same effect as if executed by officers of the financial institution or credit union by authority of its board of directors or stockholders. ADD}
{ADD In addition to all powers and authority and duties specifically mentioned and provided in this chapter, each conservator shall have and exercise all such powers and authority and perform such duties as the director, by either general or special orders, shall prescribe. ADD}
{ADD 19-11-7. Penalties and liabilities. -- ADD} {ADD The conservator and his or her assistants shall be subject to the same penalties and liabilities to which they respectively would be liable if the conservator were the receiver of a financial institution or credit union appointed in judicial proceedings in this state, including penalties and liabilities now established and which may be established by law. The conservator's liability shall be limited to the assets of the financial institution or credit union except for fraud or malpractice by the conservator. ADD}
{ADD 19-11-8. Withdrawal of deposits and claims. -- ADD} {ADD During the period of the continuance of any conservatorship provided for, the director or his or her designee may require the conservator to set aside and make available for withdrawal, and permit withdrawal by depositors and other creditors, such amounts or proportions of their respective deposits or claims as the director or his or her designee may order and direct. The director or his or her designee may authorize the conservator in any case to receive and permit withdrawals of new deposits, subject to such rules, regulations, limitations, and dispositions as the director or his or her designee shall prescribe. ADD}
{ADD 19-11-9. Rules as to new deposits. -- ADD} {ADD Whenever the period of any such conservatorship shall have been terminated and the financial institution or credit union permitted to resume business in accordance with the provisions of this chapter, or whenever a receiver shall have been appointed of the property of the financial institution or credit union in accordance with law, the new deposits which theretofore may have been received shall be disposed of or held for the persons entitled to them in such manner as the director or his or her designee shall prescribe, unless and except as the persons entitled to such deposits respectively shall have withdrawn the deposits within fifteen (15) days after the conservator shall have given written notice to them of the opportunity to withdraw the same. The conservator shall give such notice and opportunity at such a time and in such a manner as the director or his or her designee shall prescribe. ADD}
{ADD 19-11-10. Payment of expense of conservatorship. -- ADD} {ADD The compensation of the conservator and of legal counsel, assistants, and other employees of the conservator and all other expenses incident to each conservatorship, including costs and expenses incurred by the director or his or her designee in relation thereto, shall be fixed by the director or his or her designee and paid from and out of the assets of the financial institution or credit union. ADD}
{ADD 19-11-11. Termination of conservatorship. -- ADD} {ADD If the director or his or her designee shall at any time be satisfied that the further continuance of any conservatorship is no longer necessary or desirable, he or she may terminate the conservatorship and direct the conservator to surrender possession of all property then in his or her possession to the financial institution or credit union, and permit it to resume business, all upon the terms, conditions, restrictions, and limitations as the director or his or her designee may prescribe. ADD}
{ADD 19-11-12. Superseding receivership. -- ADD} {ADD Nothing in this chapter, and no appointment of a conservator under this chapter, and no continuance of any such conservatorship, shall abridge or affect or be so construed as to abridge or affect the right, power, and authority of the director or his or her designee at any time to institute proceedings in accordance with law for the appointment of a receiver of any financial institution or credit union, or of the judicial authority to make appointment of a receiver upon request of the director or his or her designee, and if a receiver shall be appointed in any such proceeding, the conservator, whenever the receiver shall have been duly appointed and qualified, shall immediately transfer and deliver to the receiver all property, books, and documents of all kinds then belonging to the financial institution or credit union. ADD}
{ADD 19-11-13. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable. ADD}
SECTION 50. Title 19 of the General Laws entitled "Financial Institutions" is hereby amended by adding thereto the following chapter:
{ADD CHAPTER 12 ADD}
{ADD RECEIVERSHIP ADD}
{ADD 19-12-1. Application for receivership. -- ADD} {ADD If, upon examination, any financial institution or credit union, whether or not such financial institution or credit union has invoked the conservatorship provisions of this title or the voluntary liquidation provisions of this title, appears to be insolvent by reason of:
(a) Such financial institution's or credit union's financial condition is such that the sum of such financial institution's or credit union's debts are greater than all of such financial institution's or credit union's property at a fair valuation, exclusive of property transferred, concealed, or removed with intent to hinder, delay or defraud such financial institution's or credit union's creditors or because it is generally not paying or is unable to pay its debts as they become due; or
(b) Such financial institution's or credit union's condition is such as to render the continuance of its business hazardous to the public or to those having funds in its custody; or
(c) Such financial institution or credit union has failed to maintain adequate deposit insurance as required by this title; or
(d) Such financial institution or credit union has failed to remedy unsafe or unsound practices in violation of a cease and desist order.
The director or his or her designee, is empowered immediately to take possession of that financial institution or credit union and its assets; and the director may apply to the superior court for the appointment of the director or one of his or her deputies, or both, or in the case of a financial institution or credit union whose deposits are insured by the Federal Deposit Insurance Corporation, the National Credit Union Administration or any other agency or instrumentality of the United States, which insures the deposits of such financial institution or credit union, a receiver or receivers thereof, and for an injunction to restrain the financial institution or credit union, in whole or in part, from further proceeding with its business, and the court shall have jurisdiction in equity of the application. ADD}
{ADD 19-12-2. Appointment and powers of receiver. -- ADD} {ADD The court may appoint, without bond, the director or one of his or her deputies, or both, as the receiver or receivers to take possession of the property and effects of the financial institution or credit union, subject to such directions as may from time to time be prescribed by the court, and the appointment of said receiver or receivers shall vest in him, her or them, all the right, title and interest of the financial institution or credit union in and to its property and effects, and shall vacate and dissolve all attachments or liens thereon, created by or obtained in or pursuant to any suit or proceeding at law or in equity against the financial institution or credit union which was begun within four (4) months before the appointment of the receiver or receivers. ADD}
{ADD 19-12-3. Clerical assistance -- Legal assistance. -- ADD} {ADD The receiver or receivers are authorized to employ such clerical assistance as may be necessary, at the expense of the financial institution or credit union under receivership; but the duties of receivership shall be discharged by the receiver or receivers, as part of his, her or their official duties. The receiver may appoint one or more special deputies to act for him or her, and may appoint clerks, assistants, agents, accountants and such legal counsel as he or she deems necessary. The receiver may grant powers of attorney to execute, acknowledge and deliver all documents that may be necessary for the transfer of assets or assumption of liabilities. The compensation of the persons appointed by the receiver and the expenses of taking possession of the financial institution or credit union and conducting the receivership proceeding, shall be fixed by the receiver, and shall be paid out of the funds or assets of the financial institution or credit union. ADD}
{ADD 19-12-4. Schedule of property given to receiver. -- ADD} {ADD When a receiver is, or receivers are, so appointed, the president or treasurer of the financial institution or credit union shall make or cause to be made a schedule of its property, and shall make oath that the schedule sets forth all of the property which the financial institution or credit union owns or is entitled to. The treasurer shall deliver the schedule to the receiver or receivers, who may at any time examine under oath the treasurer, board of directors, or trustees, or other officers, to determine whether all the property which the financial institution or credit union owns or is entitled to has come into the hands of the receiver or receivers. ADD}
{ADD 19-12-5. Injunction to restrain carrying on of business. -- ADD} {ADD If any financial institution or credit union appears to have exceeded its powers or failed to comply with any provisions of law, the director may apply to the superior court for the county in which that financial institution or credit union is conducting its business for an injunction to restrain the financial institution or credit union, in whole or in part, from further proceeding with its business, and the court shall have jurisdiction in equity of the application. ADD}
{ADD 19-12-6. Legislative findings. -- ADD} {ADD It is hereby found as follows:
(1) Certain financial institutions or credit unions whose deposits were previously insured by the Rhode Island Share and Deposit Indemnity Corporation, are presently unable to obtain adequate deposit insurance as required by section 19-4-10 (formerly 19-11-9).
(2) As a result thereof, a proclamation of the governor dated January 1, 1991 declared a banking emergency under chapter 13 (formerly chapter 18) of this title with respect to certain of those financial institutions or credit unions pursuant to which operations of such financial institutions or credit unions have been suspended pending their obtaining adequate deposit insurance, and a number of them have obtained federal deposit insurance and have been permitted to resume operations.
(3) There remain more than twelve (12) such financial institutions or credit unions that remain subject to orders suspending their operations, which orders preclude approximately one hundred ninety thousand (190,000) members and/or depositors of such financial institutions or credit unions from having access to approximately three hundred thousand (300,000) separate accounts that in the aggregate total more than one billion dollars ($1,000,000,000).
(4) The inability of depositors in such remaining financial institutions or credit unions to withdraw their deposits has created hardships not only for such depositors and their families but also for a broad sector of citizens and businesses in the state of Rhode Island that depend on payments from depositors for goods and services supplied to them.
(5) It is hereby determined to be necessary in order to preserve and restore liquidity to the economy of the state, to protect deposits of state funds in such financial institutions or credit unions, and to protect the health, safety and general welfare of the people of the state of Rhode Island, for the general assembly to exercise its constitutional and other powers to enact measures to achieve these essential public purposes by providing for the relief of persons affected by the suspension of withdrawals from the financial institutions or credit unions affected by the banking emergency by expediting access by depositors to funds and assets in such financial institutions or credit unions.
(6) The numbers of people, accounts and funds adversely affected indicate that, without prompt state legislative action, there will be a serious negative impact on the health, safety and general welfare of the people of the state and the economy of the state, already weakened by current economic conditions.
(7) This chapter shall, therefore, be deemed to be an exercise of the police powers of this state to achieve the essential public purpose of providing for the protection of the health, safety and general welfare of the people of the state by amending the general laws of Rhode Island to grant priorities in distributions to depositors upon the liquidation of financial institutions or credit unions and to expedite receivership and other proceedings intended to make available to depositors and other affected parties funds and the value of assets in the affected financial institutions and credit unions. ADD}
{ADD 19-12-7. Priority of claims. -- ADD} {ADD (a) When the superior court shall assume jurisdiction of a receivership proceeding with respect to a financial institution or credit union subject to the provisions of this title the expenses and claims against such financial institution or credit union shall have priority in receiving such distributions, including (without limitation) any assumption of liabilities, out of the assets of such financial institution or credit union in the following order except to the extent otherwise provided by subsection (b) of this section, pro rata among any class of claimants having priority until the members of such class have been paid or provided for in full before distribution to any junior class of claimants:
(1) First, reasonable administrative expenses as allowed by such court in connection with the administration of the receivership estate, including (without limitation) payment of any loans, together with interest thereon, obtained by the receiver with the approval of the court to fund the operations of the receivership estate and the administration of the receivership proceeding, repayable only from the assets in such estate.
(2) Second, unsecured claims for wages earned by individuals who provided services as employees to the financial institution or credit union as provided in section 28-14-6.1, in amounts recommended by the receiver subject to the approval of the court.
(3) Third, subject to subsections (b) and (d) hereof, unsecured claims of depositors in such financial institution or credit union which does not have or which has failed to obtain federal deposit insurance, provided, however, that any such claim shall only have priority under this subsection to the extent that, if such financial institution or credit union had maintained such insurance with the Federal Deposit Insurance Corporation and whether or not such financial institution or credit union would have been eligible to maintain such insurance with the Federal Deposit Insurance Corporation, the deposit with respect to which such claim relates would have been an "insured deposit" as such term is defined in section (m) of the Federal Deposit Insurance Corporation Act (12 U.S.C. section 1813(m)) as in effect as of December 31, 1990 and would have been covered by deposit insurance under the rules and regulations of the Federal Deposit Insurance Corporation as in effect as of December 31, 1990. For the purpose of applying the preceding sentence, in case of a credit union all types of such credit union's member share accounts, including regular shares, share certificates and share draft accounts, except to the extent such accounts constitute equity ownership interests in the credit union under the terms of the charter or bylaws of the credit union, shall be deemed an insured deposit.
(4) Fourth, subject to subsections (b) and (d) hereof, unsecured claims of depositors in such financial institution or credit union which does not have or which has failed to obtain federal deposit insurance for its deposits, to the extent their deposit claims exceed amounts recovered under subsection (a)(3).
(5) Fifth, unsecured claims of any local, state or federal taxing agency entitled by law to priority in distributions from any receivership estate, to the extent of such priority, in such amounts as shall be approved by the court.
