[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4252 Introduced in House (IH)]

113th CONGRESS
  2d Session
                                H. R. 4252

  To amend the Federal Deposit Insurance Act to allow mutual capital 
 certificates to satisfy capital requirements for mutual depositories, 
to amend the Revised Statutes of the United States to establish mutual 
                national banks, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 14, 2014

 Mr. Rothfus introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
  To amend the Federal Deposit Insurance Act to allow mutual capital 
 certificates to satisfy capital requirements for mutual depositories, 
to amend the Revised Statutes of the United States to establish mutual 
                national banks, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Mutual Bank Choice and Continuity 
Act of 2014''.

SEC. 2. TREATMENT OF MUTUAL CAPITAL CERTIFICATES.

    (a) In General.--Section 38 of the Federal Deposit Insurance Act 
(12 U.S.C. 1831o) is amended--
            (1) in subsection (b)(2)--
                    (A) by redesignating subparagraphs (F) through (I) 
                as subparagraphs (H) through (K), respectively; and
                    (B) by inserting after subparagraph (E) the 
                following new subparagraphs:
                    ``(F) Mutual capital certificate.--The term `mutual 
                capital certificate' means a financial instrument 
                issued by a mutual depository pursuant to subsection 
                (c)(1)(C) that--
                            ``(i) is subordinate to all claims against 
                        such mutual depository;
                            ``(ii) is unsecured by the assets of such 
                        mutual depository;
                            ``(iii) does not permit preemptive rights;
                            ``(iv) does not provide voting or member 
                        rights to the holder unless the board of 
                        directors of such mutual depository proposes to 
                        change the specific terms of any class of such 
                        certificates in a manner adverse to the 
                        interests of the holder;
                            ``(v) is not eligible for use as collateral 
                        for any loan made by such mutual depository;
                            ``(vi) if declared by the board of 
                        directors of such mutual depository, entitles 
                        the holder to a payment of fixed, variable, or 
                        participating dividends; and
                            ``(vii) is not redeemable until the date 
                        that is 5 years after the date of issuance, 
                        except in the case of merger, conversion, or 
                        consolidation of such mutual depository, or 
                        reorganization of such mutual depository into a 
                        mutual holding company or a Federal mutual bank 
                        holding company (as such term is defined in 
                        section 5133A(a) of the Revised Statutes of the 
                        United States).
                    ``(G) Mutual depository.--The term `mutual 
                depository' means an insured depository institution 
                operating in a non-stock form, including a Federal non-
                stock depository and any form of non-stock depository 
                provided for under State law, the deposits of which are 
                insured by an instrumentality of the Federal 
                Government.''; and
            (2) in subsection (c)(1)--
                    (A) in subparagraph (A), by inserting ``and 
                subparagraph (C)'' after ``subparagraph (B)(ii)''; and
                    (B) by inserting after subparagraph (B) the 
                following new subparagraph:
                    ``(C) Mutual capital certificates.--A mutual 
                depository is authorized to issue mutual capital 
                certificates that shall qualify as common equity Tier 1 
                capital (as such term is defined by the appropriate 
                Federal banking agency) for purposes of any capital 
                requirements mandated by any Federal law or 
                regulation.''.
    (b) Regulations.--Not later than 180 days after the date of 
enactment of this section, the appropriate Federal banking agencies 
shall jointly issue regulations to implement this section.

SEC. 3. CHARTERING MUTUAL NATIONAL BANKS AND ESTABLISHING FEDERAL 
              MUTUAL BANK HOLDING COMPANIES.

    (a) In General.--Chapter 1 of title LXII of the Revised Statutes of 
the United States (12 U.S.C. 21 et seq.) is amended by inserting after 
section 5133 the following new sections:

``SEC. 5133A. MUTUAL NATIONAL BANKS.

