Substitute House Bill No. 6664

Public Act No. 99-36

An Act Concerning Technical Revisions to the Banking Law of Connecticut and Certain Related Statutes.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 36a-12 of the general statutes is repealed and the following is substituted in lieu thereof:

The commissioner may appoint and define the duties and authority of such employees as may be necessary to perform properly the functions of the commissioner's office. The deputy commissioner and any other employee of the Department of Banking shall have the same privileges and be subject to the same restrictions as the commissioner concerning relationships and transactions with any federal bank, federal credit union, out-of-state bank [,] or out-of-state credit union, or with any person subject to the general supervision of the commissioner, except that any employee of the Department of Banking other than the deputy commissioner may be indebted to any person subject to the general supervision of the commissioner, provided the prior approval of the commissioner is obtained for any singular indebtedness or series of indebtedness in the aggregate of twenty-five thousand dollars or more to any such person. Such prior approval shall not be required for (1) indebtedness resulting from the sale of the debt by the original lender, (2) indebtedness incurred at least six months prior to appointment as an employee of the Department of Banking, provided, the commissioner may grant retroactive approval upon such appointment in the case of any singular indebtedness or series of indebtedness in the aggregate of twenty-five thousand dollars or more to any such person that is incurred, in whole or in part, within six months prior to such appointment, or (3) indebtedness incurred by any employee of the Department of Banking who is covered under the terms of the administrative clerical (NP-3) collective bargaining agreement. For purposes of this section, "indebtedness" shall include a line of credit extended to any employee by a person subject to the general supervision of the commissioner whether or not such line of credit has been drawn upon. Any information submitted by an employee to the commissioner for the commissioner's approval pursuant to this section shall be exempt from disclosure under section 1-19.

Sec. 2. Subsection (a) of section 36a-24 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) The [Commissioner of Banking] commissioner, in the commissioner's discretion, may hold a hearing in connection with any application filed with the commissioner and otherwise, with respect to any matter within the commissioner's jurisdiction, as the commissioner may determine. In the case of an acquisition pursuant to section 36a-184, the commissioner shall call such a hearing if the bank or holding company named in the acquisition statement:

(1) Files with the commissioner a written request for a hearing not later than fifteen days after the acquisition statement is filed with the commissioner or the acquisition statement is received by the bank or holding company, whichever is later; and

(2) With such written request, files a statement of issues of fact which, if proved, would constitute grounds for the commissioner's disapproval under subsection (b) of section 36a-185. Such hearing shall be called to commence not later than sixty days after the filing of the acquisition statement.

Sec. 3. Subdivision (6) of subsection (a) of section 36a-428n of the general statutes is repealed and the following is substituted in lieu thereof:

(6) "Qualified financial contract" means any securities contract, commodity contract, forward contract, including any spot and forward foreign exchange contract, repurchase agreement, swap agreement, and any similar agreement, any option to enter into any such agreement, including any combination of the foregoing, any other agreement determined by the [Commissioner of Banking] commissioner by regulation or order to be a qualified financial contract and any master agreement for such agreements. Such master agreement, together with all supplements thereto, shall be treated as one qualified financial contract, provided, such contract, option or agreement, or combination of contracts, options or agreements is reflected in the books, accounts or records of the foreign bank or a party provides documentary evidence of such agreement.

Sec. 4. Subsection (c) of section 36a-428n of the general statutes is repealed and the following is substituted in lieu thereof:

(c) Title to such business and property in this state of a foreign bank shall vest by operation of law in the commissioner and his successors upon taking possession, without the execution of any instruments of conveyance, assignment, transfer or endorsement. The commissioner shall promptly apply to the superior court for the judicial district of Hartford for appointment as receiver of such foreign bank with effect from the time of taking possession, and the superior court shall make such appointment. Thereafter, except as otherwise provided in this section, the commissioner shall liquidate or otherwise deal with such business and property in this state of a foreign bank in accordance with the provisions of sections 36a-223 to 36a-239, inclusive, provided, (1) "debts", "liabilities", "deposits", "claims" and other similar terms used in sections 36a-223 to 36a-239, inclusive, [refers] refer to the claims that the commissioner shall accept pursuant to subsection (e) of this section; (2) "creditors" and "depositors", as used in such sections, [refers] refer to the owners of such accepted claims; (3) except as the context otherwise requires, "Connecticut bank", as used in such sections, refers to the state branches or state agencies in this state; and (4) "officer", as used in such sections, includes any person in charge of or who is an officer of such state branches and the agent or other person in charge of such state agencies. Notwithstanding any contrary provision of law, including chapters 55a and 67, the commissioner may employ or contract with such legal counsel and expert assistants under such titles as the commissioner may assign to them and may retain such of the officers or employees of such foreign bank as the commissioner deems necessary in the liquidation and distribution of the assets of such foreign bank, without the prior approval of any other state agency or elective officers. The commissioner shall be entitled to the appointment of a single judge to supervise the liquidation upon request to the administrative judge of the superior court for the judicial district of Hartford. Said judge shall have the power to order expedited or simplified procedures whenever necessary to resolve a matter in such liquidation.

Sec. 5. Section 36a-435 of the general statutes is repealed and the following is substituted in lieu thereof:

As used in sections 36a-435 to [36a-474] 36a-475, inclusive, unless the context otherwise requires:

(1) "Certificate of organization" means the certificate of incorporation of a Connecticut credit union and includes in the case of Connecticut credit unions in existence on July 1, 1975, articles of association, articles of incorporation and certificates of organization;

(2) "Fiscal year" means January first to December thirty-first, inclusive;

(3) "Immediate family" means any person related by blood, adoption or marriage to a person within the field of membership of the Connecticut credit union;

(4) "Member" means any person who has been admitted to membership in the Connecticut credit union in accordance with its bylaws;

(5) "Membership share" means a share, having a par value not exceeding one hundred dollars, which is part of the capital of the Connecticut credit union and which may not be withdrawn or transferred except upon termination of membership;

(6) "Share" means the basic unit of the capital of the Connecticut credit union; and

(7) "Groups having a common bond of occupation or association" means one or more employer or associational groups, provided (A) each of such groups has its own common bond and a common bond with each other such group within the field of membership, and (B) in the case of multiple group fields of membership, all of the employers and associations shall be within a well-defined geographic area as determined by the commissioner.

Sec. 6. Section 36a-437 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) A Connecticut credit union shall be organized under and subject to the provisions of the laws of this state governing corporations without capital stock, provided, in the event of any conflict between the provisions of such laws and sections 36a-435 to [36a-474] 36a-475, inclusive, the provisions of said sections shall control.

(b) Seven or more persons eighteen years of age or older may form a Connecticut credit union by signing and acknowledging before an officer authorized to take acknowledgments of deeds three copies of a certificate of organization and two copies of the proposed bylaws of the Connecticut credit union. At the incorporators' request, the commissioner shall supply forms for the certificate of organization and bylaws.

