Mutual Bank Capital Opportunity Act of 2017

To amend the Federal Deposit Insurance Act to allow mutual capital certificates to satisfy capital requirements for mutual depositories. 1. Short title This Act may be cited as the Mutual Bank Capital Opportunity Act of 2017 2. Treatment of mutual capital certificates (a) In general Section 38 of the Federal Deposit Insurance Act ( 12 U.S.C. 1831o (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 (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 ; and (2) in subsection (c)(1)— (A) in subparagraph (A), by inserting and subparagraph (C) subparagraph (B)(ii) (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 (1) Implementation Not later than 180 days after the date of the enactment of this section, the appropriate Federal banking agencies (as defined in section 3 of the Federal Deposit Insurance Act ( 12 U.S.C. 1813 (2) Other financial instruments (A) In general Not later than 90 days after the date of the enactment of this section, the appropriate Federal banking agencies shall jointly issue regulations identifying other financial instruments, aside from mutual capital certificates, that mutual depositories may issue that shall qualify as additional 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) Definitions The terms mutual capital certificate mutual depository 12 U.S.C. 1831o(b)(2) (c) Report to Congress Not later than 6 months after the date of the enactment of this section, and every 6 months thereafter until the date which is 3 years after the date of the enactment of this section, the appropriate Federal banking agencies shall submit a report to Congress on the progress of such agencies in promulgating the regulations described in subsection (b). Such report shall include a description of outreach efforts to the financial industry and any barriers to implementation of the requirements of this section.

Summary: Mutual Bank Capital Opportunity Act of 2017 This bill amends the Federal Deposit Insurance Act to allow mutual capital certificates issued by a mutual depository (i.e., a federally insured depository institution operating in a non-stock form) to qualify as common-equity Tier 1 capital for purposes of satisfying federal capital requirements. A "mutual capital certificate" is a financial instrument that: (1) is subordinate to all claims against, and unsecured by the assets of, the issuing mutual depository; (2) does not permit preemptive rights; (3) in general, does not provide voting or member rights; (4) is not eligible for use as collateral for any loan made by the issuing mutual depository; (5) entitles the holder to a payment of fixed, variable, or participating dividends (if the depository's board so declares); and (6) is generally not redeemable until five years after issuance. The appropriate federal banking agencies must jointly issue regulations to implement these provisions and to identify other financial instruments issued by mutual depositories that shall qualify as additional Tier 1 capital for purposes of federal capital requirements. The agencies must submit to Congress a series of reports on their progress in promulgating such regulations.