(6) Sixth, unsecured claims of all general creditors and depositors of such financial institution or credit union to the extent not accorded priority pursuant to subsections (1) through (4) hereof, in such amounts as shall be approved by the court.
(b) Distributions entitled to priority under subsection (a)(3) and/or (4) hereof shall be reduced or limited to the extent that any of the following paragraphs apply:
(1) Any distribution to a depositor pursuant to subsection (a)(3) and/or (4) of this section shall be subject to any legally available setoff and reduction to the extent of any default on any debt of such depositor to the financial institution or credit union at the time of such distribution.
(2) Any distribution to a depositor entitled to priority pursuant to subsection (a)(3) and/or (a)(4) of this section may be affected, reduced or extended in time to the extent that the receiver may recommend and the court may approve a plan of distribution with respect to depositor claims entitled to such priority which pays promptly (i) a subclass of such claims in full up to a stated amount for administrative convenience and (ii) if such receiver so recommends and the court approves, such stated amount to all other depositors entitled to priority under subsection (a)(3) and/or (a)(4) of this section whose claims exceed such stated amount to provide partial and more timely relief for such depositors.
(c) The claim of a creditor which is secured by a mortgage, security interest or lien on property in which the financial institution or credit union has an interest is a secured claim to the extent of the value of the estate's interest in such property or to the extent of amounts subject to setoff, as the case may be, and is an unsecured claim to the extent that the value of such creditor's interest or the amount so subject to setoff is less than the amount of such claim as approved by the court. Only the unsecured portion of the claim of such secured creditor shall participate in a distribution provided for in subsection (a) hereof.
(d) Notwithstanding the provisions of subsection (a)(3) and/or (a)(4) of this section or the provisions of section 42-116-7(b)(1) and/or (b)(2) or section 42-116-12 of the general laws, no priority shall be afforded under subsection (a)(3) and/or (a)(4) of this section to the unsecured claims of any officer, director or employee of any financial institution or credit union or of the Rhode Island Share and Indemnity Corporation or any other person who, with knowledge of the actual or impending insolvency and/or the impending closing of a financial institution or credit union or of the actual or impending insolvency of and/or the actual or impending cessation of business by the Rhode Island Share and Deposit Indemnity Corporation, and for the purpose of avoiding the loss of funds and/or access to funds in any depository account in any such financial institution or credit union, withdrew from any such financial institution or credit union any amount of money within thirty (30) days prior to the closing of that financial institution or credit union by proclamation of the governor dated January 1, 1991. ADD}
{ADD 19-12-8. Priority of claims -- Federally insured financial institutions or credit unions. -- ADD} {ADD In a receivership, or a conservatorship under chapter 11 of this title, of a financial institution or credit union whose deposits are insured by the federal deposit insurance corporation, the national credit union administration or any other agency or instrumentality of the United States, the allowed expenses and claims against such financial institution or credit union shall have priority in receiving distributions, out of the assets of such financial institution or credit union in the following order:
(1) First, the payment of costs and expenses of the administration of the receivership estate.
(2) Second, the payment of claims for "deposits", as that term is defined in 12 U.S.C. section 1813(I), including, but not limited to, the claims of depositors in a mutual savings bank for return of their deposits.
(3) Third, unsecured claims of any local, state, or federal taxing authority entitled by law to priority in distribution from the receivership or conservatorship estate, to the extent of such priority.
(4) Fourth, claims of salaried employees of the financial institution or credit union for wages or salaries earned but unpaid as of the commencement of the receivership or conservatorship.
(5) Fifth, claims for all other general liabilities not specified herein.
(6) Sixth, claims otherwise proper that were not filed within the prescribed time.
(7) Seventh, claims for obligations expressly subordinated to deposits and general liability claims.
(8) Any funds remaining shall be paid to the stockholders of the financial institution or credit union, or, in the case of a mutual financial institution in which there are no stockholders, to the depositors in proportion to the respective amounts of their stock or deposits.
(9) Interest shall be given the same priority as the claim on which it is based, but no interest shall be paid on any claim until the principal of all claims within the same class has been paid or adequately provided for in full. ADD}
{ADD 19-12-9. Payment of certain priority claims. -- ADD} {ADD (a) In receivership proceedings under this chapter, distributions on account of priority claims described in section 19-12-7(a)(1), (a)(2), (a)(3) and/or (a)(4) shall be made to the persons or entities entitled thereto as soon as sufficient funds are available to the receiver, subject, however, to section 19-12-7(b). The holders of claims entitled to priority under section 19-12-7(a)(2), (a)(3) and/or (a)(4) are relieved of the necessity of filing claims with the receiver.
(b) On the recommendation of the receiver, the court may approve a sale or other transfer of all or any part of the assets of the financial institution or credit union for consideration sufficient to pay in full or in part the liabilities of the financial institution or credit union which are entitled to priority in distribution pursuant to section 19-12-7(a). The consideration for such transfer, whether in the form of immediate funds or the issuance of deferred obligations, as shall be distributed in accordance with section 19-12-7 in such manner and at such time or times as shall be recommended by the receiver, in a distribution plan as provided in the order of the court approving such transfer. If the transferee which assumes deposit liabilities of a financial institution or credit union entitled to priority under section 19-12-7(a)(3) and/or (a)(4) in a transfer so approved is a financial institution or credit union authorized by law to receive deposits and its deposits, including the assumed deposits of the financial institution or credit union, are protected by federal deposit insurance, the court on the recommendation of the receiver, may approve such transfer of assets and assumption of liabilities, in which case the priority claims of depositors whose claims were so assumed will be deemed to have been adequately provided for and the priority granted such claims satisfied. If such transferee is an entity, including any corporate entity specially chartered by the Rhode Island general assembly to acquire assets or assume any deposit liabilities of the financial institution or credit union in receivership under this chapter, which assumes all or part of the deposit liabilities of a financial institution or credit union not as deposits in an operating depository institution, but as liabilities to be paid out of the assets acquired, the court, based on the recommendation of the receiver and the best interests of the depositors whose priority claims are to be paid or assumed by the transferee, may approve such transfer and such transferee's plan of distribution, including provisions therein that would be authorized under section 19-12-7(b), in which case the claims entitled to priority pursuant to section 19-12-7(a)(3) and/or (a)(4) shall be deemed to have been provided for and satisfied to the extent they have been assumed by the transferee.
(c) A transferee which assumes or pays any claim entitled to priority pursuant to section 19-12-7(a)(2), (a)(3) and/or (a)(4) pursuant to an order entered by the court under subsection (b) hereof, shall be subrogated to the claim and priority position of the employees and depositors whose claims have been so assumed or paid. ADD}
{ADD 19-12-10. Automatic stay. -- ADD} {ADD (a) The appointment of a temporary or permanent receiver pursuant to the provisions of this chapter, or the taking of possession of the financial institution or credit union and its assets by the director or his or her designee, whichever shall first occur, shall operate as a stay until further order of the court, applicable to all persons and entities, of
(1) The commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the financial institution or credit union that was or could have been commenced before the commencement of the receivership under this chapter, or to recover a claim against the financial institution or credit union that arose before the commencement of the receivership pursuant to this chapter;
(2) The enforcement, against the financial institution or credit union or against property of the receivership estate, or a judgment obtained before the commencement of the receivership under this chapter;
(3) Any act to obtain possession of property of or from the receivership estate or to exercise control over property of such estate;
(4) Any act to create, perfect, or enforce any lien against property of the receivership estate;
(5) Any act to create, perfect, or enforce against property of the financial institution or credit union any lien to the extent that such lien secures a claim that arose before the commencement of the receivership under this title;
(6) Any act to collect, assess, or recover a claim against the financial institution or credit union that arose before the commencement of the receivership under this chapter;
(7) The setoff of any debt owing to the financial institution or credit union that arose before the commencement of the receivership under this chapter against any claim against the financial institution or credit union.
(b) Nothing in this section shall be construed to prevent the issuance, employment or enforcement of process in conjunction with any investigation by state or federal authorities. ADD}
{ADD 19-12-11. Additional powers of receiver. -- ADD} {ADD (a) In addition to powers granted to the receiver pursuant to this chapter or any other law, a receiver appointed under this chapter shall have power to reject any executory contract or unexpired lease of the financial institution or credit union.
(b) After notice and hearing, the receiver may abandon any property of the receivership estate that is burdensome to the estate or that is of inconsequential value and benefit to such estate.
(c) On request of a party in interest and after notice and a hearing, the court may order the receiver to abandon any property of the receivership estate that is burdensome to such estate or that is of inconsequential value and benefit to such estate.
(d) Unless the court orders otherwise, any property scheduled pursuant to section 19-12-4 of this chapter not otherwise administered at the time of the closing of the receivership proceeding is abandoned to the financial institution or credit union subject to the receivership proceeding being reopened by the court to administer assets, to accord relief to the financial institution or credit union or for other cause.
(e) Unless the court orders otherwise, property of the receivership estate that is not abandoned under this section and that is not administered in the receivership proceeding remains property of the receivership estate. ADD}
{ADD 19-12-12. Receiver as a lien creditor and as successor to certain creditors and purchasers. -- ADD} {ADD (a) A receiver appointed pursuant to this chapter shall have, as of the commencement of the receivership proceeding, and without regard to any knowledge of the receiver or of any creditor, the rights and powers of, or may avoid any transfer of property of the financial institution or credit union or any obligation incurred by the financial institution or credit union that is voidable by:
(1) A creditor that extends credit to the financial institution or credit union at the time of the commencement of the receivership proceeding, and that obtains at such time and with respect to such credit, a judicial lien on all property on which a creditor on a simple contract could have obtained such judicial lien, whether or not such a creditor exists;
(2) A creditor that extends credit to the financial institution or credit union at the time of the commencement of the receivership proceeding, and obtains, at such time and with respect to such credit, an execution against the financial institution or credit union that is returned unsatisfied at such time, whether or not such a creditor exists; or
(3) A bona fide purchaser of real property, other than fixtures, from the financial institution or credit union, against whom applicable law permits such transfer to be perfected, and obtains the status of a bona fide purchaser and has perfected such transfer at the time of the commencement of the receivership proceeding, whether or not such a purchaser exists.
(b) Such receiver may avoid any transfer of an interest of the financial institution or credit union in property or any obligation incurred by the financial institution or credit union that is voidable under any applicable law by a creditor holding an unsecured claim against the financial institution or credit union.
(c) Without limiting the provisions of subsection (a) hereof, such receiver shall be deemed a lien creditor as that term is defined in section 6A-9-301-(3) and a creditor as that term is defined in section 6-16-1(d) and shall have all the rights and powers accorded to such lien creditor or creditor by any provisions of applicable law.