(c) Three copies of the certificate of organization, acknowledged in the manner provided in this section, shall be filed with the commissioner. The certificate of organization shall contain the following: (1) The name of the Connecticut credit union which shall include the words "credit union" and "Inc." or the words "mutual benefit association"; (2) a statement that the object of the Connecticut credit union is to conduct the business of, and to engage in any act or activity lawful for, a Connecticut credit union, and that the existence of the Connecticut credit union is perpetual; (3) the location of its principal office and subsidiary offices in this state; (4) a description of its field of membership in detail; (5) any other lawful provisions for the regulation and management of the affairs of the Connecticut credit union or for defining or regulating the powers of the Connecticut credit union, its officers, directors and members as the incorporators or its governing board may deem appropriate; and (6) a statement of the par value of its shares. The certificate of organization of any Connecticut credit union in existence on July 1, 1975, whether denominated a certificate of organization or articles of association or denominated by any other name, shall not, by virtue of the requirements of this subsection, be required to be amended.

(d) Two copies of the bylaws, acknowledged in the manner provided in this section, shall be filed with the commissioner. The bylaws shall contain: (1) The purpose for and the manner in which special meetings of the members shall be held; (2) the title and duties of the officers; (3) the manner in which officers and directors shall be removed and the manner in which vacancies in the officers and governing board shall be filled; (4) the length of terms of officers, the supervisory committee, the credit committee and directors; (5) such other lawful provisions for the regulation and management of the Connecticut credit union affairs as the incorporators or governing board deems appropriate; [,] and (6) any additional provisions not contained in the certificate of organization as the commissioner deems necessary.

(e) (1) Within thirty days from the filing with the commissioner of the certificate of organization and the bylaws, the commissioner shall furnish the incorporators with written notice of the commissioner's determination whether: (A) The proposed field of membership is favorable to the success of the Connecticut credit union; (B) the incorporators are of such character as to give assurance that the affairs of the Connecticut credit union will be administered in accordance with the provisions of sections 36a-435 to [36a-474] 36a-475, inclusive; (C) the certificate of organization meets the requirements of this section; and (D) the proposed bylaws are consistent with the provisions and purposes of sections 36a-435 to [36a-474] 36a-475, inclusive. (2) If the commissioner determines that the foregoing requirements are satisfied, the commissioner shall (A) endorse the commissioner's approval on the copies of the certificate of organization and the bylaws, (B) retain one copy of the certificate of organization and the bylaws, (C) file one copy of the certificate of organization with the Secretary of the State, (D) return one copy of the certificate of organization, certified by the Secretary of the State, and the bylaws to the incorporators, and (E) issue the license.

(f) Within a reasonable time after receipt of notice from the commissioner that the certificate of organization and the bylaws have been approved, the incorporators shall hold an organization meeting at which they shall elect directors, adopt bylaws, and conduct any other business necessary to complete the organization of the Connecticut credit union.

(g) (1) The certificate of organization of a Connecticut credit union may, with the approval of the commissioner, be amended at any time by the adoption of an amendment resolution by two-thirds of the members of the governing board at any meeting. Written notice of such meeting, together with the text of the proposed amendment shall be given to each director at least seven days prior to the meeting. (2) A certificate of amendment shall be filed in triplicate with the commissioner. The certificate of amendment shall set forth: (A) The name of the Connecticut credit union; (B) the amendment; and (C) a statement of the number of directors' votes required to take such action and the number of votes cast in favor of the amendment. (3) The commissioner, upon determining that the certificate of organization, as amended, meets the requirements of sections 36a-435 to [36a-474] 36a-475, inclusive, shall endorse the commissioner's approval thereon, retain one copy, file one copy with the Secretary of the State and return one copy, certified by the Secretary of the State, to the Connecticut credit union.

(h) (1) The bylaws of a Connecticut credit union may, with the approval of the commissioner, be amended at any time by the adoption of an amendment resolution by two-thirds of the members of the governing board at any meeting. Written notice of the meeting and text of the proposed amendment shall be given to each director at least seven days prior to the meeting. (2) The Connecticut credit union shall file two copies of the amendment with the commissioner, who shall determine whether the amendment is consistent with the provisions and purposes of sections 36a-435 to [36a-474] 36a-475, inclusive. Not more than thirty days after the filing of the proposed amendment, the commissioner shall furnish to the Connecticut credit union written notice of the commissioner's determination. The commissioner, upon determining that the bylaws, as amended, satisfy the requirements of said sections, shall endorse the commissioner's approval on two copies of the amendment, retain one copy, and return one copy thereof to the Connecticut credit union. No amendment to the bylaws of a Connecticut credit union may become effective until the amendment has been approved in writing by the commissioner.

Sec. 7. Subsection (e) of section 36a-438 of the general statutes is repealed and the following is substituted in lieu thereof:

(e) The governing board may expel any member who has not carried out the member's obligations with the Connecticut credit union or who has neglected or refused to comply with the provisions of sections 36a-435 to [36a-474] 36a-475, inclusive, or the bylaws. No member may be expelled by the governing board until the member has been informed in writing of the charges against the member and has had a reasonable opportunity to be heard thereon. A member desiring to withdraw from a Connecticut credit union shall give notice of the member's intention to withdraw.

Sec. 8. Section 36a-440 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) A single central credit union may be organized and operated as a Connecticut credit union under the provisions of sections 36a-435 to [36a-474] 36a-475, inclusive, and shall be subject to the provisions of said sections which are not inconsistent with this section. The central credit union organized and operated under the provisions of this section shall in all respects be a Connecticut credit union as defined by sections 36a-435 to [36a-474] 36a-475, inclusive. The bylaws of the central credit union shall contain such provisions as are necessary to permit and promote accomplishment of its unique purposes.

(b) The membership of the central credit union shall be limited to Connecticut credit unions, federal credit unions and out-of-state credit unions, organizations and associations of any such member credit unions, including organizations and associations of officers, directors or managers of any such member credit unions, and subsidiaries of such organizations and associations. Membership in the central credit union shall terminate when the member is no longer within the field of membership.

(c) Annual meetings may be held at such time as the bylaws provide. Each member of the central credit union shall be entitled to a single vote on all matters referred to the members for vote. Members shall be represented at any meeting of members of the central credit union by one member of such member credit union who has been authorized by the governing board of such member credit union. Only the member so authorized may cast the vote of its member credit union at such meetings.

