November 10, 2011, Introduced by Reps. Tlaib, Meadows, Jackson, Brown, Segal, Liss, Barnett, Slavens, Hovey-Wright, Lindberg, Townsend, Cavanagh, Switalski, Irwin and Howze and referred to the Committee on Banking and Financial Services.
A bill to amend 2003 PA 215, entitled
"Credit union act,"
by amending section 431 (MCL 490.431).
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec.
431. (1) A domestic credit union may invest funds not
used
in it does not use to make loans to members in any of the
following:
(a) Securities, obligations, or other instruments of or issued
by or fully guaranteed as to principal and interest by the United
States or an agency or instrumentality of the United States, or in
any trust or trusts established for investing directly or
collectively in those securities, obligations, or instruments.
(b) Securities, obligations, or other instruments of or issued
by any state of the United States, the District of Columbia, the
Commonwealth
of Puerto Rico, or a territory organized by Congress ,
or any of their political subdivisions.
(c) Securities, obligations, or other instruments of any
central liquidity facility or corporate credit union established
under the laws of this state, the laws of another state or
territory
of the United States, or the laws of the United States ,
or any federal reserve bank.
(d) An obligation that meets all of the following:
(i) In the domestic credit union's prudent judgment, which may
be
based in part upon on estimates which that it
believes are
reliable, there is adequate evidence that the obligor of the
obligation will be able to perform all it undertakes to perform in
connection with the obligation, including all debt service
requirements, and that the obligation may be sold with reasonable
promptness at a price that corresponds to its fair value.
(ii) The investment characteristics of the obligation are not
considered distinctly or predominantly speculative.
(iii) The obligation is not in default in the payment of
principal or interest.
(iv) The obligation is a marketable obligation in the form of a
bond, note, or debenture, commonly regarded as an investment
security, and salable under ordinary circumstances with reasonable
promptness at a fair value.
(e) Shares or certificates of an open-end management
investment company registered with the securities and exchange
commission
under the investment company act of 1940, title I of
chapter
686, 54 Stat. 789, 15 U.S.C. USC 80a-1
to 80a-3 and 80a-4
to
80a-64, if all of the following
conditions are met:
(i) Not less than At least 90%
of the fund's assets consist of
and
are company's portfolio
consists of or is limited to securities
in which a domestic credit union may invest directly.
(ii) The domestic credit union has an equitable and undivided
interest
in the underlying assets of the fund.company.
(iii) The domestic credit union is not liable for acts or
obligations
of the fund.company.
(iv) The domestic credit union's investment in any 1 fund
company does not exceed the amount of its net worth.
(f) Investments in mortgage-backed securities either issued by
or guaranteed by a private organization if the securities involved
meet the investment standards for an obligation described in
subdivision (d).
(g) Shares of stock or other equity interests in a business
development corporation incorporated under the business development
corporation act, if the aggregate purchase price of those interests
does not exceed 10% of the net worth of the credit union.
(2) A domestic credit union other than a corporate credit
union shall not invest more than 25% of its net worth in an obligor
or
affiliate of the an obligor. This subsection does not apply to
the extent that the investment is insured or guaranteed by the
United States government or an agency of the United States
government or a state or local government, or the investment is in
a corporate credit union.
(3) A domestic credit union may not invest in or hold common
stock or another equity investment except as provided in subsection
(1)(g) and section 401(2), or in bank and bank holding company
stock legally acquired before December 19, 1986. If a domestic
credit union possesses capital stock or another equity investment
as the result of a loan default, it shall dispose of that
investment within a reasonable period of time that does not exceed
1 year, or a longer period of time approved by the commissioner for
that domestic credit union.
(4) In addition to investments authorized by this act, a
domestic credit union may make any other type of investment
approved by the commissioner by rule, order, or declaratory ruling.
(5) A domestic credit union shall maintain files containing
credit and other information adequate to demonstrate evidence of
prudent business judgment in exercising the investment powers
granted under this act or by rule, order, or declaratory ruling of
the commissioner.
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No. ____ or House Bill No. 5169(request no.
01519'11) of the 96th Legislature is enacted into law.