New York Banking Law

Article 10-A
State Savings and Loan
Insurance Fund

Section 420.   Definitions.
        420-a. State savings and loan insurance fund.
        420-b. Purposes of the fund.
        420-c. General powers of the fund.
        420-d. Capital stock; advance premiums; other fiscal provisions.
        420-e. Exemption from taxation.
        420-f. Use of fund name prohibited; penalties for violation.
        420-g. Insurance of accounts and eligibility provisions.
        420-h. Premiums on insurance.
        420-i. Payment of insurance.
        420-j. Liquidation of insured savings and loan associations.
        420-k. Termination of insurance.
        420-l. Savings and loan bank eligible as fiscal agent.

  S 420. Definitions. When used in this article unless the context
otherwise requires:
  1. "Default" means an adjudication or other official determination of
a court of competent jurisdiction or other public authority pursuant to
which a conservator, receiver, or other legal custodian is appointed for
an insured institution for the purpose of liquidation.
  2. "Fund" means the state savings and loan insurance fund created by
section four hundred twenty-a of this article.
  3. "Insured account" means a savings account held by an insured member
and which is insured under the provisions of this article.
  4. "Insured savings and loan association" means an association whose
accounts are insured under this article.
  5. "Member" or "insured member" means a savings and loan association
whose application for membership in the fund has been accepted and
approved; and which has made all payments required by this article; and
whose membership has not been terminated.
  6. "Reserves" means the aggregate total of capital, advance premiums,
assessments and retained earnings of the fund.

  S 420-a. State savings and loan insurance fund. 1. There is hereby
created the "state savings and loan insurance fund". The fund shall be a
corporate governmental agency constituting a public benefit corporation.
It shall have the powers and privileges of a corporation, and under its
corporate name all of its business shall be transacted, all funds
invested, all warrants for money drawn and payments made, and all cash
and securities and other personal property shall be held.
  2. The fund shall be administered by six trustees, four of whom shall
be appointed by the governor with the advice and consent of the senate,
one shall be elected by the insured members and one shall be elected by
the board of directors of the Savings and Loan Bank of the State of New
York from their own number. The trustees of the fund first appointed by
the governor shall serve for terms ending December thirty-first in
nineteen hundred sixty-eight, nineteen hundred sixty-nine, nineteen
hundred seventy and nineteen hundred seventy-one, respectively.  Persons
appointed for full terms as their successors shall serve for four years
each commencing as of January first next following the year in which the
term of his predecessor expired. The trustee elected by the insured
members shall serve for a term ending on December thirty-first, nineteen
hundred sixty-nine and the trustee elected by the board of directors of
the savings and loan bank of the state of New York shall serve for a
term ending on December thirty-first, nineteen hundred seventy-one.
Persons elected for full terms as their successors shall serve for four
years each commencing as of January first next following the year in
which the term of his predecessor expired. In the event of a vacancy
occurring in the office of an appointed trustee by death, resignation or
otherwise, the governor shall appoint a successor in the same manner as
an original appointment to serve for the balance of the unexpired term.
If, for the previously stated reasons, a vacancy occurs in the office of
an elected trustee, said vacancy shall be filled for the unexpired term
by special election.
  3. The trustees of the fund shall serve without salary, but each
trustee shall be entitled to reimbursement for his actual and necessary
expenses incurred in the performance of his official duties and to a fee
of one hundred dollars per day when rendering service as such member,
provided that the aggregate amount of such fees payable to any one
trustee in any one fiscal year shall not exceed the sum of five thousand
dollars.
  4. The trustees of the fund may engage in private employment, or in a
profession or business, subject to the limitations contained in sections
seventy-three and seventy-four of the public officers law. The fund
shall, for the purposes of such sections, be a "state agency", and the
trustees thereof shall be "officers" of the agency for the purposes of
said sections.
  5. Notwithstanding any inconsistent provisions of law, general,
special or local, no officer or employee of the state, or of any civil
division thereof, shall be deemed to have forfeited or shall forfeit his
office or employment by reason of his acceptance of appointment as a
trustee, officer or agent of the fund; provided, however, that a
trustee, officer or agent who holds such other public office or
employment shall receive no additional compensation, fee or allowance
for services rendered pursuant to this article, but shall be entitled to
reimbursement for his actual and necessary expenses incurred in the
performance of such services.
  6. The governor may remove any trustee for inefficiency, neglect of
duty or misconduct in office after giving him a copy of the charges
against him and an opportunity to be heard, in person or by counsel, in
his defense, upon not less than ten days notice. If any trustee shall be
removed, the governor shall file with the secretary of state a complete
statement of charges made against the trustee, and his findings thereon,
together with a complete record of the proceedings.
  7. The chairman of the board of trustees shall be designated by the
governor. He shall preside over all meetings of the trustees and shall
have such other duties as the trustees may direct. A vice-chairman who
shall preside over all meetings of the fund in the absence of the
chairman and who shall have such other duties as the trustees may direct
may be designated from time to time by the trustees from among the other
trustees.
  8. The powers of the fund shall be vested in and exercised by no less
than four of the trustees then in office. The fund may delegate to one
or more of its trustees, or officers, agents or employees, such powers
and duties as the trustees may deem proper, provided, however, that all
contracts involving an estimated expense of ten thousand dollars or more
shall be approved prior to execution by no less than four trustees of
the fund.
  9. The fund shall be subject to an examination by the superintendent
of banks at least once in each calendar year.
  10. Within three days, Saturdays, Sundays and holidays excepted, after
each meeting of the trustees of the fund, the secretary or other officer
of the fund in charge of the minutes of the proceedings of the trustees
shall transmit to the superintendent of banks at his office in Albany
three certified copies of the minutes of every meeting of the trustees
for his information.
  11. The fund shall become operative when the total aggregate of the
savings deposits of its members amount to five hundred million dollars
or more and shall continue so long as it shall have bonds, insurance or
other obligations outstanding and until its existence shall be
terminated by law. Upon the termination of the existence of the fund,
all its rights and properties shall pass to and be vested in the state.
  12. Before becoming operative the fund shall adopt, and obtain the
approval of the superintendent, of by-laws for its organization,
management and operations. Any amendment of the by-laws shall require
the prior approval of the superintendent.