(d) (1) Any officer, director, employee or supervisory or credit committee member of any member and any employee of the central credit union may serve as an officer, director, or committee member of the central credit union subject to any additional criteria imposed by the bylaws. (2) The governing board of the central credit union shall meet at least quarterly. The governing board may delegate to an executive committee of at least three directors such of its duties and authorities between meetings of the governing board as it deems appropriate. The governing board shall establish policies and procedures dealing with loans to members, the terms on which investments of members in the central credit union will be accepted, the borrowing of funds by the central credit union, and investment by the central credit union of its funds. The governing board shall commit the implementation of such policies and procedures to designated officials of the central credit union. (3) The governing board of the central credit union shall appoint a five-member supervisory committee, no member of which may simultaneously serve on the credit committee or as an officer or employee of the central credit union and only two of whom may simultaneously serve as directors of the central credit union.

(e) (1) The central credit union may invest its surplus funds in: (A) Certificates of deposit; (B) the debt obligations of banks and bank holding companies; (C) the debt obligations of corporations incorporated and doing a major portion of their business within the United States, provided, (i) such corporate debt obligations are in the top rating category of any rating service recognized by the commissioner and (ii) not more than ten per cent of the central credit union's assets shall be invested in any one such corporation; (D) investments legal for Connecticut banks; (E) any other investment securities approved by the commissioner; (F) any central credit union organized under any other law; (G) repurchase transactions involving any investments which are permitted for the central credit union. For purposes of this subparagraph, a repurchase transaction is any transaction in which the central credit union agrees to buy or sell a permitted investment and simultaneously agrees to sell or buy the same investment at a later date; (H) a participating interest in any part or all of the outstanding loans of any other Connecticut credit union, federal credit union or out-of-state credit union; and (I) other investments permitted by sections 36a-435 to [36a-474] 36a-475, inclusive. The central credit union may purchase from any Connecticut credit union, federal credit union or out-of-state credit union, any loans which were legal for the selling credit union at the time made or acquired, and may hold or resell any such loans, in whole or in part, with or without undertaking direct primary liability for payment of the principal and interest of any of such loans which may go into default, provided, if any such loans are secured by real property, such property shall be located in this state. (2) The central credit union may accept equity investments from nonmember financial institutions on the following terms and conditions: (A) The equity investments shall be a part of the equity capital of the central credit union, but shall not be deemed to be shares of or a part of the share capital of the central credit union; (B) the investments shall not confer any of the rights and privileges of membership in the central credit union on the owners; and (C) the equity investments by nonmembers shall not exceed in the aggregate ten per cent of the assets of the central credit union.

(f) Loans to members shall, notwithstanding the location of their places of business, be made under the authority and subject to the limitations of subdivision (8) of subsection (a) of section 36a-441. Loans sold by the central credit union to the central liquidity facility or securities sold subject to repurchase shall not be treated as funds borrowed by the central credit union, notwithstanding the recourse rights or repurchase liability inherent in such transactions. The central credit union shall have a lien and right of set-off against the investment of any member for any loan or other liability of such member to the central credit union at any time existing. The central credit union may provide custodial or safekeeping services to its members for securities owned by them.

(g) (1) The central credit union may: (A) Borrow funds in an amount not exceeding one hundred per cent of its paid-in and unimpaired capital and surplus, (B) become the agent member for this state in any central liquidity facility for credit unions authorized by federal law, (C) invest in such a central liquidity facility for such amount as may be required in order to secure for the central credit union and its members full participation in the functions of that facility, (D) receive and hold deposits or investments of such facility, (E) enter into correspondent relationships with other financial institutions and [may] establish and maintain with such other institutions any accounts which are normally required as part of the correspondent relationship, (F) establish and maintain one or more subsidiaries to provide services which are necessary or convenient to the conduct of its business or that of its members, (G) receive from members investments, including payment on shares, with varying maturities and dividend rates established pursuant to policies and procedures of the governing board, and (H) issue money orders and travelers checks and sell them through its members. (2) The central credit union shall contribute to reserves, in lieu of the requirements of section 36a-458, (A) an amount equal to two per cent of gross income, excluding any gross receipts from any transaction in which the central credit union acts only as representative, agent or intermediary for any other party or parties to that transaction until such time as the commissioner may determine that additions to the reserve shall be reduced or suspended, or (B) such greater amount as may be required by the National Credit Union Administration or any other federal regulatory agency exercising jurisdiction over the central credit union.

(h) In the event of liquidation of the central credit union, the assets of the central credit union or the proceeds from any disposition of the assets shall be applied and distributed in the following sequence: (1) All fees and assessments due the commissioner; (2) secured creditors up to the value of their collateral; (3) costs and expenses of liquidation; (4) wages due the employees of the central credit union; (5) costs and expenses incurred by creditors in successfully opposing the release of the central credit union from certain debts as allowed by the commissioner; (6) taxes owed to the United States or any other governmental unit; (7) debts owed to the United States; (8) general creditors and secured creditors to the extent their claims exceed the value of their collateral; and (9) members, to the extent of uninsured share accounts, and the organization that insured the share accounts of the central credit union.

(i) The commissioner may adopt such regulations, in accordance with chapter 54, and may prescribe such operating procedures, consistent with the provisions of this section, as the commissioner deems advisable for the supervision and regulation of the operations of the central credit union.

Sec. 9. Subsection (a) of section 36a-441 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) A Connecticut credit union may, subject to the restrictions and limitations of sections 36a-435 to [36a-474] 36a-475, inclusive, and its bylaws:

(1) Issue shares to its members and receive payments on shares, reduce the amount of its members' shares and cancel shares as provided in sections 36a-435 to [36a-474] 36a-475, inclusive, including (A) club shares to be withdrawn within fifteen months and on which no dividends need be paid and (B) membership shares, if the bylaws so provide, on which no dividends need be paid;

(2) Make unsecured and secured loans in the manner provided in section 36a-456;

(3) Contract for loan protection insurance on the lives of its borrowing members and for life savings insurance on its members' shares;

(4) Deposit its funds in financial institutions whose accounts are insured by or under a program operated by an agency or instrumentality of the United States, provided not more than ten per cent of its assets may be deposited in financial institutions whose principal offices are located in any other state;

(5) Invest its funds in bonds legal as investments for Connecticut banks under the provisions of section 36a-275 subject to the limitations contained in section 36a-452;

(6) Sell or issue to its members without charge negotiable checks or drafts drawn by or on it and payable by it or through any bank accepting commercial deposits, provided the Connecticut credit union shall give the commissioner prior written notification of its intention to issue and sell such negotiable checks or drafts;

(7) Borrow money to an amount not exceeding fifty per cent of the paid-in and unimpaired capital and surplus of the Connecticut credit union. A Connecticut credit union shall notify the commissioner in writing of its intention to borrow amounts in excess of an aggregate of thirty-five per cent of its paid-in and unimpaired capital and surplus;

(8) Make loans not exceeding twenty per cent of the lending Connecticut credit union's paid-in and unimpaired capital and surplus to any other Connecticut credit union and any federal credit union;

(9) Expel members, as provided in sections 36a-435 to [36a-474] 36a-475, inclusive;