(d) In the event that the receiver shall make any sale or other transfer of all or any part of the assets of the financial institution or credit union to any transferee, the status and the rights and powers accorded the receiver by virtue of the provisions of subsection (a) through (c) of this section shall automatically vest in such transferee with respect to such assets. ADD}
{ADD 19-12-13. Agreements against interest of the financial institution or credit union. -- ADD} {ADD No agreement which tends to diminish or defeat the interest of the financial institution or credit union and any asset acquired by the receiver acting in a proceeding under this chapter or by any person or entity acquiring all or any of such interests or assets by a sale or other transfer approved by any order of the court entered in a receivership proceeding under this chapter, including (without limitation) loans made by such financial institution or credit union or any security therefor, shall be valid against the receiver or such transferee unless such agreement -- (1) is in writing, (2) was executed by the financial institution or credit union and any person claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the assets by the financial institution or credit union, (3) was approved by the governing body of the financial institution or credit union or its loan or other authorizing committee, which approval shall be reflected in the minutes of said board or committee, and (4) has been, continuously, from the time of its execution, an official record of the financial institution or credit union. ADD}
{ADD 19-12-14. Presumptions. -- ADD} {ADD With respect to any financial institution or credit union as to which a receivership proceeding is commenced pursuant to the provisions of this chapter, any member of its governing body or officer who votes or takes any action solely to approve or authorize the commencement of such proceeding or to accept service of citation or other process, to admit or cause to be admitted the allegations of any complaint or petition commencing such proceeding or to consent to or join in the request for relief contained therein shall be conclusively presumed to have taken such action in good faith, in the exercise of a reasonable business judgment and in the best interests of the financial institution or credit union, its depositors or other creditors. ADD}
{ADD 19-12-15. Notice to parties. -- ADD} {ADD The court having jurisdiction over any proceedings under this chapter shall have full power to shorten the time for scheduling hearings and giving notice thereof and to limit notice of creditors, depositors and other parties in interest to newspaper publication or other means as it shall deem appropriate given the exigencies of the proceeding, the number of parties to be given notice and the expenses of providing such form of notice. ADD}
{ADD 19-12-16. Appeals. -- ADD} {ADD Any order or judgment of the court having jurisdiction of any receivership proceeding under this chapter that provides for a payment to employees and depositors that have priority under section 19-12-7(a)(2), (a)(3) and/or (a)(4) or a transfer of assets of the financial institution or credit union for a consideration that includes the payment or assumption of some or all of the liabilities of the financial institution or credit union to such employees or depositors shall be final and binding and not subject to reversal on appeal unless, prior to the consummation of such transfer, the court which entered such judgment shall, on motion of an aggrieved party in interest grant a stay pending appeal conditioned upon the appellant filing a supersedeas bond in the full amount of the loss such employees and depositors may sustain in the event such order or judgment is upheld on appeal or the supreme court shall, after such motion has been denied by the superior court and prior to the consummation of such payment or transfer, grant a stay pending appeal conditioned upon the appellant filing a similarly conditioned supersedeas bond. ADD}
{ADD 19-12-17. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable. This chapter shall be construed liberally in aid of its purpose and legislative findings. ADD}
SECTION 51. Title 19 of the General Laws entitled "Financial Institutions" is hereby amended by adding thereto the following chapter:
{ADD CHAPTER 13 ADD}
{ADD BANKING EMERGENCIES ADD}
{ADD 19-13-1. Proclamation of emergency. -- ADD} {ADD The governor may proclaim that a banking emergency exists when it shall appear necessary to protect the public and the interests of those regulated institutions or of the shareholders, depositors, or other creditors of those regulated institutions. Thereupon any or all of such regulated institutions shall be subject to special regulation by the director, until the governor, by like proclamation, declares the period of banking emergency terminated. Any action taken or order issued by the director in any of the following sections in this chapter shall, in each instance, be taken only with the approval of the governor. ADD}
{ADD 19-13-2. Suspension of payment of deposits. -- ADD} {ADD During the period of such banking emergency the director may, if deemed necessary, for the protection of the public and of the interests of depositors and other creditors of any or all regulated institutions, order such regulated institutions to suspend or restrict in whole or in part the payment in currency, or by other means, of the liabilities of such regulated institutions to shareholders, depositors, and other creditors, except as hereinafter provided. The order shall become effective upon receipt by the regulated institutions of notice thereof, and shall continue in full force and effect during the period of banking emergency, until revoked or modified by the director. Whenever, in the judgment of the director the condition of emergency, because of which the order was made, warrants such action, the liability, the payment of which has been suspended or restricted, may be paid by the regulated institution, in whole or pro rata or in part, upon such terms and conditions and in such form as the director shall prescribe, provided that acceptance of any such payment, if and so far as not offered in legal tender, shall be optional with the person entitled to payment of that liability. ADD}
{ADD 19-13-3. Segregation of new cash deposits. -- ADD} {ADD Cash deposits, hereinafter called new cash deposits, received by any regulated institution after an order of the director issued under the provisions of this chapter suspending or restricting withdrawals of currency from that regulated institution, and while the order remains in force either in whole or in part, shall not be subject, by reason of the order, to any limitation or restriction as to payment or withdrawal in currency or otherwise, and shall be segregated and held or invested and used solely to meet the new cash deposit liability; provided, however, that the aggregate amount of cash representing such deposits shall be kept separately in cash, or on deposit in federal reserve banks, or invested in obligations of the United States, or as may otherwise be authorized from time to time by order of the secretary of the treasury of the United States or other duly constituted federal authority. ADD}
{ADD 19-13-4. New deposits other than cash. -- ADD} {ADD New deposits, other than new cash deposits, need not be segregated, but may be drawn against by check to the same extent and in the same manner as deposits existing prior to any order of the director, issued under the provisions of this chapter, and may also be drawn against under the terms of the order; provided, nevertheless, that new deposits made in any medium of exchange prescribed by the director under the provisions of this chapter shall be payable in the deposited medium of exchange, or the medium of exchange into which it may have been converted, and any such deposits may be withdrawn in whole or in part. ADD}
{ADD 19-13-5. Bank holidays. -- ADD} {ADD The director is further authorized to declare bank holidays with respect to any or all activities of any regulated institutions, whenever in his or her judgment such a declaration is required by the public interest. A bank holiday declared by the director under this section shall have the same effect, with respect to banking activities, as the appointment or proclamation of a legal holiday under the provisions of section 25-1-1. ADD}
{ADD 19-13-6. Conformity to federal law. -- ADD} {ADD All of the regulated institutions to which this chapter is applicable shall be permitted to conform to the requirements of any federal proclamation, law, or regulation. ADD}
{ADD 19-13-7. Violation of orders or rules. -- ADD} {ADD Any person or regulated institution violating any order or any provision of any rule or regulation made by the director under authority of this chapter, shall be punished by fine of not more than one thousand dollars ($1,000), or by imprisonment for not more than one (1) year, or both. ADD}
{ADD 19-13-8. Costs and expenses. -- ADD} {ADD Any costs and expenses incurred by the director in any exercise of the powers given under this chapter may be assessed by the director against the regulated institutions concerned and, when so assessed, shall be paid by those regulated institutions. ADD}
{ADD 19-13-9. Emergency measure. -- ADD} {ADD This chapter is hereby declared to be an emergency measure, necessary for the immediate preservation of the public peace and safety, requiring the immediately effective enactment of legislation concerning the protection of deposits in regulated institutions. ADD}
{ADD 19-13-10. Emergency powers of the director. -- ADD} {ADD In the interest of the protection of depositors in financial institutions or credit unions, the director is authorized to waive in whole or in part any provisions of this title relating to public hearings and/or public notice that would hinder or prevent the merger, consolidation, purchase of assets and assumption of liabilities, or other acquisition of a financial institution or credit union that is in danger of insolvency or that has been closed by the proclamation of a banking emergency in accordance with the provisions of this chapter. All waivers shall be made public as to the final decision or disposition within ninety (90) days after the waiver is granted. ADD}
{ADD 19-13-11. Rules and regulations. -- ADD} {ADD The director or his or her designee may adopt reasonable rules and regulations for the implementation and administration of the provisions of this chapter. ADD}
{ADD 19-13-12. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable. ADD}
{ADD 19-13-13. Chapter controlling. -- ADD} {ADD The provisions of this chapter shall control if in conflict with any other legislation. ADD}
SECTION 52. Title 19 of the General Laws entitled "Financial Institutions" is hereby amended by adding thereto the following chapter:
H{ADD CHAPTER 14 ADD}
{ADD LICENSED ACTIVITIES ADD}
{ADD 19-14-1. Definitions. -- ADD} {ADD For purposes of this chapter and chapters 14.1, 14.2, 14.3, 14.4 and 14.5: ADD}
{ADD "Check" shall mean any check, draft, money order, personal money order, or other instrument for the transmission travelers checks or foreign denomination instruments shall not or payment of money. For the purposes of check cashing, be considered checks. "Check cashing" means providing currency for checks. ADD}
{ADD "Deliver" shall mean to deliver a check to the first person who in payment for the check makes or purports to make a remittance of or against the face amount thereof, whether or not the deliverer also charges a fee in addition to the face amount, and whether or not the deliverer signs the check. ADD}
{ADD "Electronic money transfer" shall mean receiving money for transmission within the United States or to locations abroad by any means, including but not limited to wire, facsimile or other electronic transfer system. ADD}
{ADD "Lender" shall mean any person who makes or funds a loan with such person's own funds, regardless whether such person is the nominal mortgagee or creditor on the instrument evidencing the loan. ADD}
{ADD "Licensee" shall mean an entity licensed under this chapter. ADD}
{ADD "Loan" shall mean any advance of money or credit, including but not limited to:
(a) Loans secured by mortgages;
(b) Insurance premium finance contracts;
(c) The purchase or acquisition or retail installment contracts or advances to the holders thereof;
(d) Educational loans; or
(e) Any other advance of money. ADD}
{ADD "Loan broker" shall mean any person who, for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly, solicits, processes, negotiates, places or sells a loan for others in the primary market, or offers to do so. A loan broker shall also mean any person who is the nominal mortgagee or creditor in a transaction commonly called "table funding" wherein there is a contemporaneous advance of funds by a lender and an assignment by such mortgagee or creditor of the loan to such lender. ADD}
{ADD "Personal money order" shall mean any instrument for the transmission or payment of money in relation to which the purchaser or remitter appoints or purports to appoint the seller thereof as his or her agent for the receipt, transmission, or handling of money, whether the instrument is signed by the seller or by the purchaser or remitter or some other person. ADD}
{ADD "Primary market" shall mean the market wherein loans are made to borrowers by lenders, whether or not through a loan broker or other conduit. ADD}
{ADD "Principal owner" shall mean any person who owns, controls, votes or has a beneficial interest in, directly or indirectly, ten percent (10%) or more of the outstanding capital stock of a licensee. ADD}
{ADD "Sell" shall mean to sell, to issue, or to deliver a check. ADD}
{ADD "Small loan lender" shall mean a lender engaged in the business of making small loans. ADD}
{ADD "Small loan" shall mean a loan of less than five thousand dollars ($5,000), not secured by real estate, made pursuant to the provisions of chapter 19-14.2. ADD}
{ADD 19-14-2. Licenses required -- Generally. -- ADD} {ADD Other than regulated institutions and other insured-deposit-taking institutions duly organized under the laws of the United States which shall not be subject to this chapter, no person shall engage in the business of:
(a) Making or funding loans or acting as a lender or small loan lender;
(b) Brokering loans or acting as a loan broker;
(c) Selling checks for a fee or other consideration;
(d) Cashing checks for a fee or other consideration which includes any premium charged for the sale of goods in excess of the cash price of such goods; or
(e) Providing electronic money transfers for a fee or other consideration; without first obtaining a license from the director or his or her designee. Special exemptions from licensing for each activity are contained in other chapters in this title. Any natural person who is employed by a licensee is exempt from the licensing requirement of this chapter when acting on such licensee's behalf. ADD}
{ADD 19-14-3. Application for license. -- ADD} {ADD Application for a license shall be made in writing under oath in a form to be provided by the director or his or her designee. The applicant at the time of making application shall pay to the director or his or her designee the sum of one-half (1/2) of the annual license fee as a fee for investigating the application. If the application for license is approved, the applicant shall pay a fee equal to the annual license fee as provided in this chapter. The license shall be continuous and the license fee shall cover the period through March 31 of each year. Any application approved after January 1 of any given year shall pay one-half (1/2) of the annual license fee for the period ending March 31 of that year. ADD}
{ADD 19-14-4. Annual fee. -- ADD} {ADD Each licensee shall pay an annual license fee as follows:
(a) Each small loan lender license and each branch certificate, the sum of five hundred dollars ($500);
(b) Each loan broker license and each branch certificate, the sum of five hundred dollars ($500);
(c) Each lenders license and each branch certificate, the sum of one thousand dollars ($1,000);
(d) Each sale of checks license, the sum of three hundred dollars ($300);
(e) Each check cashing license, the sum of three hundred dollars ($300); and
(f) Each electronic money transfer license, the sum of three hundred dollars ($300). ADD}
{ADD Any licensee who shall not pay the annual fee by March 31 of each year shall be subject to a daily penalty of twenty-five dollars ($25) per day, subject to a maximum of seven hundred fifty dollars ($750). Such penalty shall be paid to the director to and for the use of the state. The penalty may be waived for good cause by the director or his or her designee, upon written request. ADD}
{ADD 19-14-5. Minimum capital. -- ADD} {ADD Each licensee, licensed pursuant to an application for license filed after June 30, 1995, shall maintain the following minimum net worth to be evidenced in accordance with regulations promulgated by the director or his or her designee.