  S 420-b. Purposes of the fund. The fund shall insure the savings
accounts of savings and loan associations eligible for insurance as
hereinafter provided.

  S 420-c. General powers of the fund. Except as otherwise limited by
this article, the fund shall have power:
  1. To sue and be sued;
  2. To have a seal and alter the same at pleasure;
  3. To borrow money and issue negotiable notes, bonds or other
obligations and to provide for the rights of the holders thereof;
  4. To invest any funds held in reserve or sinking funds, or any monies
not required for immediate use or disbursement, at the discretion of the
fund, in obligations of the state or the United States government or
obligations the principal and interest of which are guaranteed by the
state or the United States government;
  5. Subject to the approval of the superintendent of banks, to
establish rules and regulations governing the exercise of its powers and
the fulfillment of its purposes under this article;
  6. To enter into contracts and leases and to execute all instruments
necessary or convenient;
  7. To acquire, hold and dispose of real or personal property in the
exercise of its powers;
  8. To appoint such officers and employees as it may require for the
performance of its duties, and to fix and determine their
qualifications, duties, and compensation and to retain or employ
auditors, engineers and private consultants on a contract basis or
otherwise for rendering professional or technical services and advice,
and with the approval of the attorney general of the state of New York,
to retain or employ counsel;
  9. To conduct investigations and hearings in the furtherance of its
general purposes, and in aid thereof have access to any books, records
or papers relevant thereto; and if any person whose testimony shall be
required for the proper performance of the duties of the fund shall fail
or refuse to aid or assist the fund in the conduct of any investigation
or hearing, or to produce any relevant books, records or other papers,
the fund is authorized to apply for process of subpoena, to issue out of
any court of general original jurisdiction whose process can reach such
person, upon due cause shown;
  10. In the performance of the fund`s duties, to utilize the services
of employees of the banking department, reimbursing the banking
department for such services and expenses therein;
  11. To do all things necessary, convenient or desirable to carry out
its purposes and for the exercise of the powers granted in this article.