(10) Acquire, improve, hold, alter, maintain, repair, encumber and convey such real property as may be necessary for the transaction of its business including the safekeeping and protection of its assets. No Connecticut credit union may expend in the purchase or construction of any building for the purpose, in whole or in part, of accommodating its business, a greater amount than, in the opinion of the commissioner, should be used for such purpose, and such expenditure shall be subject to the approval of the commissioner;

(11) Make home or property improvement loans as provided in section 36a-456;

(12) Make higher education loans as provided in sections 36a-435 to [36a-474] 36a-475, inclusive;

(13) Make loans secured by mortgage on real property, including home equity loans, as provided in sections 36a-265 and 36a-442;

(14) Make contributions or gifts for charitable, educational or public welfare purposes, except that the total amount of such contributions or gifts made by any Connecticut credit union in any one fiscal year shall not exceed the greater of: (A) One hundred dollars, (B) one and one-half per cent of its undivided earnings, or (C) one-tenth of one per cent of its gross income in the immediately preceding fiscal year;

(15) Sell any or all of its outstanding loans to any other lending institution and to purchase one or more outstanding loans from any other Connecticut credit union or federal credit union or purchase from any other lending institution residential mortgage loans or consumer loans made to the credit union's members on a recourse or without recourse basis for such consideration as shall be agreed upon. A loan servicing agreement or arrangement contemplated by such a transaction shall be subject to the prior approval of the commissioner;

(16) Sell a participating interest in any or all of its outstanding loans pursuant to an appropriate written loan participation and servicing agreement to be signed by both Connecticut credit unions involved in such transaction, provided such agreement shall be subject to the prior approval of the commissioner;

(17) Act as agent for the sale, issue and redemption of the obligations of the United States and pledge assets to the United States or to the proper federal reserve bank for its obligations as such agent;

(18) Subject to the prior approval of the commissioner, install safe deposit boxes within suitably constructed vaults in its business building or buildings and rent the boxes to its members provided the Connecticut credit union has assets of at least five hundred thousand dollars and at least one full-time employee; and

(19) Act as agent for the sale to its members of money orders and travelers checks issued by the central credit union.

Sec. 10. Subsection (f) of section 36a-446 of the general statutes is repealed and the following is substituted in lieu thereof:

(f) A Connecticut credit union may, with the written approval of the commissioner and subject to applicable restrictions of state and federal law, receive from members payments on shares that will comprise the assets of an individual retirement account established by such member as authorized by Section 408 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, or of a Keogh or similar type retirement plan established by or for such member as authorized by Section 401(d) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, or of a retirement plan established by or for such member as authorized by Section 401(k) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended. Payments on shares shall be established in a separate account from the shares of the member, and shall not be subject to pledge to secure loans by the Connecticut credit union to the member nor available for set-off by the Connecticut credit union if the member defaults on a loan. Such shares shall be treated as under separate ownership for purposes of applying any limit imposed by sections 36a-435 to [36a-474] 36a-475, inclusive, on the maximum amount of shares owned by a member. Otherwise, these shares are subject to all of the provisions of said sections relating to shares.

Sec. 11. Section 36a-450 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Except for those powers specifically conferred on the credit committee or the supervisory committee or unless otherwise delegated, the business affairs of the Connecticut credit union shall be managed by the governing board.

(b) In addition to the authority conferred on the governing board by the provisions of sections 36a-435 to [36a-474] 36a-475, inclusive, the bylaws, or other applicable law, and except to the extent otherwise delegated or unless such action would be detrimental to the financial integrity of the Connecticut credit union, the governing board shall: (1) Prescribe the conditions for membership and expel members; (2) determine limits on loan amounts, interest rates and maturities and establish unsecured loan limits and security requirements in addition to those imposed by said sections; (3) declare dividends; (4) designate one or more depositories of, and direct and manage the deposit and investment of, funds of the Connecticut credit union, except in the matter of loans to members; (5) authorize interest refunds to members; (6) determine the maximum amount of shares that a member may own, which may be less than the maximum amount provided in said sections; (7) approve, or authorize designated officers of the Connecticut credit union to approve, all usual expenditures incident to the conduct of the business of the Connecticut credit union; (8) establish and implement personnel policies and procedures; (9) cause to be obtained and maintained in full force at all times the bond required by said sections; (10) cause to be prepared every month and maintained on file in the principal office of the Connecticut credit union a list of all delinquent loans and establish and implement policies for the handling of delinquent loans; (11) authorize any extraordinary expenditure necessary or appropriate for the conduct of the business of the Connecticut credit union; (12) fill any vacancies that may arise among the officers, on the supervisory committee or on the credit committee, in the manner provided in the bylaws; and (13) exercise such other authority and perform such other duties as the bylaws may prescribe.

(c) The governing board may appoint, (1) for the terms specified in the bylaws, a credit committee of not less than three nor more than five members of the Connecticut credit union, none of whom shall simultaneously serve on the supervisory committee; (2) for the terms specified in the bylaws, a supervisory committee of not less than three nor more than five members of the Connecticut credit union, none of whom may simultaneously serve on the credit committee or as an officer of the Connecticut credit union or be otherwise regularly employed by it and only one of whom may simultaneously serve as director of the Connecticut credit union; (3) an executive committee of not less than three nor more than five directors, one of whom shall be the chairman of the governing board or the chief executive officer of the Connecticut credit union; (4) an investment officer or an investment committee from among the members of the Connecticut credit union; (5) one or more membership officers from among the members of the Connecticut credit union, who shall not be the treasurer, an assistant treasurer or loan officer; and (6) one or more loan officers, who shall not be members of the supervisory committee but who may be members of the credit committee. Loan officers shall be subject to all of the restrictions and other provisions of sections 36a-435 to [36a-474] 36a-475, inclusive, relating to officers of the Connecticut credit union.

(d) The governing board may employ a president or general manager, as the bylaws may provide, to conduct or to supervise the business of the Connecticut credit union, such person to be compensated as the governing board deems appropriate.