    ``(a) Definitions.--In this section and in section 5133B the 
following definitions shall apply:
            ``(1) Appropriate federal banking agency.--The term 
        `appropriate Federal banking agency' has the meaning given such 
        term in section 3 of the Federal Deposit Insurance Act (12 
        U.S.C. 1813).
            ``(2) Depository institution subsidiary.--The term 
        `depository institution subsidiary' means an insured depository 
        institution that is a subsidiary (as such term is defined in 
        section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
        1813)) of a Federal mutual bank holding company.
            ``(3) Insured depository institution.--The term `insured 
        depository institution' has the meaning given such term in 
        section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
        1813).
            ``(4) Federal mutual bank holding company.--The term 
        `Federal mutual bank holding company' means a bank holding 
        company operating in mutual form organized under section 5133B 
        that owns, directly or indirectly, a majority of the shares of 
        voting stock of each depository institution subsidiary.
            ``(5) Modification of a federal mutual bank holding 
        company.--The term `modification of a Federal mutual bank 
        holding company' means--
                    ``(A) the sale of shares of common or preferred 
                stock in a depository institution subsidiary to any 
                party other than the parent Federal mutual bank holding 
                company of such depository institution subsidiary or a 
                wholly owned subsidiary of that parent;
                    ``(B) the voluntary grant of a lien on shares of 
                common or preferred stock in a depository institution 
                subsidiary; or
                    ``(C) any action that affects the corporate 
                structure of the Federal mutual bank holding company 
                and materially impacts the rights of its members.
            ``(6) Mutual capital certificate.--The term `mutual capital 
        certificate' has the meaning given such term in section 
        38(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 
        1831o(b)(2)).
            ``(7) Mutual depository.--The term `mutual depository' 
        means an insured depository institution operating in a non-
        stock form, including a Federal non-stock depository and any 
        form of non-stock depository provided for under State law, the 
        deposits of which are insured by an instrumentality of the 
        Federal Government.
            ``(8) Mutual national bank.--The term `mutual national 
        bank' means a mutual depository chartered by the Comptroller of 
        the Currency under this section.
            ``(9) Mutuality.--The term `mutuality' means the quality of 
        being an insured depository institution organized under a 
        Federal or State law providing for the organization of non-
        stock depository institutions, or a holding company organized 
        under a Federal or State law providing for the organization of 
        non-stock entities that control one or more depository 
        institutions.
            ``(10) National bank.--The term `national bank' means a 
        banking association organized pursuant to section 5133.
            ``(11) Mutual member.--The term `mutual member' means each 
        tax liable depositor in a mutual depository's savings, demand, 
        or other authorized depository accounts who is not a prior 
        charter member.
            ``(12) Prior charter member.--The term `prior charter 
        member' means each tax liable depositor in a mutual national 
        bank that maintains under its prior mutual depository charter 
        pursuant to subsection (d)(1)(B).
            ``(13) State bank.--The term `State bank' has the meaning 
        given such term in section 3 of the Federal Deposit Insurance 
        Act (12 U.S.C. 1813).
            ``(14) Tax liable depositor.--The term `tax liable 
        depositor' means the single person responsible for paying any 
        Federal taxes due on any interest paid on any deposits held 
        within any savings, demand, or other authorized depository 
        account.
    ``(b) Chartering Mutual National Banks.--Notwithstanding the 
provision designated the `Third' of section 5134, in order to establish 
mutual institutions operating in non-stock form for the deposit of 
funds, the extension of credit, and provision of other services, the 
Comptroller of the Currency may charter mutual national banks either de 
novo or through a conversion of any insured depository institution or 
any insured credit union (as such term is defined in section 101 of the 
Federal Credit Union Act (12 U.S.C. 1752)), subject to regulations 
prescribed by the Comptroller of the Currency in accordance with this 
section. The powers conferred by this section are intended to provide 
for the creation and maintenance of mutual national banks as bodies 
corporate existing in perpetuity for the benefit of their depositors 
and the communities in which they operate.
    ``(c) Regulations.--
            ``(1) Regulations of the comptroller.--The Comptroller of 
        the Currency is authorized to prescribe appropriate regulations 
        for the organization, incorporation, examination, operation, 
        and regulation of mutual national banks.
            ``(2) Applicability of capital stock requirements.--The 
        Comptroller of the Currency shall prescribe regulations 
        applicable to mutual national banks regarding the requirements 
        of this title with respect to capital stock and the limitations 
        imposed on national banks under this title based on capital 
        stock.
    ``(d) Conversions.--
            ``(1) Conversion of a mutual depository to a mutual 
        national bank.--Subject to such regulations as the Comptroller 
        of the Currency may prescribe, a mutual depository that elects 
        to convert to a mutual national bank shall submit to the 
        Comptroller of the Currency a notice of its election to convert 
        on a specified date that is on or after the date that is 30 
        days after the date on which the notice is filed.
                    ``(A) Charter.--The mutual depository shall be 
                converted to a mutual national bank and the Comptroller 
                of the Currency shall issue a charter described in 
                subsection (b) on the specified date described in 
                paragraph (1).
                    ``(B) Option to maintain mutual depository 
                charter.--After converting and receiving a charter 
                under subparagraph (A), such mutual national bank may 
                continue to exercise the governance, investments, and 
                authorities permitted under its prior mutual depository 
                charter.
            ``(2) Conversion of a mutual national bank to a stock 
        national bank.--Subject to such regulations as the Comptroller 
        of the Currency may prescribe for the protection of the rights 