(a) Small loan lenders, the sum of twenty-five thousand dollars ($25,000);
(b) Loan brokers, the sum of ten thousand dollars ($10,000);
(c) Lenders, the sum of one hundred thousand dollars ($100,000); and
(d) Sale of checks, the sum of fifty thousand dollars ($50,000) ADD}
.{ADD 19-14-6. Bond of applicant. -- ADD} {ADD An applicant for any license shall file with the director or his or her designee a bond to be approved by him or her in which the applicant shall be the obligor.
The amount of said bond shall be as follows:
(a) Small loan lenders, the sum of ten thousand dollars ($10,000);
(b) Loan brokers, the sum of ten thousand dollars ($10,000);
(c) Lenders, the sum of twenty-five thousand dollars ($25,000);
(d) Sale of checks and electronic money transfer licensees, the sum of fifty thousand dollars ($50,000) subject to a maximum of one-hundred-fifty thousand dollars ($150,000) when aggregated with agent locations;
(e) Check cashing licensees which accept checks for collection with deferred payment, the sum of fifty thousand dollars ($50,000) subject to a maximum of one-hundred-fifty thousand dollars ($150,000) when aggregated with agent locations;
(f) Foreign exchange licensees, the sum of ten thousand dollars ($10,000)
(g) Each branch or agent location of a licensee, the sum of five thousand dollars ($5,000).
The bond shall run to the state for the use of the state and of any person who may have cause of action against the obligor of the bond under the provisions of this title. The bond shall be conditioned upon the obligor faithfully conforming to and abiding by the provisions of this title and of all rules and regulations lawfully made, and the obligor will pay to the state and to any such person any and all money that may become due or owing to the state or to the person from the obligor under and by virtue of the provisions of this title. ADD}
{ADD 19-14-7. Issuance or denial of license. -- ADD} {ADD (a) Upon the filing of a completed application, the payment of fees and the approval of the bond, the director or his or her designee shall commence an investigation of the applicant. The director or his or her designee shall thereupon issue and deliver the license applied for in accordance with the provisions of this chapter at the location specified in the application if he or she shall find:
(1) that the financial responsibility, experience, character, and general fitness of the applicant, and of the members thereof if the applicant is a partnership, limited liability company or association, or of the officers and directors and the principal owner or owners of the issued and outstanding capital stock thereof if the applicant is a corporation, are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly, and efficiently within the purposes of this title; and
(2) that allowing the applicant to engage in business will promote the convenience and advantage of the community in which the business of the applicant is to be conducted.
A license provided pursuant to this title shall remain in full force and effect until it is surrendered by the licensee or revoked or suspended as provided by law.
If the director or his or her designee rejects an application for a license, he or she shall notice the applicant, by certified mail, of the denial, the reason(s) supporting the denial and shall afford the applicant the opportunity for a hearing within a reasonable time period to show cause why the license should not be denied. When an application for a license is denied, the director or his or her designee shall return to the applicant the bond, but shall retain the investigation fee to cover the costs of investigating the application. The director or his or her designee shall approve or deny every application for license hereunder within sixty (60) days from the date the application is deemed by the director or his or her designee to be completed.
(b) Any applicant or licensee aggrieved by the action of the director or his or her designee in denying a completed application for a license shall have the right to appeal the action, order, or decision pursuant to Chapter 35 of Title 42, as amended, entitled "administrative procedures". ADD}
{ADD 19-14-8. Denial of license by default. -- ADD} {ADD If, within sixty (60) days of the initial filing of the application, the applicant has failed to provide the necessary factual data in order to complete the application, the director or his or her designee shall notice the applicant, by certified mail, that the application shall be considered in default and rejected if all necessary data for a completed application is not received within fourteen (14) days of said notice unless the application is withdrawn. The notice shall specify what information is necessary for completion. ADD}
{ADD 19-14-9 Contents of license -- Posting. -- ADD} {ADD The license or branch certificate shall contain such information as the director or his or her designee shall require, including the type of activity authorized. The license or branch certificate shall be kept conspicuously posted in the place of business of the licensee. Any licensee who shall lose, misplace or mutilate such license or branch certificate shall pay a replacement fee of one hundred dollars ($100.00) to the director for use of the state. ADD}
{ADD 19-14-10. Attorney for service of process. -- ADD} {ADD (a) Every licensee shall appoint and thereafter maintain in this state a resident attorney with authority to accept process for the licensee in this state, including the process of garnishment. A document evidencing the power of attorney shall be filed with the director or his or her designee. The power of attorney shall state the business address, including street and number, if any, of the resident attorney. Thereafter if such resident attorney shall change his or her business address he or she shall forthwith, within ten (10) days subsequent to any such change, file in the office of the director or his or her designee notice of such change setting forth his or her current business address. If the resident attorney shall die, resign, or remove from the state, the licensee shall make a new appointment and file the power of attorney in the office of the director or his or her designee. No such power of attorney shall be revoked until a like power shall have been given to some other competent person resident in this state and filed with the director or his or her designee. Service of process upon the resident attorney shall be deemed sufficient service upon the licensee. Any licensee who shall neglect or fail to appoint a resident attorney and file the power of attorney in the office of the director or his or her designee as above provided for, or fails to replace a resident attorney for a period of thirty (30) days from vacancy, shall be liable for a penalty not exceeding five hundred dollars ($500). Upon the filing of any power of attorney required by this section a fee of twenty-five dollars ($25.00) shall be paid to the director for the use of the state. If any licensee shall be a corporation and shall comply with the provisions of Chapter 1.1 of Title 7, it shall be exempt from the power of attorney filing requirements of this section. If any licensee shall be a limited partnership or limited liability company and shall comply with the provisions of Chapters 13 and 16, respectively, of Title 7, it shall be exempt from the power of attorney requirements of this section.
(b) Any process, including the process of garnishment, may be served upon the director or his or her designee as agent of the licensee in the event that no resident attorney can be found upon whom service can be made, or in the event that the licensee has failed to designate a resident attorney as above required, and process may be served by leaving a copy of the process with a fee of twenty-five dollars ($25.00) which shall be included in the taxable costs of the suit, action, or proceeding, in the hands of the director or his or her designee. Such service shall be sufficient service upon the licensee provided that notice of service and a copy of the process shall be forthwith sent by certified mail by the plaintiff or his or her attorney of record to the licensee at the latest address filed with the director or his or her designee. If the licensee shall not have filed his or her address pursuant to this chapter, notice of service shall be given in such manner as the court in which the action is pending may order as affording the licensee reasonable opportunity to defend the action or to learn of the garnishment. Nothing herein shall limit or affect the right to serve process upon a licensee in any other manner now or hereafter permitted by law. ADD}
{ADD 19-14-11. Prohibition or transfer or assignment of license. -- ADD} {ADD No license shall be transferable or assignable. A change in ownership of less than twenty-five percent (25%) of the voting stock or equity interests of a licensee shall not be considered a transfer or assignment of the license. A change in ownership of twenty-five percent (25%) or more of the voting stock or equity interests shall require notification to the director within fifteen (15) days of such a change in ownership. Change in ownership application procedures, including reasonable response time requirements, shall be established by regulations promulgated by the director or his or her designee. ADD}
{ADD 19-14-12. Place of business -- Branch offices -- Name changes. -- ADD} {ADD (a) Additional places of business may be maintained under the same license upon written application to the director or his or her designee for the establishment of an additional branch office. A separate application must be filed for each additional branch office being requested. At the time of the application, the licensee shall pay to and for the use of the state an investigation fee as provided for in section 19-14-3. Upon the filing of such application, the director or his or her designee shall investigate the facts, and if he or she shall find that allowing the licensee to engage in business in the additional branch location will promote the convenience and advantage of the community in which the licensee desires to conduct his or her business, the director or his or her designee shall thereupon issue and deliver a branch certificate, signed by the director or his or her designee which shall be authority for the operation of the business under the license at the branch location. If the director or his or her designee shall not so find, he or she shall deny the licensee permission to establish the branch location in a manner consistent with the licensing application process. Upon approval of a branch location request, the licensee shall pay an additional annual licensing fee for each branch location in the manner consistent with the licensing application process. Any person licensed under Rhode Islnd general laws chapters 19-25, 19-25.1, 19-25.2, 19-25.3 or 19-25.4 as in effect on June 30, 1995, that has maintained more than one (1) office licensed under any of those chapters as of June 30, 1995 will automatically be issued branch certificates for the comparable licenses under this chapter for all such locations other than the main office as part of the 1996 license renewal process. The original licenses for locations deemed to be branches must be surrendered at that time.
(b) Whenever a licensee shall wish to change his or her place of business or branch location to a street address other than that designated in his or her license, he or she shall make written application thereof to the director or his or her designee who shall investigate the facts. If the director or his or her designee shall find that allowing the licensee to engage in business in the new location will promote the convenience and advantage of the community in which the licensee desires to conduct his or her business, the director or his or her designee shall reissue the license or branch certificate reflecting the change and the date thereof which shall be authority for the operation of the business under the license at the new location. If the director or his or her designee shall not so find, he or she shall deny the licensee permission to change the location of the place of business, in the manner consistent with the application process for a license. At the time of application, the licensee shall pay to and for the use of the state the sum of two hundred fifty dollars ($250) as an investigation and processing fee.
(c) No licensee shall transact the business provided for by this chapter under any other name than that named in the license or branch certificate. Whenever a licensee shall wish to change the name, the licensee shall make written application to the director or his or her designee who shall investigate the facts. If the director or his or her designee shall find that the change of name is appropriate and all requirements for the name change have been met by the licensee, the director or his or her designee shall approve the change and issue a replacement license and branch certificate(s), if applicable, reflecting the new name, upon surrender by the licensee of the original license and branch certificate(s), if applicable. At the time of application for change of name, the licensee shall pay to and for the use of the state the sum of one hundred fifty dollars ($150) and an additional fifty dollars ($50) for each branch location as an investigation and processing fee. ADD}
{ADD 19-14-13. Revocation of license. -- ADD} {ADD The director or his or her designee may, upon the ten (10) days' notice to the licensee, stating his or her intent to revoke and the grounds therefor, and upon reasonable opportunity to be heard, revoke any license issued hereunder if he or she shall find that:
(a) The licensee has failed to comply with any demand, ruling, order, or requirement of the director or his or her designee lawfully made pursuant to and within the authority of this title;
(b) The licensee has violated any provisions of this title or section 6-26-2, as amended, as applicable, or any rule or regulation lawfully made by the director or his or her designee under and within the authority of this chapter;
(c) Any fact or condition exists which, if it had existed at the time of the original application for the license, would have warranted the director or his or her designee in refusing originally to issue the license;
(d) The licensee has committed any fraud, engaged in any dishonest activities, or made any misrepresentation;
(e) The licensee has violated any provisions of this title or any regulation issued pursuant thereto;
(f) The licensee has made a false statement in the application for such license or failed to give a true reply to a question in such application; or,
(g) The licensee has demonstrated his or her or its incompetency or untrustworthiness to act as a licensee pursuant to this chapter.
The burden of proving the existence of any such fact or condition as a ground for revocation of a license under this section shall be upon the director or his or her designee. In furtherance of the foregoing, the director or his or her designee, if he or she has reasonable cause to believe that the grounds for revocation exist, may subpoena and investigate the business, books, and records of the licensee. ADD}
{ADD 19-14-14. Revocation by default. -- ADD} {ADD The director or his or her designee may revoke any license without a hearing by default if the licensee fails to respond to notifications informing the licensee of a failure to pay the annual license fee, maintain in effect the required bond or bonds or maintain net worth requirements as required by this title.
