I 

115TH CONGRESS 

1ST SESSION H. R. 1595 

To amend the Federal Deposit Insurance Act to allow mutual capital 

certificates to satisfy capital requirements for mutual depositories. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 17, 2017 

Mr. ROTHFUS (for himself and Mr. STIVERS) 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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Mutual Bank Capital 

5 Opportunity Act of 2017’’. 

6 SEC. 2. TREATMENT OF MUTUAL CAPITAL CERTIFICATES. 

7 (a) IN GENERAL.—Section 38 of the Federal Deposit 

8 Insurance Act (12 U.S.C. 1831o) is amended— 

9 (1) in subsection (b)(2)— 


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1 (A) by redesignating subparagraphs (F) 

2 through (I) as subparagraphs (H) through (K), 

3 respectively; and 

4 (B) by inserting after subparagraph (E) 

5 the following new subparagraphs: 

6 ‘‘(F) MUTUAL CAPITAL CERTIFICATE.— 

7 The term ‘mutual capital certificate’ means a 

8 financial instrument issued by a mutual deposi9 tory pursuant to subsection (c)(1)(C) that— 

10 ‘‘(i) is subordinate to all claims 

11 against such mutual depository; 

12 ‘‘(ii) is unsecured by the assets of 

13 such mutual depository; 

14 ‘‘(iii) does not permit preemptive 

15 rights; 

16 ‘‘(iv) does not provide voting or mem17 ber rights to the holder unless the board of 

18 directors of such mutual depository pro19 poses to change the specific terms of any 

20 class of such certificates in a manner ad21 verse to the interests of the holder; 

22 ‘‘(v) is not eligible for use as collateral 

23 for any loan made by such mutual deposi24 tory; 


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1 ‘‘(vi) if declared by the board of direc2 tors of such mutual depository, entitles the 

3 holder to a payment of fixed, variable, or 

4 participating dividends; and 

5 ‘‘(vii) is not redeemable until the date 

6 that is 5 years after the date of issuance, 

7 except in the case of merger, conversion, or 

8 consolidation of such mutual depository, or 

9 reorganization of such mutual depository 

10 into a mutual holding company or a Fed11 eral mutual bank holding company (as 

12 such term is defined in section 5133A(a) 

13 of the Revised Statutes of the United 

14 States). 

15 ‘‘(G) MUTUAL DEPOSITORY.—The term 

16 ‘mutual depository’ means an insured deposi17 tory institution operating in a non-stock form, 

18 including a Federal non-stock depository and 

19 any form of non-stock depository provided for 

20 under State law, the deposits of which are in21 sured by an instrumentality of the Federal Gov22 ernment.’’; and 

23 (2) in subsection (c)(1)— 


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1 (A) in subparagraph (A), by inserting 

2 ‘‘and subparagraph (C)’’ after ‘‘subparagraph 

3 (B)(ii)’’; and 

4 (B) by inserting after subparagraph (B) 

5 the following new subparagraph: 

6 ‘‘(C) MUTUAL CAPITAL CERTIFICATES.—A 

7 mutual depository is authorized to issue mutual 

8 capital certificates that shall qualify as common 

9 equity Tier 1 capital (as such term is defined 

10 by the appropriate Federal banking agency) for 

11 purposes of any capital requirements mandated 

12 by any Federal law or regulation.’’. 

13 (b) REGULATIONS.— 

14 (1) IMPLEMENTATION.—Not later than 180 

15 days after the date of the enactment of this section, 

16 the appropriate Federal banking agencies (as de17 fined in section 3 of the Federal Deposit Insurance 

18 Act (12 U.S.C. 1813)) shall jointly issue regulations 

19 to implement this section. 

20 (2) OTHER FINANCIAL INSTRUMENTS.— 

21 (A) IN GENERAL.—Not later than 90 days 

22 after the date of the enactment of this section, 

23 the appropriate Federal banking agencies shall 

24 jointly issue regulations identifying other finan25 cial instruments, aside from mutual capital cerVerDate Sep 11 2014 01:04 Mar 22, 2017 Jkt 069200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1595.IH H1595

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1 tificates, that mutual depositories may issue 

2 that shall qualify as additional Tier 1 capital 

3 (as such term is defined by the appropriate 

4 Federal banking agency) for purposes of any 

5 capital requirements mandated by any Federal 

6 law or regulation. 

7 (B) DEFINITIONS.—The terms ‘‘mutual 

8 capital certificate’’ and ‘‘mutual depository’’ 

9 have the meaning given such terms in section 

10 38(b)(2) of the Federal Deposit Insurance Act 

11 (12 U.S.C. 1831o(b)(2)). 

12 (c) REPORT TO CONGRESS.—Not later than 6 

13 months after the date of the enactment of this section, 

14 and every 6 months thereafter until the date which is 3 

15 years after the date of the enactment of this section, the 

16 appropriate Federal banking agencies shall submit a re17 port to Congress on the progress of such agencies in pro18 mulgating the regulations described in subsection (b). 

19 Such report shall include a description of outreach efforts 

20 to the financial industry and any barriers to implementa21 tion of the requirements of this section. 

Æ 


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