        of mutual members and for any other purpose the Comptroller of 
        the Currency may consider appropriate, any mutual national bank 
        may reorganize as a national bank operating in stock form.
            ``(3) Conversion of a mutual national bank to a state 
        bank.--Any mutual national bank may convert to a State bank in 
        accordance with regulations prescribed by the Comptroller of 
        the Currency and applicable State law.
    ``(e) Terminating Mutuality.--A mutual national bank shall 
terminate mutuality by--
            ``(1) liquidating; or
            ``(2) converting to a national bank operating in stock form 
        under subsection (d)(2) or to a State bank under subsection 
        (d)(3).
    ``(f) Status and Rights of Members.--
            ``(1) In general.--The status of a mutual member or prior 
        charter member is primarily as a depositor and secondarily as a 
        holder of a contingent right to participate in the equity of 
        such mutual national bank upon a liquidation or conversion 
        pursuant to subsection (e).
            ``(2) Member rights.--
                    ``(A) Prior charter member rights.--The status and 
                rights of a prior charter members shall be governed by 
                the law of the prior mutual depository charter.
                    ``(B) Mutual member rights.--Each mutual member of 
                a mutual national bank that receives a charter pursuant 
                to subsection (b) shall have the following rights:
                            ``(i) The right to vote for delegates to 
                        the board of directors of such mutual national 
                        bank.
                            ``(ii) The right to attend any meeting of 
                        mutual members called by the board of directors 
                        of such mutual national bank.
                            ``(iii) Any other rights agreed upon by 
                        contract between the mutual member and the 
                        mutual national bank.
            ``(3) Certain voting rights.--On questions requiring action 
        by its mutual members, the mutual national bank shall provide 
        in its charter that each such mutual member shall have either--
                    ``(A) one vote per mutual member; or
                    ``(B) one vote for each $100, or fraction thereof, 
                of the withdrawal value of the mutual member's account, 
                but not more than 1,000 votes per mutual member.
            ``(4) Continuity of rights.--If a mutual national bank 
        converts to a Federal mutual bank holding company pursuant to 
        section 5133B, a mutual member or prior charter member of such 
        mutual national bank shall have the same rights with respect to 
        that Federal mutual bank holding company as such member had 
        with respect to the mutual national bank immediately prior to 
        such conversion.
            ``(5) Conversion rights.--If the board of directors of a 
        mutual national bank, in its sole discretion, determines that a 
        conversion described in paragraph (2) or (3) of subsection (d) 
        is in the best interests of the community in which such bank 
        operates, and the mutual members or prior charter members of 
        such bank approve the conversion through a special proxy, then 
        on a record date set by the board of directors such members 
        shall have the first right to subscribe for and purchase stock 
        in the converted bank.
            ``(6) Liquidation rights.--If a mutual national bank is 
        liquidated by operation of law, or if the board of directors of 
        a mutual national bank, in its sole discretion, determines a 
        liquidation of such bank is in the best interests of the 
        community in which such bank operates and the mutual members or 
        prior charter members of such bank approve the liquidation, 
        then on the date of liquidation, members of the liquidated 
        mutual national bank shall have the right to have credited to 
        their accounts, on a pro rata basis, any residual assets that 
        remain after the liquidation of such bank.
    ``(g) Proxies.--
            ``(1) In general.--A mutual member may give a perpetual 
        proxy to a committee of the board of directors of the mutual 
        depository in writing or electronically. Such proxy may be used 
        to vote on any issue requiring approval of the mutual members.
            ``(2) Use of proxies.--A proxy given under paragraph (1) 
        may vote on the conversion of a mutual depository to a mutual 
        national bank and any concurrent or subsequent reorganization 
        to a Federal mutual bank holding company, except that absent a 
        finding by the appropriate Federal banking agency of the mutual 
        depository that action is needed to avoid loss to the Deposit 
        Insurance Fund of the Federal Deposit Insurance Corporation or 
        to protect the stability of the United States financial system, 
        such proxy may not be used to vote in favor of--
                    ``(A) terminating mutuality for a mutual national 
                bank or a Federal mutual bank holding company; or
                    ``(B) permitting the modification of a Federal 
                mutual bank holding company.
            ``(3) Effect of conversion or reorganization.--A proxy 
        given under paragraph (1) shall continue to be valid after the 
        conversion of a mutual depository to a mutual national bank 
        pursuant to subsection (d)(1)(A) and any concurrent or 
        subsequent reorganization to a Federal mutual bank holding 
        company.
            ``(4) Revoking a proxy.--A mutual member may revoke a proxy 
        given under paragraph (1) in writing or electronically. The 
        revocation shall be effective not later than 6 business days 
        after it is made.
    ``(h) Conforming References.--Unless otherwise provided by the 
Comptroller of the Currency--
            ``(1) any reference in any Federal law to a national bank 
        operating in stock form, including a reference to the term 
        `national banking association', `member bank', `national bank', 
        `national association', `bank', `insured bank', `insured 
        depository institution', or `depository institution' shall be 
        deemed to refer also to a mutual national bank;
            ``(2) any reference in any Federal law to the term `board 
        of directors', `director', or `directors' of a national bank 
        operating in stock form shall be deemed to refer also to the 
        board of a mutual national bank; and
            ``(3) any terms in Federal law that may apply only to a 
        national bank operating in stock form, including the terms 
        `stock', `share', `shares of stock', `capital stock', `common 
        stock', `stock certificate', `stock certificates', 
        `certificates representing shares of stock', `stock dividend, 
        transferable stock', `each class of stock', `cumulate such 
        shares', `par value', or `preferred stock' shall not apply to a 
        mutual national bank.