For purposes or revocation by default the director or his or her designee shall send to the licensee and to the licensee's registered attorney for service of process at the address stated in the application for license, by certified mail, notice of the deficiency and potential revocation of license. Should the licensee or his or her registered attorney fail to respond to the certified mail or is not answering to service, the director or his or her designee may revoke such license by default and without hearing after fifteen (15) days from the date of the certified mail. ADD}
{ADD 19-14-15. Suspension of license. -- ADD} {ADD The director or his or her designee may, upon three (3) days' notice and an opportunity for hearing, suspend any license for a period not exceeding thirty (30) days, pending investigation. ADD}
{ADD 19-14-16. Surrender of license. -- ADD} {ADD Any licensee may surrender any license or branch certificate(s) by delivering to the director or his or her designee written notice that he or she thereby surrenders the license or branch certificate(s). The surrender shall not affect the licensee's civil or criminal liability for acts committed prior to the surrender. Written notice of any surrender must be filed with the director or his or her designee within thirty (30) days of the termination of the business authorized by this chapter at the surrendered location. The surrender of any license does not affect the licensee's requirement to file an annual report with the fifty dollar ($50.00) filing fee. Such report shall be filed within thirty (30) days of the surrender of the license. The licensee shall give written notification to the director or his or her designee within twenty-four (24) hours from termination of business. ADD}
{ADD 19-14-17. Contracts unimpaired by revocation, suspension, or surrender of license. -- ADD}
{ADD Any revocation, suspension or surrender of a license shall not impair or affect the obligation of any preexisting lawful contract between the licensee and any customer. ADD}
{ADD 19-14-18. Reinstatement of license. -- ADD} {ADD Every license issued hereunder shall remain in force and effect until it shall have been surrendered, revoked, or suspended in accordance with the provisions of this chapter. The director or his or her designee shall have authority on his or her own initiative to reinstate suspended licenses or to issue new licenses to a licensee whose licenses shall have been revoked if no fact or condition then exists which clearly would have warranted the director or his or her designee in refusing originally to issue the license under this chapter. A license reinstatement fee equal to one-half of the annual license fee shall be paid to the director to and for the use of the state. ADD}
{ADD 19-14-19. Filing findings on revocation or suspension. -- ADD} {ADD Whenever the director or his or her designee shall revoke or suspend a license issued pursuant to this chapter, he or she shall file in his or her office a written order to that effect containing the evidence and the reason(s) supporting the revocation or suspension, and serve upon the licensee a copy thereof. ADD}
{ADD 19-14-20. Books, accounts, and records. -- ADD} {ADD The licensee shall keep and use such books, accounts, and records, which may be maintained by optical imaging, as will enable the director or his or her designee to determine whether such licensee is complying with the provisions of this title and with the rules and regulations lawfully made by the director or his or her designee.
If the licensee maintains its records outside of the state of Rhode Island, the licensee shall be responsible for all reasonable costs and expenses incurred by the examining personnel to examine such records. ADD}
{ADD 19-14-21. Advertising and misrepresentations. -- ADD} {ADD (a) No licensee or other person shall advertise, print, display, publish, distribute, telecast, or broadcast or cause or permit to be advertised, printed, displayed, published, distributed, telecast, or broadcast in any manner whatsoever any false, misleading, or deceptive statement or representation with regard to the rates, terms or conditions for licensed activities. The director or his or her designee may order any licensee or other person to desist from any conduct which he or she shall find to be a violation of the foregoing provisions.
(b) The director or his or her designee may require that rates of interest or charges, if stated by a licensee, be stated fully and clearly in such manner as he or she may deem necessary to prevent misunderstanding thereof by prospective customers. (c) The licensee shall disclose, in any written or oral advertisements or representation disseminated primarily in this state, the type of license held. ADD}
{ADD 19-14-22. Reporting requirements. -- ADD} {ADD (a) Each licensee shall annually on or before March 31 file a report with the director or his or her designee giving such relevant information as the director or his or her designee may reasonably require concerning the business and operations during the preceding calendar year of each licensed place of business conducted by the licensee within the state. The report shall be made under oath and shall be in a form prescribed by the director or his or her designee. At the time of filing each such report, the sum of fifty dollars ($50.00) per license and fifty dollars ($50.00) per branch certificate shall be paid by the licensee to the director for the use of the state. Any licensee who shall delay transmission of any report required by the provisions of this title beyond the limit, unless additional time is granted, in writing, for good cause, by the director or his or her designee, shall pay a penalty of twenty five dollars ($25) for each day of the delay.
(b) Any licensee shall, within twenty-four hours after actual knowledge, notify the director or his or her designee in writing of the occurrence of any of the following events: the institution of bankruptcy, receivership, reorganization or insolvency proceedings regarding a licensee, the institution of any adverse government action against a licensee, or any felony indictment or conviction of any licensee or any officers, directors, owners, employees, members or partners thereof, as the case may be. ADD}
{ADD 19-14-23. Examinations and investigations. -- ADD} {ADD For the purpose of discovering violations of this title or securing information lawfully required by him or her hereunder, the director or his or her designee(s) may at any time, investigate the loans and business and examine the books, accounts, records and files used therein, of every licensee and of ever person who shall be engaged in the business, whether the person shall act or claim to act as principal or agent, or under or without the authority of this title. For that purpose the director or his or her designee(s) shall have free access to the offices and places of business, books, accounts, papers, records, files, and safes, of all such persons. The director or his designee(s) shall have authority to require the attendance of and to examine under oath any person whose testimony may be required relative to the loans or the business or to the subject matter of any examination, investigation, or hearing.
The director or his or her designee shall make an examination of the affairs, business, office, and records of each licensee and branch location at least once every eighteen (18) months. The total cost of an examination made pursuant to this section shall be paid by the licensee or person being examined, and shall be one hundred fifty percent (150%) of the total salaries and benefits plus one-hundred percent (100%) of the travel and transportation expenses for the examining personnel engaged in the examinations. The fees shall be paid to the director to and for the use of the division of banking. The examination fees shall be in addition to any taxes and fees otherwise payable to the state.
The provisions of section 19-4-3 shall apply to records of examinations or investigations of licensees; however, the director or his or her designee is authorized to make public the number of valid consumer complaints as determined by the director or his or her designee filed against the licensee for a twelve month period immediately preceding the request for such information. ADD}
{ADD 19-14-24. Other business in same place. -- ADD} {ADD No licensee shall conduct any business under this title within any office or place of business in which any other business is solicited or engaged, except as the director or his or her designee may authorize, in writing. Such approval shall not be unreasonably withheld if he or she finds that the character of the other business is such that the granting of such authority would not evade the provisions of this chapter. ADD}
{ADD 19-14-25. Transactions and place of business limited by license. -- ADD} {ADD No licensee shall transact such business provided for by this chapter under any other name or at any other place of business than that named in the license or branch certificate, unless that place is for the exclusive convenience of the customer. The fact that closings occur at a place other than a licensed place of business shall not be deemed to be a violation of this section. ADD}
{ADD 19-14-26. Penalty for violations. -- ADD} {ADD (a) Any person and the several members, officers, directors, agents and employees thereof, who shall knowingly violate or participate in the violation of any of the applicable provisions of this title or any regulation promulgated thereunder, shall be guilty of a misdemeanor and upon conviction thereof shall be punishable by a fine of not more than one thousand dollars ($1,000) or by imprisonment of not more than one (1) year, or both. Each violation shall constitute a separate offense. Complaints under the provisions of this chapter may be made by the director or his or her designee and shall not be required to give surety for costs. The attorney-general shall prosecute all complaints under this chapter.
(b) Any contract of loan not invalid for any other reason, in the brokering, or making of which any act shall have been done which violates 19-14-2, shall be voidable in the discretion of the court, and the lender or loan broker shall have no right to collect or receive any interest, fees or charges whatsoever. ADD}
{ADD 19-14-27. Modification or repeal of chapter. -- ADD} {ADD This chapter or any part thereof may be modified, amended, or repealed so as to effect a cancellation or alteration of any license or right of a licensee hereunder, provided that the cancellation or alteration shall not impair or affect the obligation of any pre-existing lawful contract between any licensee and any customer. ADD}
{ADD 19-14-28. Appeal from director. -- ADD} {ADD Any applicant or licensee aggrieved by an action of the director or his or her designee in denying an application for a license or in revoking or suspending a license, or by any order or decision of the director or his or her designee, shall have the right to appeal the action, order, or decision pursuant to Chapter 35 of Title 42, as amended, entitled "administrative procedures".ADD}
{ADD 19-14-29. Appropriations -- Fees. -- ADD} {ADD The general assembly shall annually appropriate such sums as it may deem sufficient for clerical assistance and necessary expenses in carrying out the provisions of this chapter; and the state controller is hereby authorized and directed to draw his or her orders upon the general treasurer for the payment of the sums appropriated or so much thereof as may from time to time by required, upon receipt by him or her of proper vouchers approved by the director or his or her designee. All fees received under the provisions of this title shall be turned over to the general treasurer. ADD}
{ADD 19-14-30. Rules and regulations. -- ADD} {ADD The director or his or her designee may adopt reasonable rules and regulations for the implementation and administration of the provisions of this chapter. ADD}
{ADD 19-14-31. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable. ADD}{ADD 19-14-32. Pre-existing contracts. -- ADD} {ADD Nothing contained in this chapter shall be so construed as to impair or affect the obligation of any contract or loan lawfully entered into prior to July 1, 1995. ADD}
SECTION 53. Title 19 of the General Laws entitled "Financial Institutions" is hereby amended by adding thereto the following chapter:
{ADD CHAPTER 14.1
LENDERS AND LOAN BROKERS ADD}
{ADD 19-14.1-1. Confessions of judgment -- Incomplete instruments prohibited. -- ADD} {ADD No lender or loan broker shall take any confession of judgment, or any power of attorney, except a power of attorney or power of sale authorizing the lender or loan broker in case of default in payment of interest or principal, to enforce the provisions of any chattel mortgage or pledge. No lender or loan broker shall take any note, promise to pay, or security that does not accurately disclose the actual amount of the loan, the time for which it is made, and the agreed rate of interest nor any instrument in which blanks are left to be filled in after execution. The provisions of this section related to confessions of judgment and power of attorney shall not apply to real estate secured loans. ADD}
{ADD 19-14.1-2. Maximum rate of interest. -- ADD} {ADD Every lender may lend or loan broker may negotiate the lending of any sum of money and may charge, contract for and receive points, fees, charges and interest on the unpaid balance of the loan at a rate not to exceed that provided in section 6-26-2, or as otherwise a permitted under applicable federal law or regulation.
Rebates of prepaid finance charges on precomputed loans, made for an original term of sixty (60) months or less, may be calculated on the method commonly referred to as the rule of 78 or sum of the digits. Rebates of prepaid finance charges on precomputed loans, made for an original term greater than sixty-one (60) months, must be at least the amount as would be produced by the application of the rule of anticipation. ADD}
{ADD 19-14.1-3. Unemployment insurance defined. -- ADD} {ADD For purposes of this chapter, involuntary unemployment insurance coverage shall not be a factor in the approval by the lender or loan broker of any loan. The lender or loan broker shall give and maintain specific written indication that the cost of this coverage is disclosed to the debtor, that the coverage is not a condition for the extension of credit and that the debtor voluntarily desires the coverage. The debtor shall be given written notice of his or her right to cancel within thirty (30) days of the receipt of insurance policy and that the cancellation will result in a full refund of any premiums paid. Unemployment resulting from a labor dispute shall be deemed involuntary unemployment. ADD}
{ADD 19-14.1-4. Documents delivered to borrower -- Advance payments -- Release of security. -- ADD} {ADD Every lender or loan broker, as applicable, who is the holder of any note shall:
(a) Give to any borrower or the borrower's agent making a loan payment a plain and complete receipt for all payments on the loan at the time the payment is made in person at the lender's or loan broker's office.
(b) Except for an open-end loan, upon written request from the borrower, the holder of a subordinate mortgage loan instrument shall deliver to the borrower within ten (10) days from receipt of a written request a statement of the borrower's account showing the date and amount of all payments made or credited to the account and the total unpaid balance. Not more than two (2) such statements shall be required in any twelve (12) month period.
(c) Permit payment to be made in advance in any amount on any contract of loan at any time, but the lender or loan broker may apply the payment first to all interest in full at the agreed rate and other permitted charges, up to the date of such payment. Any broker fees, points or origination fees shall not be subject to any required refund.
(d) Upon repayment of the loan in full, mark indelibly every obligation and security signed by the borrower with the word "paid" or "canceled" and release any mortgage, restore any pledge, cancel and return any note or a copy thereof, and cancel and return any assignment or a copy thereof given to the lender or loan broker by the borrower.
(e) Issue mortgage discharges in accordance with the provision of title 34, chapter 26.