Sec. 12. Subsection (c) of section 36a-452 of the general statutes is repealed and the following is substituted in lieu thereof:

(c) A Connecticut credit union may invest its funds: (1) In bonds which are a direct obligation of the United States, any state or territory of the United States, or any instrumentality of the United States or of any state or territory of the United States, provided such bonds are rated in the three highest rating categories by each nationally recognized rating service that rates such bonds; (2) in bank accounts which are insured by or under a program operated by an agency or instrumentality of the United States; (3) in out-of-state bank accounts which are insured by or under a program operated by an agency or instrumentality of the United States, but only to the extent such accounts are insured; (4) subject to the commissioner's approval, in stock, bonds, debentures or other investments in one or more organizations which provide or will provide a service necessary to or in the conduct of the business of the Connecticut credit union, provided written notice of the investment shall be given to the commissioner within ten days of such investment; (5) in a central credit union organized under sections 36a-435 to [36a-474] 36a-475, inclusive; (6) in the notes or share accounts of any Connecticut credit union or federal credit union, except that the Connecticut credit union receiving the investment shall not accept from any Connecticut credit union or federal credit union an amount greater than the maximum amount to which the share account may be insured, or five per cent of the investing Connecticut credit union or federal credit union's assets, whichever is higher; (7) with the prior written approval of the commissioner, in the shares of, or loans to, cooperatives, except that no Connecticut credit union may invest more than five per cent of its paid-in and unimpaired capital and surplus; (8) in a participating interest in any part or all of the outstanding loans of any other Connecticut credit union or federal credit union; (9) in debt obligations of banks, which obligations have original maturities of one week or less, provided no Connecticut credit union may invest more than five per cent of its paid-in and unimpaired capital and surplus; (10) in debt obligations, other than bonds, issued or fully guaranteed as to principal and interest by the United States or any of its agencies or instrumentalities; and (11) subject to the prior written approval of and any limitations imposed by the commissioner, in any other investments the commissioner deems appropriate in light of such factors as the financial condition and needs of the Connecticut credit union and the degree of risk inherent in the investment.

Sec. 13. Subsection (a) of section 36a-453 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) In accordance with the bylaws, the officers of a Connecticut credit union shall be a chairman of the board or president, vice chairman or vice president, secretary and treasurer who shall be elected by the governing board from among the members of the governing board and who shall not hold more than one office at a time. The governing board may appoint such other officers as the bylaws or sections 36a-435 to [36a-474] 36a-475, inclusive, provide.

Sec. 14. Section 36a-456 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) As provided in section 36a-441, a Connecticut credit union may make such secured and unsecured loans, including lease financing for personal property to its members if the leases are the functional equivalent of secured loans for personal property, with such maturities as may be determined by the governing board, repayable in weekly, semimonthly, monthly, quarterly or semiannual instalments, but which may be repaid in whole or in part prior to maturity, to its members for provident or productive purposes, on such terms as sections 36a-435 to [36a-474] 36a-475, inclusive, the bylaws and any written loan policies of the governing board may permit.

(b) Applications for loans shall be submitted in writing to the credit committee, shall state the purpose for which the loan is desired and shall contain any other information the credit committee deems appropriate.

(c) No Connecticut credit union may make secured or unsecured loans to a member primarily or any person secondarily liable in reliance on the credit of such member totaling either the greater of two hundred dollars or ten per cent of the Connecticut credit union's paid-in and unimpaired capital and surplus.

(d) The governing board of the Connecticut credit union may establish the maximum rate of interest which the Connecticut credit union may charge, contract for and receive on loans to its members.

(e) Subject to regulations adopted by the commissioner, in accordance with chapter 54, the governing board of a Connecticut credit union may authorize interest refunds to members following the close of any annual, semiannual or quarterly accounting period. Refunds shall be made from income earned and received during such accounting period, in proportion to the interest paid by such members during the accounting period on reasonable, objective classes of loans established by the governing board and under such conditions as the governing board may prescribe.

(f) The following shall be security for loans made pursuant to this section:

(1) Share accounts in any Connecticut credit union or federal credit union or savings accounts in any bank, provided the savings accounts are insured by or under a program operated by an agency or instrumentality of the United States;

(2) Share accounts in any out-of-state credit union, or savings accounts in any out-of-state bank to the extent the accounts are insured by or under a program operated by an agency or instrumentality of the United States;

(3) A contract issued by a life insurance company under which such company is obligated to grant a cash value, loan value or other value to the pledgor or assignor within not more than one year after demand, but only to the extent of the value the company is obligated to grant;

(4) Stocks, bonds or other investment securities that, based on quality, maturity and marketability, are deemed by the Connecticut credit union to be appropriate security;

(5) A secondary mortgage on real property whose net equity value, as defined in section 36a-442, is at least twenty per cent of the appraised value of such real estate after the granting of the secondary mortgage pursuant to this subsection;

(6) Tangible personal property that, based on intended use and normal useful life and resale value, is deemed by the Connecticut credit union to be appropriate security for such loans; and

(7) The endorsement or other guaranty of a loan.

(g) Loans that are secured in full by pledge of the borrowing member's own shares may be made without regard to the instalment repayment provisions of subsection (a) of this section and without the prior approval of the credit committee.

(h) A Connecticut credit union may make the following home or property improvement loans to its members: (1) Any loan, not exceeding the amount specified in Section 1703(b)(1) of the National Housing Act, as from time to time amended, insurable by the Secretary of the Department of Housing and Urban Development under Sections 1702 to 1709, inclusive, of that act, and (2) any loan, not exceeding the amount specified in Section 1709(b)(2) of the National Housing Act insurable by the Secretary of the Department of Housing and Urban Development for the maximum amount under Section 1709(k)(1) to (5), inclusive, or Section 1715k(h) of the National Housing Act.

(i) A Connecticut credit union may make loans to members for the payment of expenses of college or university education for a member or a member of a member's family. The loans shall be subject to the applicable limitations on amount, duration and requirement of security provided for by sections 36a-435 to [36a-474] 36a-475, inclusive. All such loans which are fully secured by insurance available under the provisions of any state or federal legislation shall not exceed the applicable limitations imposed by such legislation, and the limitations shall apply in lieu of the corresponding limitations stated in said sections.

(j) No Connecticut credit union may make a loan other than a loan permitted by sections 36a-435 to [36a-474] 36a-475, inclusive. A loan other than a loan permitted by said sections shall be immediately due and payable on demand of the Connecticut credit union notwithstanding any provisions to the contrary contained in the note or other instrument evidencing such loan. An officer, director or member of a statutorily authorized committee of a Connecticut credit union who knowingly permits or participates in the making of a loan other than a loan permitted by said sections shall be fined not more than five hundred dollars and shall be primarily liable to the Connecticut credit union for the entire unpaid balance of the unauthorized loan. The illegality of a loan shall not be a defense in any action by the Connecticut credit union to recover the loan.

(k) No director, member of a statutorily authorized committee or employee of a Connecticut credit union may act as endorser or other guarantor on any loan made by the Connecticut credit union, except a loan made by the Connecticut credit union to a member of such person's immediate family. For purposes of this subsection "immediate family" means any person related by blood, adoption or marriage to the borrower, regardless of whether such person lives in the same household as the borrower.

Sec. 15. Section 36a-462 of the general statutes is repealed and the following is substituted in lieu thereof:

The commissioner may adopt such regulations in accordance with the provisions of chapter 54 and make such findings, consistent with sections 36a-435 to [36a-474] 36a-475, inclusive, as may be necessary for the conduct of Connecticut credit unions and the enforcement of the provisions of said sections. The commissioner may adopt regulations in accordance with the provisions of chapter 54 to establish rates to be paid as dividends on shares having an agreed maturity in the manner provided in subsection (a) of section 36a-459.