  S 420-d. Capital stock; advance premiums; other fiscal provisions.  1.
The fund shall have a capital stock of one hundred million dollars which
shall be divided into shares of one hundred dollars each. Each member
savings and loan association whose accounts are insured under this
article shall subscribe and pay for such stock in an amount equal to one
percentum of its savings accounts at the time of admission to the fund
and shall make annual adjustments to maintain such ratio.
  2. Each savings and loan association at the time it becomes a member
of the fund shall pay an advance premium to the fund in an amount equal
to one percentum of the savings and loan association`s savings accounts,
said premium to be maintained at a one per cent level by annual
adjustments thereof until such time as the reserves of the fund are in
excess of two and one-half percentum of the aggregate of the savings
accounts of its members, whereupon such excess shall be applied at the
end of the fiscal year on a pro-rata basis to the reduction of the
advance premiums or to the payment of current premiums at the discretion
of the trustees.

  S 420-e. Exemption from taxation. It is hereby found, determined and
declared that the creation of the fund and the carrying out of its
purposes is in all respects for the benefit of the people of the state
of New York and for the improvement of their health, welfare and
prosperity and is a public purpose, and that the fund will be performing
an essential governmental function in the exercise of the powers
conferred upon it by this article, and that the fund shall be required
to pay no fees, taxes or assessments, whether state or local, including
but not limited to fees, taxes or assessments on real estate, franchise
taxes, sales taxes or other excise taxes, upon its activities as an
insurer; and that all income received by the fund and that the bonds of
the fund and the income therefrom shall at all times be exempt from
taxation, except for gift and estate taxes and taxes on transfers. This
section shall constitute a covenant and agreement with the holders of
all bonds issued by the fund.

 

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  S 420-f. Use of fund name prohibited; penalties for violation.  No
individual, association, partnership, or corporation shall use the words
"state savings and loan insurance fund", or any combination of any of
these words which would have the effect of leading the public in general
to believe there was any connection, actually not existing, between such
individual, association, partnership, or corporation and the fund, as
the name under which he or it shall hereafter do business.  No
individual, association, partnership, or corporation shall advertise or
otherwise represent falsely by any device whatsoever that his or its
accounts are insured or in anywise guaranteed by the fund, or by the
state, or by any instrumentality thereof; and no insured member shall
advertise or otherwise represent falsely by any device whatsoever the
extent to which or the manner in which its accounts are insured by the
fund. Every individual, partnership, association, or corporation
violating this section shall be guilty of a misdemeanor punishable by a
fine of not exceeding one thousand dollars, or by imprisonment not
exceeding one year, or both.

  S 420-g. Insurance of accounts and eligibility provisions. 1.  It
shall be the duty of the fund to insure the accounts of all state
savings and loan associations that apply and qualify therefor.  Approval
of the application shall constitute the savings and loan association a
member of the fund.
  2. Applications shall be in such form as the fund shall prescribe, and
shall contain an agreement (a) to pay the reasonable cost of such
examinations as the fund shall deem necessary in connection with such
insurance, and (b) if the insurance is granted, to permit and pay the
cost of such examinations as in the judgment of the fund may from time
to time be necessary for its protection and the protection of member
savings and loan associations, to permit the fund to have access to any
information or report with respect to any examination made by any public
regulatory authority and to furnish any additional information with
respect thereto as the fund may require, and to pay the premium charges
for insurance as hereinafter provided.
  3. The fund shall reject the application of any applicant if it finds
that the applicant has assets insufficient to pay its debts and the
amount due its members upon savings accounts or that its financial
policies or management are unsafe or unsound; and the fund may reject
the application of any applicant if it finds that the character of the
management of the applicant or its home financing policy is inconsistent
with economical home financing or with the purposes of this article.
Upon the approval of any application for insurance the fund shall notify
the applicant, and upon the required purchase of the capital stock of
the fund and upon the payment of the initial premium charge for such
insurance and required advance premiums the fund shall issue to the
applicant a certificate stating that it has become an insured
institution. In considering applications for such insurance the fund
shall give full consideration to all factors in connection with the
financial condition of applicants and insured institutions, and shall
have power to require such adjustments in their financial statements as
the fund finds to be necessary.
  4. Any savings and loan association which applies after January first,
nineteen hundred sixty-seven for insurance under this article shall pay,
in the event its application is approved, an admission fee in such
amount as the fund shall determine, taking into consideration the total
cost of processing all insurance applications.