(f) In the case of educational loans, deliver to the borrower a written statement which shall disclose the name and address of the borrower and licensee, the name of each payee to whom disbursements will be made, the date and total amount of the loan commitment, a description of the payment schedule, the amount of any insurance procured by the lender with a summary of the nature and extent of coverage, the total amount of all insurance premiums to be collected by the licensee, the schedule of any disbursements to be made to the borrower and of the method by which the schedule of any disbursements to an educational institution will be determined. ADD}
{ADD 19-14.1-5. Instrument evidencing loan, contents. -- ADD} {ADD No loan document shall contain:
(a) Any acceleration clause under which any part or all of the unpaid balance of the obligation not yet matured may be declared due and payable because the holder deems himself or herself to be insecure;
(b) Any power of attorney to confess judgment or any other power of attorney except a statutory power of sale;
(c) Any provision whereby the debtor waives any rights accruing to him or her under the provisions of this title or any other law expressly prohibiting such waiver;
(d) Any requirement that more than one installment be payable in any one installment period, or, except for an open-end loan, variable-rate loan, change in the payment schedule as a result of the borrower's default or delinquency, or pursuant to an agreement involving a court proceeding, that the amount of any installment be greater or lesser than that of any other installment, except for the final installment which may be in a greater or lesser amount; or
(e) Any assignment of or order for the payment of any salary, wages, commission or other compensation for services, or any part thereof, earned or to be earned. ADD}
{ADD 19-14.1-6. Assignment of earnings. -- ADD} {ADD The payment in money, credit, goods, or things in action, as consideration for any sale or assignment of, or order for, the payment of wages, salary, commissions, or other compensation for services, whether earned or to be earned, shall for the purposes of regulation under this chapter be deemed a loan secured by the assignment, and the amount which the assigned compensation exceeds the amount of consideration actually paid shall for the purposes of regulation under this chapter be deemed interest upon the loan from the date of the payment to the date the compensation is payable. The transaction shall be governed by and subject to the provisions of this chapter. ADD}
{ADD 19-14.1-7. Assignment of wages simultaneous with loan -- Liens on furniture. -- ADD} {ADD No assignment of or order for payment of any salary, wages, commissions, or other compensation for services, earned or to be earned, given to secure any loan made by any licensee under this chapter, shall be valid unless the amount of the loan is paid to the borrower simultaneously with its execution; nor shall the assignment or order, or any chattel mortgage or other lien on household furniture then in the possession and use of the borrower, be valid unless it is in writing, signed in person by the borrower, nor if the borrower is married unless it is signed in person by both husband and wife, provided that written assent of a spouse shall not be required when husband and wife have been living separate and apart for a period of at least five (5) months prior to the making of the assignment, order, mortgage, or lien. ADD}
{ADD 19-14.1-8. Escrow accounts. -- ADD} {ADD All fees paid by clients or residential mortgage loan applicants to a lender or loan broker prior to the closing of the loan in connection with which such fees are paid, shall be deposited in one or more escrow accounts maintained at a federally-insured-deposit-taking institution. Said account(s) shall contain only those funds collected from such clients or residential mortgage loan applicants. Said fees shall include but are not limited to: application fees, appraisal fees, title attorney fees, title insurance fees, credit report fees, rate lock fees or other similar fees.
A lender or loan broker may offset related funds in the escrow account(s) against commissions to which it is entitled in accordance with the contract for services actually performed or for reimbursement for the fees described in the immediately preceding paragraph paid directly by the lender or loan broker to third parties. All offsets shall be accounted for through written documentation evidencing the amount of offset.
The lender or loan broker shall maintain complete and accurate records of all escrow accounts and shall produce upon request all documents pertaining to escrow account activity, including, but not limited to: bank statements, check stubs, canceled, voided, or unused checks, deposit tickets, and reconciliations or other comparable account records.
No licensee governed by this chapter shall commingle money collected for fees from clients or residential mortgage loan applicants with its own funds or use any part of a client's or residential mortgage loan applicant's money in the conduct of the lender's or loan broker's business until such fees or monies shall have been offset as provided for in this section. ADD}
{ADD 19-14.1-9. Penalties. -- ADD} {ADD (a) Any person and the several members, officers, directors, agents and employees thereof, who shall knowingly violate or participate in the violation of any of the applicable provisions of this chapter or any regulation promulgated thereunder, shall be guilty of a misdemeanor and upon conviction thereof shall be punishable by a fine of not more than one thousand dollars ($1,000) or by imprisonment of not more than one (1) year, or both. Each violation shall constitute a separate offense. Complaints under the provisions of this chapter may be made by the director or his or her designee and he or she shall not be required to give surety for costs. The attorney-general shall prosecute all complaints under this chapter.
(b) Any person who shall violate any provision of this chapter may also be subject to a civil monetary penalty, in the discretion of the court. For unintentional violations, to be determined by the court, the award may include actual damages sustained by the applicant or borrower, as the case may be, as a result of the violation, plus a penalty in an amount not greater than one hundred dollars ($100) per violation. For intentional violations, to be determined by the court, the award may include actual damages sustained by the applicant or borrower, as the case may be, as a result of the violation, plus a penalty in an amount not greater than five hundred dollars ($500) per violation. A person's failure to take action to correct the violation within a reasonable period of time, as determined by the court, following notice to the person of the violation by the director or his or her designee pursuant to a final written report or other written notice, may be evidence of an intentional violation under this subsection (b) with respect to violations committed after such notice and expiration of such reasonable time period for correction of such violation. ADD}
{ADD 19-14.1-10. Special exemptions. -- ADD} {ADD (a) The licensing provisions of chapter 14 shall not apply to:
(1) Non profit charitable, educational or religious corporations or associations;
(2) Any person who makes less than six (6) loans in this state in any consecutive twelve (12) month period; there is no similar exemption from licensing for loan brokers for brokering loans or acting as a loan broker; or,
(3) Person(s) acting as an agent for a licensee for the purpose of conducting closings at a location other than that stipulated in the license.
(b) The provisions of chapter 14 and chapter 14.1 shall not apply to:
(1) Loans to corporations, joint ventures, partnerships, limited liability companies or other business entities;
(2) Loans over twenty-five thousand dollars ($25,000) in amount to individuals for business or commercial, as opposed to personal, family or household purposes;
(3) Loans principally secured by accounts receivable and/or business inventory;
(4) Loans made by a life insurance company wholly secured by the cash surrender value of a life insurance policy;
(5) Education-purpose loans made by the Rhode Island Health and Educational Building Corporation as vested in chapter 38.1 of title 45 or the Rhode Island Student Loan Authority as vested in chapter 62 of title 16;
(6) The acquisition of retail or loan installment contracts by an entity whose sole business in this state is acquiring such from federal bank receivers or liquidators; or
(7) Notes evidencing the indebtedness of a retail buyer to a retail seller of goods, services or insurance for a part or all of the purchase price. ADD}
{ADD 19-14.1-11. Rules and regulations. -- ADD} {ADD The director or his or her designee may adopt reasonable rules and regulations for the implementation and administration of the provisions of this chapter. ADD}
{ADD 19-14.1-12. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable. ADD}
SECTION 54. Title 19 of the General Laws entitled "Financial Institutions" is hereby amended by adding thereto the following chapter:
{ADD CHAPTER 14.2
SMALL LOAN LENDERS ADD}
{ADD 19-14.2-1. Maximum rate on small loans not authorized by chapter. -- ADD} {ADD (a) No person, except as authorized by this chapter, shall directly or indirectly charge, contract for, or receive any interest, discount, or consideration greater than provided by this chapter upon the loan, use, or sale of credit of the amount or value of five thousand dollars ($5,000) or less.
(b) The foregoing prohibition shall apply to any person, who, by any device, subterfuge, or pretense whatsoever shall charge, contract for, or receive greater interest, consideration, or charges than is authorized by this chapter for the loan, use, or forebearance of money, goods, or things in action, or for the loan, use, or sale of credit.
(c) No loan of the amount or value of five thousand dollars ($5,000) or less for which a greater rate of interest, consideration, or charges than is permitted by this chapter has been charged, contracted for, or received, wherever made, shall be enforced in this state and every person in any way participating therein in this state shall be subject to the provisions of this chapter, provided that the foregoing shall not apply to loans legally made in any other state, commonwealth, or district which then has in effect a regulatory small loan law similar in principal to this chapter. ADD}
{ADD 19-14.2-2. Confessions of judgment -- Incomplete instruments prohibited. -- ADD} {ADD No small loan lender shall take any confession of judgment, or any power of attorney, except a power of attorney or power of sale authorizing the small loan lender in case of default in payment of interest or principal, to enforce the provisions of any chattel mortgage or pledge. No small loan lender shall take any note, promise to pay, or security that does not accurately disclose the actual amount of the loan, the time for which it is made, and the agreed rate or interest nor any instrument in which blanks are left to be filled in after execution. ADD}
{ADD 19-14.2-3. Unemployment insurance defined. -- ADD} {ADD For purposes of this chapter, involuntary unemployment insurance coverage shall not be a factor in the approval by the small loan lender of any loan. The small loan lender shall give and maintain specific written indication that the cost of this coverage is disclosed to the debtor, that the coverage is not a condition for the extension of credit and that the debtor voluntarily desires the coverage. The debtor shall be given written notice of his or her right to cancel within thirty (30) days of the receipt of insurance policy and that the cancellation will result in a full refund of any premiums paid. Unemployment resulting from a labor dispute shall be deemed involuntary unemployment. ADD}
{ADD 19-14.2-4. Documents delivered to borrower -- Advance payments -- Release of security. -- ADD} {ADD Every small loan lender who is the holder of any note shall:
(a) Give to the borrower or the borrower's agent making payment a plain and complete receipt for all payments on the loan at the time the payment is made in person at the small loan lender's office;
(b) Permit payment to be made in advance in any amount on any contract of loan at any time, but the small loan lender may apply the payment first to all interest in full at the agreed rate and other permitted charges, up to the date of such payment;
(c) Upon repayment of the loan in full, mark indelibly every obligation and security signed by the borrower with the word "paid" or "canceled" and restore any pledge, cancel and return any note or a copy thereof, and cancel and return any assignment or a copy thereof given to the small loan lender by the borrower. ADD}
{ADD 19-14.2-5. Instrument evidencing loan, contents. -- ADD} {ADD No loan document shall contain:
(a) Any acceleration clause under which any part or all of the unpaid balance of the obligation not yet matured may be declared due and payable because the holder deems himself or herself to be insecure;
(b) Any power of attorney to confess judgment or any other power of attorney;
(c) Any provision whereby the debtor waives any rights accruing to him or her under the provisions of this title or any other law expressly prohibiting such waiver;
(d) Any requirement that more than one installment be payable in any one installment period; or
(e) Any assignment of or order for the payment of any salary, wages, commission or other compensation for services, or any part thereof, earned or to be earned. ADD}
{ADD 19-14.2-6. Assignment of earnings. -- ADD} {ADD The payment in money, credit, goods, or things in action, as consideration for any sale or assignment of, or order for, the payment of wages, salary, commissions, or other compensation for services, whether earned or to be earned, shall for the purposes of regulation under this chapter be deemed a loan secured by the assignment, and the amount which the assigned compensation exceeds the amount of consideration actually paid shall for the purposes of regulation under this chapter be deemed interest upon the loan from the date of the payment to the date the compensation is payable. The transaction shall be governed by and subject to the provisions of this chapter. ADD}
{ADD 19-14.2-7. Assignment of wages simultaneous with loan -- Liens on furniture. -- ADD} {ADD No assignment of or order for payment of any salary, wages, commissions, or other compensation for services, earned or to be earned, given to secure any loan made by any small loan lender under this chapter, shall be valid unless the amount of the loan is paid to the borrower simultaneously with its execution; nor shall the assignment or order, or any chattel mortgage or other lien on household furniture then in the possession and use of the borrower, be valid unless it is in writing, signed in person by the borrower, nor if the borrower is married unless it is signed in person by both husband and wife, provided that written assent of a spouse shall not be required when husband and wife have been living separate and apart for a period of at least five (5) months prior to the making of the assignment, order, mortgage, or lien. ADD}
{ADD 19-14.2-8. Maximum loan and interest rate. -- ADD} {ADD (a) Every small loan lender may lend up to five thousand dollars ($5,000) in the aggregate to one borrower and may charge, contract for, and receive thereon interest on the unpaid principal balance on a loan at a rate not exceeding the following:
(1) Loans up to and including three hundred dollars ($300), three percent (3%) per month;
(2) Loans exceeding three hundred dollars ($300) but not exceeding eight hundred dollars ($800), two and one-half percent (2.5%) per month; and
(3) Loans exceeding eight hundred dollars ($800), but not exceeding five thousand dollars ($5,000), two percent (2%) per month. ADD}
{ADD 19-14.2-9. Split loans. -- ADD} {ADD No small loan lender shall induce or permit any borrower to split up or divide any loan, or permit any person to become obligated individually under more than one loan contract at the same time, for the purpose or with the result of obtaining a higher rate of charge than would otherwise be permitted. ADD}
{ADD 19-14.2-10. Computation of interest. -- ADD} {ADD (a) Interest on loans made under this chapter shall not be paid, deducted, or received in advance, or compounded, and shall be computed and paid only on unpaid principal balances and on the basis of the number of days actually elapsed, for the purpose of such computations a month shall be any period of thirty (30) consecutive days.