Sec. 16. Section 36a-466 of the general statutes is repealed and the following is substituted in lieu thereof:

Nothing in sections 36a-435 to [36a-474] 36a-475, inclusive, shall be construed to exempt Connecticut credit unions organized under said sections from taxation under the provisions of chapter 208.

Sec. 17. Subsection (b) of section 36a-468 of the general statutes is repealed and the following is substituted in lieu thereof:

(b) Once the certificate is filed with the Secretary of the State, the converting credit union shall cease to be a Connecticut credit union and shall no longer be subject to any of the provisions of sections 36a-435 to [36a-474] 36a-475, inclusive.

Sec. 18. Subsection (b) of section 36a-469 of the general statutes is repealed and the following is substituted in lieu thereof:

(b) When the commissioner has been satisfied that all of the requirements of subsection (a) of this section, and all other requirements of sections 36a-435 to [36a-474] 36a-475, inclusive, have been complied with, the commissioner shall (1) endorse the commissioner's approval on three copies of the certificate of organization and on two copies of the bylaws, (2) retain one copy of the certificate of organization and the bylaws, file one copy of the certificate of organization with the Secretary of the State, and return one copy of the certificate of organization, certified by the Secretary of the State, and one copy of the bylaws to the converting credit union, and (3) issue the license required by section 36a-436. Upon such approval and issuance of license, the federal credit union or out-of-state credit union shall become a Connecticut credit union as of the date it ceases to be a federal credit union or out-of-state credit union. The successor Connecticut credit union shall be vested with all of the assets and shall continue to be responsible for all of the obligations of the predecessor federal credit union or out-of-state credit union to the same extent as if the conversion had not taken place.

Sec. 19. Subsection (c) of section 36a-470 of the general statutes is repealed and the following is substituted in lieu thereof:

(c) When the commissioner is satisfied the merger would better serve the economic needs of the members of the Connecticut credit unions and is in the public interest, and that all of the requirements of this section and all other requirements of sections 36a-435 to [36a-474] 36a-475, inclusive, have been complied with, the commissioner shall endorse the commissioner's approval on three copies of the certificate of merger, retain one copy, file one copy with the Secretary of the State and return one copy, certified by the Secretary of the State, to the continuing Connecticut credit union or federal credit union. A copy of such certificate shall be recorded in the offices of the town clerks in each town in this state where any real property owned by the terminating Connecticut credit union is located.

Sec. 20. Section 36a-472 of the general statutes is repealed and the following is substituted in lieu thereof:

An out-of-state credit union may, with the prior written approval of the commissioner, do business as a credit union in this state if a Connecticut credit union is permitted to do business as a credit union in the state in which the out-of-state credit union is organized. Before granting approval, the commissioner shall determine that such out-of-state credit union: (1) Is a credit union organized under laws similar to sections 36a-435 to [36a-474] 36a-475, inclusive; (2) is financially solvent; (3) has share insurance as provided under the federal Credit Union Act; (4) is effectively examined and supervised by the banking commissioner or similar official of the state in which it is organized; and (5) needs to conduct business in this state to adequately serve its members in this state.

Sec. 21. Section 36a-474 of the general statutes is repealed and the following is substituted in lieu thereof:

Except for institutions which are licensed pursuant to sections 36a-435 to [36a-474] 36a-475, inclusive, the provisions of said sections shall not apply to any institution subject to and under the general supervision of any agency of the United States or to any other entity subject to the general supervision of the commissioner.

Sec. 22. Subsection (a) of section 36a-475 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) As used in this section, section 36a-44 and subsection (b) of section 36a-441:

(1) "Credit union service organization" means an organization providing services that are useful to credit unions in the conduct of their lawful operations and the provision of lawful services to their members.

(2) "Shared service center" means a facility which is connected electronically with two or more credit unions so as to permit the facility, through personnel at the facility and the electronic connection, to provide to a credit union member at the facility the same credit union services that the credit union member could lawfully obtain at the main office of the member's credit union.

[(3) "Commissioner" means the Commissioner of Banking. With respect to any function of the commissioner, "commissioner" includes any person authorized or designated by the commissioner to carry out that function.]

Sec. 23. Section 36a-485 of the general statutes is repealed and the following is substituted in lieu thereof:

As used in this section and sections 36a-486 to [36a-495] 36a-498, inclusive, unless the context otherwise requires:

(1) "Advance fee" means any consideration paid or given, directly or indirectly, to a mortgage lender or mortgage broker required to be licensed pursuant to sections 36a-485 to 36a-498, inclusive, prior to the closing of a first mortgage loan to any person, including, but not limited to, loan fees, points, commissions, transaction fees or similar prepaid finance charges;

(2) "First mortgage loan" means a loan made to a natural person, the proceeds of which are to be used primarily for personal, family or household purposes, which loan is secured by a first mortgage upon any interest in one-to-four-family residential owner-occupied real property located in this state which is not subject to any prior mortgages and includes the renewal or refinancing of an existing first mortgage loan;

(3) "Mortgage broker" means a person who, for a fee, commission or other valuable consideration, negotiates, solicits, arranges, places or finds a first mortgage loan which is to be made by a mortgage lender, whether or not such lender is required to be licensed under sections 36a-485 to 36a-498, inclusive;

(4) "Mortgage lender" means any person engaged in the business of making first mortgage loans;

(5) "Principal officer" means the president or treasurer of any licensee which is organized as a corporation; and

(6) "Residential property" means improved real property used or occupied, or intended to be used or occupied, for residential purposes.

Sec. 24. Section 36a-487 of the general statutes is repealed and the following is substituted in lieu thereof:

The following are exempt from licensing under sections 36a-485 to [36a-495] 36a-498, inclusive:

(1) Any bank, out-of-state bank, Connecticut credit union, federal credit union, or out-of-state credit union, provided subsidiaries of such institutions are not exempt from licensure;

(2) Persons granting five or fewer first mortgage loans within any period of twelve consecutive months;

(3) Bona fide nonprofit corporations granting first mortgage loans to promote home ownership for the economically disadvantaged;

(4) Agencies of the federal government, or any state or municipal government, or any quasi-governmental agency granting first mortgage loans under the specific authority of the laws of any state or the United States;

(5) Persons licensed under sections 36a-555 to 36a-573, inclusive, when making loans authorized by said sections;

(6) Persons licensed under sections 36a-510 to 36a-524, inclusive, when making loans authorized by said sections, provided such licensed lender makes less than twelve first mortgage loans within any period of twelve consecutive months;

(7) Any corporation or its affiliate which makes first mortgage loans exclusively for the benefit of its employees or agents;

(8) Any corporation, licensed in accordance with section 38a-41, or its affiliate or subsidiary, which grants first mortgage loans to promote home ownership in urban areas; and

(9) Persons acting as fiduciaries with respect to any employee pension benefit plan qualified under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, who make first mortgage loans solely to plan participants from plan assets.