``SEC. 5133B. FEDERAL MUTUAL BANK HOLDING COMPANIES.

    ``(a) Reorganization of Mutual National Bank as a Federal Mutual 
Bank Holding Company.--
            ``(1) In general.--Subject to approval under the Bank 
        Holding Company Act of 1956 (12 U.S.C. 1841 et seq.), a mutual 
        national bank may reorganize into a Federal mutual bank holding 
        company by submitting a reorganization plan to the Board of 
        Governors of the Federal Reserve System (hereinafter referred 
        to as the `Board of Governors').
            ``(2) Plan approval.--A reorganization plan submitted under 
        paragraph (1) requires the approval of--
                    ``(A) a majority of the board of directors of the 
                mutual national bank; and
                    ``(B) a majority of mutual members or prior charter 
                members of the mutual national bank at a meeting held 
                at the call of the board of directors of such bank 
                under the procedures prescribed by the charter or 
                bylaws of such bank.
            ``(3) Conversion to a federal mutual bank holding 
        company.--Upon the approval of the reorganization plan 
        submitted under paragraph (1) and the issuance of the 
        appropriate charters--
                    ``(A) the substantial part of the assets and 
                liabilities of the mutual national bank, including all 
                of the insured liabilities, shall be transferred to a 
                national bank, a majority of the shares of voting stock 
                of which is owned, directly or indirectly, by the 
                mutual national bank that is to become a Federal mutual 
                bank holding company; and
                    ``(B) the mutual national bank shall become a 
                Federal mutual bank holding company.
    ``(b) Ownership of Depository Institution Subsidiaries.--To avoid 
terminating mutuality, a Federal mutual bank holding company must own, 
directly or indirectly, at least a majority of the shares of voting 
stock of each of its depository institution subsidiaries.
    ``(c) Terminating Mutuality.--
            ``(1) Liquidating or converting.--A Federal mutual bank 
        holding company shall terminate mutuality by liquidating or 
        converting to a bank holding company operating in stock form.
            ``(2) No termination.--Notwithstanding paragraph (1), a 
        reorganization of a mutual depository or a modification of a 
        Federal mutual bank holding company may not terminate 
        mutuality.
    ``(d) Retention of Capital.--In connection with a reorganization 
described in subsection (a), a mutual national bank may retain capital 
at the holding company level in order to comply with the capital 
requirements of the Board of Governors for holding companies.
    ``(e) Other Conversions.--
            ``(1) Conversion of a state mutual bank holding company to 
        a federal mutual bank holding company.--Subject to such 
        regulations as the Board of Governors may prescribe, a mutual 
        bank holding company organized under State law that elects to 
        convert to a Federal mutual bank holding company--
                    ``(A) shall submit to the Board of Governors a 
                notice of its election to convert on a specified date 
                that is on or after the date that is 30 days after the 
                date on which the notice is filed; and
                    ``(B) shall be converted to a Federal mutual bank 
                holding company on such specified date.
            ``(2) Maintenance of original powers, governance, and 
        authorities.--Upon conversion to a Federal mutual bank holding 
        company, the entity may continue to exercise the powers, 
        governance, and authorities permitted to it as a mutual bank 
        holding company organized under State law.
            ``(3) Conversion of federal mutual bank holding company to 
        bank holding company.--Subject to such regulations as the Board 
        of Governors may prescribe, any Federal mutual bank holding 
        company that is organized under subsection (a) may reorganize 
        as a bank holding company operating in stock form.
    ``(f) Rights of Mutual Holding Company Members.--Each tax liable 
depositor in a savings, demand, or other authorized depository account 
in depository institution subsidiary shall have the same rights with 
respect to the Federal mutual bank holding company as such depositor 
would have had if the depository institution subsidiary had been a 