(b) If part or all of the consideration for a contract of a small loan is the unpaid balance of a prior loan with the same licensee then the principal of the new contract of loan shall not include any unpaid interest on the prior loan, except interest which has accrued within sixty (60) days before the making of the new contract of loan; provided, however, that unpaid interest on a prior loan may not be so included in the principal of a new loan more than once in any period of twelve (12) months. ADD}
{ADD 19-14.2-11. Maximum term of small loans. -- ADD} {ADD No small loan lender shall enter into any contract of loan under this chapter of one thousand dollars ($1,000) or less, excluding charges, under which the borrower agrees to make any scheduled repayment of cash advance or principal more than twenty-five (25) months from the date of making the contract, nor, any contract of small loan exceeding one thousand dollars ($1,000) but not exceeding five thousand dollars ($5,000), excluding charges, under which the borrower agrees to make any scheduled repayment of cash advance or principal more than sixty (60) months from the date of making the contract. Every contract of small loan shall provide for repayment of the loan in substantially equal installments at approximately equal periodical intervals of time. ADD}
{ADD 19-14.2-12. Small loans -- No other charges, exception. -- ADD} {ADD In addition to the interest allowed herein, no small loan licensee shall directly or indirectly charge, contract for or receive any other charges except credit insurance, lawful filing fees and insurance charges and other fees listed in section 6-26-2(c) of the general laws or as authorized by regulation. ADD}
{ADD 19-14.2-13. Additional documents delivered to borrower. -- ADD} {ADD Every licensee who is the holder of any small loan note shall:
Deliver to the borrower at the time any small loan is made a statement of the law regarding interest rate and term limitations, in plain English, showing in clear and distinct terms the amount and date of the loan and of its maturity, the nature of the security, if any, for the loan, the name and address of the borrower and of the licensee, and the agreed rate of interest. ADD}
{ADD 19-14.2-14. Penalties. -- ADD} {ADD (a) Any person and the several members, officers, directors, agents and employees thereof, who shall knowingly violate or participate in the violation of any of the applicable provisions of this chapter or any regulation promulgated thereunder, shall be guilty of a misdemeanor and upon conviction thereof shall be punishable by a fine of not more than one thousand dollars ($1,000) or by imprisonment of not more than one (1) year, or both. Each violation shall constitute a separate offense. Complaints under the provisions of this chapter may be made by the director or his or her designee and he or she shall not be required to give surety for costs. The attorney-general shall prosecute all complaints under this chapter.
(b) Any contract of loan not invalid for any other reason, in the making or collecting of which any act shall have been done which constitutes a misdemeanor under this section, shall be voidable, at the discretion of the court, and the small loan lender shall have no right to collect or receive any principal, interest, fees or charges whatsoever. ADD}
{ADD 19-14.2-15. Rules and regulations. -- ADD} {ADD The director or his or her designee may adopt reasonable rules and regulations for the implementation and administration of the provisions of this chapter. ADD}
{ADD 19-14.2-16. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable. ADD}
SECTION 55. Title 19 of the General Laws entitled "Financial Institutions" is hereby amended by adding thereto the following chapter:
{ADD CHAPTER 14.3
SALE OF CHECKS AND ELECTRONIC MONEY TRANSFERS ADD}
{ADD 19-14.3-1. Exemption from licensing. -- ADD} {ADD No license to sell checks or engage in the business of electronic money transfers shall be required of such agents as any licensee shall designate or appoint. No license to sell checks or engage in the business of electronic money transfers shall be required to obtain a branch office license pursuant to section 19-14-12 or shall be subject to the provisions of section 19-14-24 or shall be required to obtain a license pursuant to chapter 19-14.4 for check cashing services incidental to the sale of checks and electronic money transfers. ADD}
{ADD 19-14.3-2. Securities in lieu of bonds. -- ADD} {ADD In lieu of the required surety bond or bonds, or of any portion as required by chapter 14, the applicant may deposit with the director or his or her designee with such financial institutions, credit unions or national banks in this state as the applicant may designate and the director or his or her designee may approve, United States government/agency obligation or state obligations, to an aggregate amount, based upon principal amount or market value, whichever is lower, of not less than the amount of the required surety bond. The securities shall be deposited and held to secure the same obligations as would the surety bond, but the licensee shall be entitled to receive all interest and dividends thereon, shall have the right, with the approval of the director or his or her designee, to substitute other securities for those deposited, and shall be required to substitute securities on the written order of the director or his or her designee. ADD}
{ADD 19-14.3-3. Liability of licensees. -- ADD} {ADD Each licensee shall be liable for the payment of all checks or electronic money transfer sold by the licensee in this state, in whatever form and whether directly or through an agent, as the maker or drawer thereof according to the negotiable instrument laws of this state; and a licensee who sells a check or electronic money transfer, whether directly or through an agent, upon which the licensee is not designated as maker or drawer shall nevertheless have the same liabilities with respect thereto as if signed as the maker or drawer thereof. Every check or electronic money transfer sold by a licensee, directly or through an agent, shall bear the name of the licensee clearly imprinted thereon. ADD}
{ADD 19-14.3-4. Rules and regulations. -- ADD} {ADD The director or his or her designee may adopt reasonable rules and regulations for the implementation and administration of the provisions of this chapter. ADD}
{ADD 19-14.3-5. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable ADD}
.SECTION 56. Title 19 of the General Laws entitled "Financial Institutions" is hereby amended by adding thereto the following chapter:
{ADD CHAPTER 14.4
CHECK CASHING ADD}
{ADD 19-14.4-1. Exemptions from licensing. -- ADD} {ADD No license to cash checks shall be required hereunder of any persons engaged in the business of cashing checks where such business that is incidental to such person's retail sale of goods or services and such person charges not more than fifty cents ($.50) per check cashed. ADD}
{ADD 19-14.4-2. Public notice of application. -- ADD} {ADD (a) Upon the filing of any application in due form, accompanied by the required fee and documents, notice thereof shall be published in a newspaper of general circulation in this state. Each notice shall contain: ADD}
{ADD (1) the name of the applicant; ADD}
{ADD (2) the location of the proposed site; and ADD}
{ADD (3) a statement that any comment or objection by anyone in relation to such application should be submitted in writing to the director of his or here designee for consideration within ten (10) business days of the date of publication. ADD}
{ADD (b) The general assembly finds and declares that check cashing businesses provide important and vital services to Rhode Island citizens, that the number of check cashing businesses should be limited in accordance with the needs of the communities they are to serve, and that it is in the public interest to promote and foster the check cashing businesses and to insure the financial stability thereof. ADD}
{ADD Accordingly, the director or his or her designee shall cause an investigation of the needs of the community for the establishment of a check cashing business at the location specified in the application and the effect that granting the license will have on the financial stability of other check cashing businesses that may be serving the community in which the business of the applicant is proposed to be conducted. If the issuance of a license to engage in the check cashing business at the location specified will not promote the needs and the convenience and advantage of the community in which the check cashing business of the applicant is proposed to be conducted, then the application may be denied. ADD}
{ADD The director or his or her designee shall thereafter investigate to ascertain whether the qualifications and requirements have been met. Within ninety (90) days after the publication of the notice, if the director or his or her designee finds that the qualifications have been met he or she shall issue to the applicant a license to engage in the business of cashing checks in this state. ADD}
{ADD 19-14.4-3. Rules and regulations. -- ADD} {ADD The director or his or her designee is authorized, directed and empowered to promulgate regulations which provide for the safety and security of customers of the licensee, and/or its employees, from robbery or other criminal activities to include, but not be limited to, bullet proof glass and steel partitions. ADD}
{ADD The rules and regulations, in addition to such other provisions as the director or his or her designee may require, must provide that licensees maintain: ADD}
{ADD (a) Continuously, for each licensed premises liquid assets of at least ten thousand dollars ($10,000). ADD}
{ADD (b) A cash sheet which must be prepared daily for each day's business reflecting all transactions for that day. ADD}
{ADD (c) A money order register recording the date issued, money order number, amount and date paid. In lieu of the said money order register, a copy of the money order may be kept when carbonized type money orders are used. ADD}
{ADD (d) Insurance issued by an insurance company or indemnity company, authorized to do business under the law of this state, which shall insure the applicant against loss by theft, burglary, robbery or forgery in principal sum, as determined by the director or his or her designee, which shall in no event be less than ten thousand dollars ($10,000) nor more than one hundred thousand dollars ($100,000). The required amounts shall bear a relationship to the liquid assets on hand at the licensed location. ADD}
{ADD (e) An adequate written policy and affirmative program to insure compliance with state and federal money laundering statutes. ADD}
{ADD 19-14.4-4. Fees for services. -- ADD} {ADD No licensee shall: ADD}
{ADD (a) Charge check-cashing fees in excess of three percent (3%) of the face amount of the check, or five dollars ($5.00), whichever is greater, if such check is the payment of any kind of state public assistance or federal social security benefit.
(b) Charge check-cashing fees for personal checks in excess of ten percent (10%) of the fact amount of the personal check or five dollars ($5.00), whichever is greater.