Sec. 25. Subsection (a) of section 36a-488 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) An application for a license under sections 36a-485 to [36a-495] 36a-498, inclusive, or renewal of such license shall be made in writing, under oath and on a form provided by the commissioner.

Sec. 26. Section 36a-489 of the general statutes is repealed and the following is substituted in lieu thereof:

If the commissioner finds, upon the filing of an application for a license, that the financial responsibility, character, reputation, integrity and general fitness of the applicant and of the members thereof if the applicant is a partnership or association, and of the officers, directors and principal employees if the applicant is a corporation, are such as to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a-485 to [36a-495] 36a-498, inclusive, the commissioner may thereupon issue the applicant a license (1) to engage in the business of granting first mortgage loans or (2) to be a mortgage broker. If the commissioner fails to make such findings, the commissioner shall not issue a license, and shall notify the applicant of the denial and the reasons for such denial.

Sec. 27. Subsection (a) of section 36a-491 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) (1) Each applicant for a license to be a mortgage lender or to be both a mortgage lender and a mortgage broker shall, at the time of making such application, pay to the commissioner a license fee of four hundred dollars. Each applicant for a license to be a mortgage broker shall, at the time of making such application, pay to the commissioner a license fee of two hundred dollars. Each license issued pursuant to this section shall expire at the close of business on September thirtieth of each year unless such license is renewed. Such licensee shall, on or before September first of each year, pay to the commissioner the appropriate license fee as provided in this section for the succeeding year, commencing October first, together with such renewal application as the commissioner may require. Any renewal application filed with the commissioner after September first shall be accompanied by a one-hundred-dollar late fee.

(2) Whenever an application for a license, other than a renewal application, is filed under sections 36a-485 to [36a-495] 36a-498, inclusive, by any person who was a licensee under said sections and whose license expired less than sixty days prior to the date such application was filed, such application shall be accompanied by a one-hundred-dollar processing fee in addition to the application fee.

Sec. 28. Section 36a-492 of the general statutes is repealed and the following is substituted in lieu thereof:

No such license, and no renewal thereof, shall be granted unless the applicant has filed a bond with the commissioner written by a surety authorized to write such bonds in this state, in the sum of forty thousand dollars, the form of which shall be approved by the Attorney General. Such bond shall be conditioned upon such licensee faithfully performing any and all written agreements or commitments with borrowers and prospective borrowers, truly and faithfully accounting for all funds received by the licensee in the licensee's capacity as a mortgage lender or a mortgage broker, and conducting such mortgage business consistent with the provisions of sections 36a-485 to [36a-495] 36a-498, inclusive. Any person who may be damaged by failure to perform any written agreements or commitments, or by the wrongful conversion of funds paid to a licensee, may proceed on such bond against the principal or surety thereon, or both, to recover damages. The bond shall run concurrently with the period of the license granted to the applicant, and the aggregate liability under the bond shall not exceed the penal sum of the bond.

Sec. 29. Section 36a-494 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) The commissioner may suspend, revoke or refuse to renew any license, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for a license under sections 36a-485 to [36a-495] 36a-498, inclusive, or if the commissioner finds that the licensee or any owner, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee has done any of the following: (1) Made any material misstatement in the application; (2) committed any fraud or misrepresented, concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose any of the material particulars of any first mortgage loan transaction, including disclosures required by subdivision (6) of subsection (a) of section 36a-493, or part III of chapter 669 or regulations adopted pursuant thereto, to anyone entitled to such information; (3) violated any of the provisions of sections 36a-485 to [36a-495] 36a-498, inclusive, or of parts I, III and V of chapter 669 or of any regulations adopted pursuant thereto, or any other law or regulation applicable to the conduct of its business; or (4) failed to perform any agreement with a borrower.

(b) Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any of the provisions of sections 36a-485 to [36a-495] 36a-498, inclusive, or any regulation adopted pursuant thereto, the commissioner may take action against such person in accordance with section 36a-50.

Sec. 30. Section 36a-495 of the general statutes is repealed and the following is substituted in lieu thereof:

The commissioner may adopt regulations in accordance with the provisions of chapter 54 as may be necessary to carry out the provisions of sections 36a-485 to [36a-494] 36a-498, inclusive.

Sec. 31. Section 36a-534a of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Any mortgage broker or mortgage lender, as defined in section 36a-485 and licensed pursuant to section 36a-486, and any broker or lender, as defined in section 36a-510 and licensed pursuant to section 36a-511, shall notify the [Commissioner of Banking] commissioner by written affidavit if any such broker or lender, as a result of a transaction in which such broker or lender was involved, reasonably believes that the lending practices of a financial institution or federal bank violate section 36a-737 or 46a-66. Such broker or lender shall provide the commissioner with any written document containing lending restrictions which a financial institution or federal bank has provided to such broker or lender. In the event the commissioner finds that there is a reasonable basis for said notification, the commissioner shall notify the Commission on Human Rights and Opportunities of said notification and the action [he] the commissioner plans to take with respect thereto.

(b) The [Commissioner of Banking] commissioner may suspend, revoke or refuse to renew the license of any broker or lender who violates subsection (a) of this section.

Sec. 32. Section 36a-606a of the general statutes is repealed and the following is substituted in lieu thereof:

Each licensee [, as defined in subdivision (4) of section 36a-596,] shall comply with the applicable provisions of the Currency and Foreign Transactions Reporting Act, 31 USC Section 5311 et seq., as from time to time amended, and any regulations adopted under such provisions, as from time to time amended.

Sec. 33. Subsection (c) of section 49-2 of the general statutes is repealed and the following is substituted in lieu thereof:

(c) Advancements may also be made by a mortgagee, or the assignee of any mortgagee, under an open-end mortgage to the original mortgagor, or to the assign or assigns of the original mortgagor who assume the existing mortgage, or any of them, and any such mortgage debt and future advances shall, from the time such mortgage deed is recorded, without regard to whether the terms and conditions upon which such advances will be made are contained in the mortgage deed and, in the case of an open-end mortgage securing a commercial revolving loan, a consumer revolving loan or a letter of credit, without regard to whether the authorized amount of indebtedness shall at that time or any time have been fully advanced, be a part of the debt due such mortgagee and be secured by such mortgage equally with the debts and obligations secured thereby at the time of recording the mortgage deed and have the same priority over the rights of others who may acquire any rights in, or liens upon, the mortgaged real estate subsequent to the recording of such mortgage deed, provided: (1) [the] The heading of any such mortgage deed shall be clearly entitled "Open-End Mortgage"; (2) the mortgage deed shall contain specific provisions permitting such advancements and, if applicable, shall specify that such advancements are made pursuant to a commercial revolving loan agreement, a consumer revolving loan agreement or a letter of credit; (3) the mortgage deed shall state the full amount of the loan therein authorized; (4) the terms of repayment of such advancements shall not extend the time of repayment beyond the maturity of the original mortgage debt, provided this subdivision shall not be applicable where such advancements are made or would be made pursuant to a commercial revolving loan agreement, a consumer revolving loan agreement or a letter of credit, and the mortgage deed specifies that such advancements are repayable upon demand or by a date which shall not be later than thirty years from the date of the mortgage; (5) such advancements shall be secured or evidenced by a note or notes signed by the original mortgagor or mortgagors or any assign or assigns of the original mortgagor or mortgagors who assume the existing mortgage, or any of them, but no note shall be required with respect to any advancements made pursuant to a commercial revolving loan agreement, a consumer revolving loan agreement or a letter of credit as long as such advancements are recorded in the books and records of the original mortgagee or its assignee; (6) the original mortgage shall be executed and recorded after October 1, 1955; (7) the original mortgagor or mortgagors, or any assign or assigns of the original mortgagor or mortgagors who assume the existing mortgage, or any of them, are hereby authorized to record a written notice terminating the right to make such optional future advances secured by such mortgage or limiting such advances to not more than the amount actually advanced at the time of the recording of such notice, provided a copy of such written notice shall also be sent by registered or certified mail, postage prepaid and return receipt requested, to the mortgagee, or a copy of such written notice shall be delivered to the mortgagee by a proper officer or an indifferent person and a receipt for the same received from the mortgagee, and such notice, unless a later date is recorded or specified in the notice, shall be effective from the time it is received by the mortgagee; (8) except that if any such optional future advance or advances are made by the mortgagee, or the assignee of any mortgagee, to the original mortgagor or mortgagors, or any assign or assigns who assume the existing mortgage, or any of them, after receipt of written notice of any subsequent mortgage, lien, attachment, lis pendens, legal proceeding or adjudication against such real property, then the amount of any such advance, other than an advance made pursuant to a commercial revolving loan agreement or a letter of credit, shall not be a priority as against any such mortgage, lien, attachment, lis pendens or adjudication of which such written notice was given; (9) any notice given to the mortgagee under the terms of subdivision (8) of this subsection shall be deemed valid and binding upon the original mortgagee or any assignee of the original mortgagee, [(A)] in the case of a mortgagee [,] other than a banking institution, [as defined in section 36-193a,] on the next business day following receipt by such mortgagee of such notice sent by registered or certified mail, postage prepaid and return receipt requested or by hand delivery with a signed receipt, and [(B)] in the case of a mortgagee which is a banking institution, [as defined in section 36-193a,] on the next business day following receipt at the main office of such banking institution of such notice sent by registered or certified mail, postage prepaid and return receipt requested or by hand delivery with a signed receipt. For the purposes of this subsection: [,] (A) "Banking institution" means a bank and trust company, a national banking association having its main office in this state, a savings bank, a federal savings bank having its main office in this state, a savings and loan association, a federal savings and loan association having its main office in this state, a credit union having assets of two million dollars or more, or a federal credit union having its main office in this state and having assets of two million dollars or more; (B) "commercial revolving loan" means a loan to a foreign or domestic corporation, partnership, sole proprietorship, association or entity, or any combination thereof, organized for profit and engaged primarily in commercial, manufacturing or industrial pursuits, which loan entails advances of all or part of the loan proceeds and repayments of all or part of the outstanding balance of the loan from time to time; [,] and (C) "consumer revolving loan" means a loan to one or more individuals, the proceeds of which are intended primarily for personal, family or household purposes, which is secured by a mortgage on residential real property, and is made pursuant to an agreement between the mortgagor and mortgagee which [(A)] (i) provides for advancements of all or part of the loan proceeds during a period of time which shall not exceed ten years from the date of such agreement and for repayments of the loan from time to time, [(B)] (ii) provides for payments to be applied at least in part to the unpaid principal balance not later than ten years from the date of the loan, [(C)] (iii) does not authorize access to the loan proceeds by a credit card or any similar instrument or device, whether known as a credit card, credit plate, or by any other name, issued with or without a fee by an issuer for the use of the cardholder in obtaining money, goods, services, or anything else of value on credit, and [(D)] (iv) does not provide that such a revolving loan to more than one mortgagor will be immediately due and payable upon the death of fewer than all the mortgagors who signed the revolving loan agreement. Nothing in this subsection shall affect the validity or enforceability of any loan agreement which provides for future advancements by a lender to a borrower as between such parties or their heirs, successors or assigns, or shall affect the validity or enforceability of any mortgage securing any such loan that would be valid and enforceable without the provisions of this subsection.

Sec. 34. Subsection (p) of section 36a-70 of the general statutes is repealed and the following is substituted in lieu thereof:

(p) One or more persons may organize an interim Connecticut bank solely (1) for the acquisition of an existing bank, whether by acquisition of stock, by acquisition of assets, or by merger or consolidation, or (2) to facilitate any other corporate transaction authorized by this title in which the commissioner has determined that such transaction has adequate regulatory supervision to justify the organization of an interim Connecticut bank. Such interim Connecticut bank shall not accept deposits or otherwise commence business. [Subdivisions (2), (3) and (4)] Subdivision (2) of subsection (c) and subsections (d), (f), (g), (h) and (o) of this section shall not apply to the organization of an interim bank, provided the commissioner may, in the commissioner's discretion, order a hearing under subsection [(d)] (e) of this section or require that the organizers publish or mail the proposed certificate of incorporation or both. The approving authority for an interim Connecticut bank shall be the commissioner acting alone. If the approving authority determines that the organization of the interim Connecticut bank complies with applicable law, the approving authority shall issue a temporary certificate of authority conditioned on the approval by the appropriate supervisory agency of the corporate transaction for which the interim Connecticut bank is formed.

Sec. 35. Subdivision (1) of section 36b-3 of the general statutes is repealed and the following is substituted in lieu thereof:

(1) "Agent" means any individual, other than a broker-dealer, who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities. "Agent" does not include an individual who represents an issuer in (A) effecting transactions in a security exempted by subdivision (1), (2), (3), (4), (6), (9), (10), (11) or (21) of subsection (a) of section 36b-21, (B) effecting transactions exempted by subsection (b) of section 36b-21, except for transactions exempted by subdivisions (10), [(11)] (13) or (14) of said subsection, (C) effecting transactions with existing employees, partners or directors of the issuer if no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state, or (D) effecting transactions in any covered security, except for covered securities within the meaning of Sections 18(b)(2) or 18(b)(4)(D) of the Securities Act of 1933. "Agent" does not include such other persons not within the intent of this subdivision as the commissioner may by regulation or order determine. A general partner, officer or director of a broker-dealer or issuer, or a person occupying a similar status or performing similar functions, is an agent only if he otherwise comes within this definition and any compensation that he receives is directly or indirectly related to purchases or sales of securities.

Approved May 27, 1999

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