mutual national bank.
    ``(g) Regulation.--A Federal mutual bank holding company shall be--
            ``(1) chartered by the Board of Governors and subject to 
        its regulation and supervision; and
            ``(2) regulated under the Bank Holding Company Act of 1956 
        (12 U.S.C. 1841 et seq.) on terms, and subject to limitations, 
        comparable to those applicable to any other bank holding 
        company.
    ``(h) Capital Improvement.--
            ``(1) Pledge of stock of national bank subsidiary.--This 
        section shall not prohibit a Federal mutual bank holding 
        company from pledging all or a portion of the stock of the 
        national bank chartered as part of a transaction described in 
        subsection (a) to raise capital for such national bank.
            ``(2) Issuance of nonvoting shares.--This section shall not 
        prohibit a national bank chartered as part of a transaction 
        described in subsection (a) from issuing any nonvoting shares 
        or less than 50 percent of the voting shares of such national 
        bank to any person other than the Federal mutual bank holding 
        company.
    ``(i) Insolvency and Liquidation.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, the Board of Governors may file a petition under chapter 7 
        of title 11, United States Code, with respect to a Federal 
        mutual bank holding company upon--
                    ``(A) the default of any depository institution 
                subsidiary, the stock of which is owned by the Federal 
                mutual bank holding company; or
                    ``(B) a foreclosure on a pledge by the Federal 
                mutual bank holding company described in subsection 
                (h)(1).
            ``(2) Distribution of net proceeds.--Except as provided in 
        paragraph (3), the net proceeds of any liquidation of any 
        Federal mutual bank holding company under paragraph (1) shall 
        be transferred to persons who hold an interest in such Federal 
        mutual bank holding company.
            ``(3) Recovery by fdic.--If the Federal Deposit Insurance 
        Corporation incurs a loss as a result of the default of any 
        depository institution subsidiary that is liquidated under 
        paragraph (1), the Federal Deposit Insurance Corporation shall 
        succeed to the interests of the depositors of the depository 
        institution subsidiary as members of the Federal mutual bank 
        holding company to the extent of the Federal Deposit Insurance 
        Corporation's loss.
    ``(j) Conforming References.--Unless otherwise provided by the 
Board of Governors--
            ``(1) any reference in any Federal law to a bank holding 
        company operating in stock form shall be deemed to refer also 
        to a Federal mutual bank holding company;
            ``(2) any reference in any Federal law to the term `board 
        of directors', `director', or `directors' of a national bank 
        operating in stock form shall be deemed to refer also to the 
        board of a Federal mutual bank holding company; and
            ``(3) any terms in Federal law that may apply only to a 
        national bank operating in stock form, including the terms 
        `stock', `shares', `shares of stock', `capital stock', `common 
        stock', `stock certificate', `stock certificates', 
        `certificates representing shares of stock', `stock dividend', 
        `transferable stock', `each class of stock', `cumulate such 
        shares', `par value', or `preferred stock' shall not apply to a 
        Federal mutual bank holding company unless the Board of 
        Governors of the Federal Reserve System determines that context 
        requires otherwise.
    ``(k) Limitation on Federal Regulation of Mutual Depositories.--
Except as otherwise provided in Federal law, the Comptroller of the 
Currency, the Board of Governors of the Federal Reserve System, and the 
Federal Deposit Insurance Corporation may not adopt or enforce any 
regulation that contravenes the corporate mutual governance rules 
prescribed by State law or regulation for mutual depositories unless 
the Comptroller, Board of Governors, or Corporation finds that the 
Federal regulation is necessary to assure the safety and soundness of 
the mutual depository.''.
    (b)  Table of Contents Amendment.--The table of sections for 
chapter 1 of title LXII of the Revised Statutes of the United States 
(12 U.S.C. 21 et seq.) is amended by inserting after the item relating 
to section 5133 the following new items:

``Sec. 5133A. Mutual national banks.
``Sec. 5133B. Federal mutual bank holding companies.''.
    (c) Appropriate Federal Banking Agency for Federal Mutual Bank 
Holding Companies.--Section 3(q)(3) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(q)(3)) is amended--
            (1) in subparagraph (F), by striking ``; and'' and 
        inserting a semicolon at the end;
            (2) in subparagraph (G), by striking the period at the end 
        and inserting ``; and''; and
            (3) by inserting after subparagraph (G) the following new 
        subparagraph:
                    ``(H) supervisory or regulatory proceedings arising 
                from the authority given to the Board of Governors 
                under section 5133B of the Revised Statutes of the 
                United States.''.

SEC. 4. CONVERSION OF A MUTUAL HOLDING COMPANY TO A FEDERAL MUTUAL BANK 
              HOLDING COMPANY.

    (a) In General.--A mutual holding company, including any form of 
mutual depository holding company provided for under State law, may 
convert to a Federal mutual bank holding company by filing with the 
Board of Governors of the Federal Reserve System a notice of its 
election to convert on a specified date that is on or after the date 
that is 30 days after the date on which the notice is filed, and such 
mutual holding company shall be converted to a Federal mutual bank 
holding company on such specified date.
    (b) Definitions.--In this section the following definitions apply:
            (1) Federal mutual bank holding company.--The term 
        ``Federal mutual bank holding company'' has the meaning given 
        such term in section 5133A(a) of the Revised Statutes of the 
        United States.
            (2) Mutual holding company.--The term ``mutual holding 
        company'' has the meaning given such term in section 10(o)(10) 
        of the Home Owners' Loan Act (12 U.S.C. 1467a(o)(10)).
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