(c) Charge check-cashing fees in excess of five percent (5%) of the face amount of the check or five dollars ($5.00), whichever is greater, for all other checks. ADD}
{ADD 19-14.4-5. Posting of charges -- Records of operation. -- ADD} {ADD (a) In every location licensed pursuant to this chapter, there shall be conspicuously posted and at all times displayed a notice stating the charges for cashing checks. ADD}
{ADD (b) Before a licensee shall deposit, with any regulated institution or other insured-deposit-taking institution duly organized under the laws of the United States, a check, cashed by such licensee, the same must be endorsed with the name under which such licensee is doing business and must include the words "licensed check cashing services". ADD} {ADD (c) The licensee shall provide a receipt for each transaction for the benefit of a customer. ADD} {ADD 19-14.4-6. Securities in lieu of bonds. -- ADD} {ADD In lieu of the required surety bond or bonds, or of any portion as required by chapter 14, the applicant may deposit with the director, or his or her designee or with such financial institutions, credit unions or national banks in this state as the applicant may designate and the director or his or her designee may approve, United States government/agency obligation or state obligations, to an aggregate amount, based upon principal amount or market value, whichever is lower, of not less than the amount of the required surety bond. The securities shall be deposited and held to secure the same obligations as would the surety bond, but the licensee shall be entitled to receive all interest and dividends thereon, shall have the right, with the approval of the director or his or her designee, to substitute other securities for those deposited, and shall be required to substitute securities on the written order of the director or his or her designee. ADD}{ADD 19-14.4-7. Dishonor of check -- Procedure. -- ADD} {ADD Within five (5) business days after being advised by the payor institution that a check has been altered, forged, stolen, obtained through fraudulent or illegal means, negotiated without proper legal authority, or represents the proceeds of illegal activity, the licensee shall notify the police department in the city or town where the office of the licensee where the check was cashed is located. In the event a check is returned to the licensee by the payor institution for any of the aforementioned reasons, the licensee may not release the check without the consent of the said city or town police department, office of the attorney general, or other investigating law enforcement authority. ADD}
{ADD 19-14.4-8. Food stamps -- Distribution. -- ADD} {ADD Check cashing licensees may engage in the distribution of food stamps in accordance with such regulations promulgated by the director or his or her designee. ADD}
{ADD 19-14.4-9. Unlicensed check cashing businesses. -- ADD} {ADD The operation of any unlicensed check cashing businesses, or the unlawful conduct or operation of any licensed check cashing business is hereby declared to constitute unfair competition with licensed and legally operated check cashing businesses doing business in the same community. A licensee operating legally under this chapter in the same community shall have the right to apply to the superior court to obtain an injunction restraining such unfair competition. ADD}
{ADD 19-14.4-10. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter which can be given effect without the invalid or unconstitutional provisions or application, and to this end the provisions of this chapter are declared to be severable. ADD}
SECTION 57. Title 19 of the General Laws entitled "Financial Institutions" is hereby amended by adding thereto the following chapter:
{ADD CHAPTER 14.5
FOREIGN EXCHANGE TRANSACTIONS ADD}
{ADD 19-14.5-1. Record of foreign exchange transactions. -- ADD} {ADD Every person carrying on a foreign exchange business or the business of forwarding foreign drafts or of forwarding money or other credits to any country outside of the United States shall make a preserve a record of each transaction, which record shall contain all of the following information: the amount or value of the money or credit forwarded, the bank or depository from which the money or credit is purchased by that person; the date of the purchase, the names and addresses of the persons forwarding the money or credit, and the serial number of other symbol of any of the drafts or credits deposited with the person for forwarding. The record shall be kept in a separate book for that purpose and shall always be open to the inspection of the person who has forwarded any money or credit through the person upon his or her request. No such person shall fail, neglect, or refuse to submit or show the record or prevent a proper person as defined herein to inspect the record. ADD}
{ADD 19-14.5-2. Forwarding of documents to foreign correspondent -- Receipt for money or documents. -- ADD} {ADD Every person whether engaged in the foreign exchange brokerage business or not, to whom any money, draft, or credit is delivered to be forwarded to a foreign correspondent, shall forward such credit accompanied by draft credits, or any documents necessary and essential to carrying out such transaction immediately after the receipt, sale, deposit, or other transaction by which the money, draft, or credit is delivered to the person for forwarding. That person shall also, upon delivery of any money, draft, or credit to be forwarded to a foreign correspondent, give a receipt, showing what the present current rate of exchange of the foreign currency to which the money, draft, or credit is to be transferred is on the day of the transaction, and the amount expressed in the denomination of the foreign currency, according to the rate of exchange, which is to be forwarded as set out above. ADD}
{ADD 19-14.5-3. Action on bond. -- ADD} {ADD Every person who has delivered or deposited money or credit to be forwarded to a foreign correspondent, who has acquired any judgment, debt, claim, or demand relating to such transaction against any person named as principal in any bond filed in accordance with these provisions or their agents or employees, arising from defalcation, embezzlement, negligence, breach of contract, or violation of any duty required under this title, shall have a cause of action upon the bond for all damages sustained, and shall upon request be furnished with a certified copy of the bond by the director or his or her designee and may bring suit in the name of the obligee named in the bond for their use and benefit against the principal and surety or sureties named in the bond, and may prosecute the action to final judgment and execution; provided, that the action and its prosecution shall involve the obligee in no expense, and that every such action shall be commenced and sued within six (6) years after the cause of action shall accrue and not after. ADD}
{ADD 19-14.5-4. Companies exempt from provisions. -- ADD} {ADD The provisions of this chapter shall not apply to duly incorporated financial institutions, or credit unions. ADD}
{ADD 19-14.5-5. Rules and regulations. -- ADD} {ADD The director or his or her designee may adopt reasonable rules and regulations for the implementation and administration of the provisions of this chapter. ADD}
{ADD 19-14.5-6. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstances is held invalid, or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable. ADD}
SECTION 58. Sections 6-26-2 and 6-26-4 of the General Laws in Chapter 6-26 entitled "Interest and Usury" are hereby amended to read as follows:
{ADD 6-26-2. Maximum rate of interest. -- ADD} (a) Subject to the provisions of {DEL section 19-25-35 as modified by section 19-25-37, and subject also to the provisions of chapter 20 of DEL} title 19, no person, partnership, association, or corporation loaning money to or negotiating the loan of money for another, except duly licensed pawnbrokers {DEL and persons licensed under the provisions of chapter 25 of title 19, DEL} shall, directly or indirectly, reserve, charge, or take interest on a loan, whether before or after maturity, at a rate which shall exceed the greater of twenty-one percent (21%) per annum or the alternate rate specified in subsection (b) of this section of the unpaid principal balance of the net proceeds of the loan not compounded, nor taken in advance, nor added on to the amount of the loan, and in the case of credit card transactions, at a rate which shall exceed the greater of eighteen percent (18%) or the alternate rate specified in subsection (b) of this section.
(b) The alternate rate shall mean the rate per annum which is equal to nine percentage points (9%) plus the treasury bill index for the week preceding the later of the date of the debtor's agreement or the date on which the interest rate is redetermined in accordance with the terms of the debtor's agreement. The treasury bill index for any week shall be the highest rate (auction average on a coupon equivalent rate) for U. S. treasury bills with maturities of one year or less, as established at auction of the treasury bills during the week, or, if no auction is conducted during the week, at the auction next preceding the week. The director of business regulation shall keep a record of the treasury bill index and shall cause the applicable rate to be published not less frequently than weekly in at least one (1) newspaper of general circulation in this state.
(c) For purposes of this section, interest shall not be construed to include charges pursuant to chapters 30 and 31 of title 27; premiums for insurance in an amount not exceeding the reasonable value of property offered as security for a loan against any substantial risk of loss, liability, damage, or destruction in conformity with the insurance laws of this state; premiums for insurance providing loss of income or involuntary unemployment coverage if the coverage is not a factor in the approval by the lender of the extension of credit and the debtor gives specific written indication that the cost of this coverage has been conspicuously disclosed to the debtor, the that debtor realizes that the coverage is not a condition for the extension of credit, and that the debtor voluntarily desires the coverage; commercial loan commitment or availability fees to assure the availability of a specified amount of credit for a specified period of time or, at the borrower's option, compensating balances in lieu of the fees; reasonable attorney's fees customarily charged for the preparation of loan, security, or mortgage documents and for the collection of defaulted loans; fees for title examination or title insurance; other customary and reasonable costs incident to the closing, supervision and collection of loans in this state; and consideration received for the redemption, sale, transfer, or other disposition of equity securities by a small business investment company licensed under the provisions of the United States "Small Business Investment Act of 1958" (15 U.S.C. section 631 et seq.) as amended, or an entity which would qualify for regulation as a business development company under the provisions of the "Investment Company Act of 1940" (15 U.S.C. section 80a-1 et seq.) as amended, whether or not such equity securities were acquired by such small business investment company or business development company in connection with or as an incident to the extension of credit. Any of the foregoing charges, if paid or advanced by the lender, may be considered part of the net proceeds of the loan, and if paid by the debtor, shall not be deducted from the net proceeds of the loan.
{ADD 6-26-4. Usurious contracts -- Penalty. -- ADD} Every contract hereafter made in violation of any of the provisions of section 6-26-2, and every mortgage, pledge, deposit, or assignment made or given as security for the performance of the contract, shall be usurious and void; provided, however, that nothing herein contained shall affect the rights of an indorsee or transferee of a negotiable instrument, who purchases the same before maturity, for value, and without notice of its usurious character; provided, further, however, that nothing herein contained shall affect the rights, duties or liabilities of any persons acting under the provisions {DEL of DEL} {DEL chapter 25 DEL} of title 19, and if the borrower shall, either before or after suit, make any payment on the contract, either of principal or interest, or of any part of either, and whether to the lender, or to any assignee, indorsee, or transferee of the contract, the borrower shall be entitled to recover from the lender the amount so paid in an action of the case. Receipts shall be given whenever payments are made of either principal or interest. Provided, however, that the provisions set forth above shall not apply to any {DEL bank DEL} {ADD financial institution ADD} and its subsidiaries, {ADD credit union, or ADD} bank holding company and its subsidiaries, {DEL trust company, savings bank, loan and investment company, credit union, or building and loan association DEL} organized under the laws of the state of Rhode Island, any other entity regulated by the department of business regulation, a national bank and its subsidiaries, federal savings and loan association or federal credit union, or a bank, company, or association hereinafter collectively and individually referred to as a regulated financial institution. In the event a regulated financial institution knowingly contracts or charges a usurious rate of interest in violation of any of the provisions of Section 6-26-2, it shall forfeit the entire interest on the debt. In case the usurious rate of interest has been paid, the person by whom it has been paid, or his legal representative, may recover from the regulated financial institution in an action in the nature of an action on the debt, twice the amount of the interest so paid, provided that the action is commenced within two (2) years from the time the usurious transaction occurred.
SECTION 59. Section 6-27-4 of the General Laws in Chapter 6-27 entitled "Truth in Lending and Retail Selling" is hereby amended to read as follows:
{ADD 6-27-4. Maximum charge -- Refunds. -- ADD} (a) No creditor shall impose a finance charge in excess of an amount equal to eighteen percent (18%) simple interest per annum. This subsection shall not apply to any transaction in connection with which the finance charge does not exceed ten dollars ($10.00). Notwithstanding the provision of any retail installment contract to the contrary, a buyer may prepay in full the unpaid balance thereof at any time before its final due date and, if the buyer does so, shall receive a refund credit thereon for the prepayment. {DEL a proportion of the original finance charge, after deducting therefrom a maximum acquisition cost of ten dollars ($10.00), as (i) the sum of the monthly unpaid balances under the schedule of payments in the contract beginning as of the date after the prepayment which is the next succeeding monthly anniversary date of the due date of the first installment under the contract, or, if the prepayment is prior to the due date of the first installment under the contract, then as of the date after the prepayment which is the next succeeding monthly anniversary date of the date of the contract, bears to (ii) the sum of all the monthly unpaid balances under the schedule of installment payments in the contract. DEL} {ADD The amount of the refund credit of prepaid finance charges on precomputed loans, made for an original term of sixty (60) months or less, may be calculated on the method commonly referred to as the rule of 78's or sum of the digits. Refund credits of prepaid finance charges on precomputed loans, made for an original term greater than sixty (60) months, must be at least the amount as that produced by the rule of anticipation. ADD}
(b) Where the amount of refund credit is less than one dollar ($1.00), no refund credit need be made.
(c) Notwithstanding any contrary provision of law, the maximum finance charge which may be applied under a revolving or open-end credit plan in connection with a transaction arising out of a retail sale of consumer goods, including the retail sale of gasoline, or services shall not exceed one and one-half (1.5%) percent per month, on sales made on or after August 31, 1986, on the average daily balance of the account or the unpaid balance outstanding as of the end of the current billing cycle. Regardless of any agreement to the contrary, a transaction under a revolving or open-end credit plan is subject to this section whenever a solicitation for the extension of credit is made by a creditor whose primary activity in Rhode Island is soliciting Rhode Island customers through the mails, and the solicitation originates outside Rhode Island but is directed to and received by a customer who resides, and responds to such solicitation, in Rhode Island.
(d) This section shall not apply to any person doing business under and as permitted by any general or special law of this state or of the United States relating to {DEL banks, savings banks, trust companies, or building and loan associations or credit unions, nor shall this section apply to any transaction covered by chapter 25 of title 19 entitled "Small Loan Business," chapter 25.2 of title 19 of the general laws entitled "Secondary Mortgage Loans," chapter 26 of title 19 of the general laws entitled "Pawnbrokers," chapter 20 of title 19 of the general laws entitled "Loan and Investment Companies," DEL} {ADD financial institutions, credit unions or licensees pursuant to title 19, ADD} chapter 44 of title 6 entitled "Rental-Purchase Agreements," and section 6-26-2.
(e) Under each revolving or open-end credit plan a late fee not to exceed twelve dollars ($12.00) may be assessed on each minimum payment not paid in full within forty (40) days following the billing date of the statement on which such minimum payment first appears.
SECTION 60. This act shall take effect upon passage.
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