  S 420-h. Premiums on insurance. 1. Each savings and loan association
whose application for insurance is approved by the fund shall pay
required advance premiums to the fund, as well as a premium charge for
such insurance equal to one-twelfth of one per centum of the total
amount of all savings accounts of such institution plus any creditor
obligations of such institution. Such premiums shall be paid at the time
the certificate is issued by the fund under section four hundred
twenty-g of this article, and thereafter annually until the reserves of
the fund equal two and one-half per centum of all savings accounts of
all members; except that under regulations prescribed by the fund such
premium charge may be paid semiannually. If at any time such reserves
fall below such two and one-half per centum, the payment of such annual
premium charge for insurance shall be resumed and shall be continued
until the reserves are brought back to such two and one-half per centum.
For the purposes of this subdivision, the amount in all accounts of
insured members and the amount of creditor obligations of any
institution may be determined from adjusted statements made within one
year prior to the approval of the application of such savings and loan
association for insurance, or in such other manner as the fund may by
rules and regulations prescribe.
  2. The fund is further authorized to assess against each insured
savings and loan association additional premiums for insurance until the
amount of such premiums equals the amount of all losses and expenses of
the fund; except that the total amount so assessed in any one year
against any such savings and loan association shall not exceed
one-eighth of one per centum of the total amount of its savings accounts
and its creditor obligations.

  S 420-i. Payment of insurance. 1. Each savings and loan association
whose application for insurance under this article is approved by the
fund shall be entitled to insurance up to the full withdrawal value of
the accounts of each of its members and investors or in such amount as
shall be established by the board of trustees, but in no event shall the
maximum amount of insurance for any savings account be less than fifteen
thousand dollars.
  2. In the event of a default by any insured savings and loan
association, payment of each insured account in such insured association
shall be made by the fund as soon as possible either (1) by cash or (2)
by making available to each savings account a transferred savings
account in a new insured savings and loan association in the same
community or in another insured savings and loan association in an
amount equal to the insured savings account; provided however, that the
fund, in its discretion, may require proof of claims to be filed before
paying the insured accounts, and that in any case where the fund is not
satisfied as to the validity of a claim for an insured account, it may
require the final determination of a court of competent jurisdiction
before paying such claim.

  S 420-j. Liquidation of insured savings and loan associations.  1. In
the event that a savings and loan association is in default, the fund
may be appointed by the superintendent as conservator or receiver and as
such, may be authorized by the superintendent (a) to take over the
assets of and operate such association, (b) to take such action as may
be necessary to put it in a sound and solvent condition, (c) to
negotiate for a merger with another insured savings and loan
association, (d) to negotiate the organization of a new savings and loan
association to take over its assets, or (e) to proceed to liquidate its
assets in an orderly manner, whichever shall appear to the
superintendent to be in the public interest. The payment by the fund of
an insured account in any such association which is in default shall
entitle the fund to the rights of the holder of such insured account,
but shall not affect any right which the holder of such account may have
in the uninsured portion of his account or any right which he may have
to participate in the distribution of the net proceeds remaining from
the disposition of the assets of such association.
  2. In order to prevent a default in an insured savings and loan
association or in order to restore an insured association to normal
operation as an insured savings and loan association, the fund is
authorized, in its discretion, to make loans to, purchase the assets of,
or make a contribution to, an insured savings and loan association or an
insured savings and loan association in default; but no contribution
shall be made to any such association in an amount in excess of that
which the fund finds to be reasonably necessary to save the expense of
liquidating such association.

  S 420-k. Termination of insurance. 1. Whenever in the opinion of the
fund any insured savings and loan association has continued unsafe or
unsound practices in conducting the business of such savings and loan
association, or has knowingly or negligently permitted any of its
officers or agents to violate any provision of any law or regulation to
which the insured savings and loan association is subject, said fund
shall first give to the superintendent a statement with respect to such
practices or violations for the purpose of securing the correction
thereof and shall give a copy thereof to the savings and loan
association. Unless such correction shall be made within one hundred and
twenty days or such shorter period of time as the superintendent shall
require, the fund, if it shall determine to proceed further, shall give
to the savings and loan association not less than thirty days` written
notice of intention to terminate the status of the savings and loan
association as an insured savings and loan association, and shall fix a
time and place for a hearing before the fund or a person designated by
the fund. The fund shall make written findings. Unless the savings and
loan association shall appear at the hearing by a duly authorized
representative, it shall be deemed to have consented to the termination
of its status as an insured savings and loan association. If the fund
shall find that any unsafe or unsound practice or violation specified in
such notice has been established and has not been corrected within the
time above prescribed in which to make such correction, the fund may
issue its order terminating the insured status of the association
effective on a date subsequent to such finding and to the expiration of
the time specified in such notice of intention. The order shall be
subject to review under article seventy-eight of the civil practice law
and rules. In the event of the termination of such status, insurance of
its accounts to the extent that they were insured on the date of such
order of termination, less any amounts thereafter withdrawn,
repurchased, or redeemed which reduce the insured accounts of an insured
member below the amount insured on the date of such order, shall
continue for a period of two years, but no investments or deposits made
after the date of such order of termination shall be insured. The fund
shall have the right to examine such association from time to time
during the two-year period aforesaid.  Such insured savings and loan
association shall be obligated to pay, within thirty days after any such
order of termination, as a final insurance premium, a sum equivalent to
twice the last annual insurance premium paid by it pursuant to
subdivision one of section four hundred twenty-h of this chapter. In the
event of the termination of insurance of accounts as herein provided the
savings and loan association which was the insured savings and loan
association shall give prompt notice in writing sent to all its account
holders that it has ceased to be an insured savings and loan association
and it may include in such notice the fact that insured accounts, to the
extent not withdrawn, repurchased, or redeemed, remain insured for two
years from the date of such termination, but it shall not further
represent itself in any manner as an insured association.  In the event
of failure to give the notice to account holders as herein provided the
fund is authorized to give such notice.
  2. (a) At any time after five years of membership, but not before, an
insured savings and loan association may submit to the fund a
certificate of intention to terminate its membership therein.
Termination shall become effective on the first day of the sixth month
following the submission of the certificate provided that:
  (i) The member pay a termination fee equivalent to twice the last
annual premium paid by it pursuant to subdivision one of section four
hundred twenty-h of this chapter; this fee shall not extend or enlarge
insurance coverage.
  (ii) The insured savings and loan association sends to each holder of
a savings account a notice in writing not later than two months after
submission of the certificate; the notice shall be in a form prescribed
by the fund and shall set forth the facts of the termination.
  (b) The fund may elect to refund to the association its original
capital contribution to the fund subject to terms it may prescribe,
provided that such refund is made within two years of termination of
membership.

  S 420-l. Savings and loan bank eligible as fiscal agent.  The savings
and loan bank operating pursuant to article ten-B of the banking law may
be designated by the fund as its fiscal agent; such bank shall have the
power to accept such designation and to do all acts necessary in order
to carry out the duties thereby imposed in accordance with any agreement
entered into pursuant thereto.