An Act To Enhance the Supervisory Powers of the Department of Professional and Financial Regulation, Bureau of Financial Institutions
Maine Legislature, Session 122, LD 0949
Committee: Insurance and Financial Services
Sponsors: MILLS, MITCHELL, SULLIVAN, PERRY, RICHARDSON, VAUGHAN
Amends: 9-B MRSA §131, 9-B MRSA §232, 8 MRSA §241, 8 MRSA §363-A, 9-B MRSA §365, 9-B MRSA §469, 9-B MRSA §1213-A, 8 MRSA §1233-A

Legislative Document 
No. 949 
S.P.324 
In Senate, February 19,2005 
An Act To Enhance the Supervisory Powers of the Department of 
Professional and Financial Regulation, Bureau of Financial 
Institutions 
Submitted by the Department of Professional and Financial Regulation pursuant to Joint 
Rule 204. 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Senator MILLS of Somerset. 
JOY J. O'BRIEN 
Secretary of the Senate 
Cosponsored by Senators: MITCHELL of Kennebec, SULLIVAN of Yark, Representatives: 
PERRY of Calais, RICHARDSON of Warren, VAUGHAN of Durham. 
Printed on n:l:ycJed pi.l~r 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 9-B MRSA §131, sub-§12-B, as enacted by PL 1995, c. 
628, §5, is repealed and the following enacted in its place: 
12-B. 
Deposit 
production 
offices. 
"Deposit 
production 
offices" 
means 
the 
Maine 
offices 
operated 
by 
an 
individual 
financial institution authorized to do business in this State or 
individual credit union authorized to do business in this State 
that do 
not reasonably help meet 
the credit needs 
of Maine 
communities. 
For 
purposes 
of 
this 
subsection, 
"deposits" 
includes credit ~nion share accounts. 
Sec. 2. 9-B MRS A §232, sub-§I, 1[1[8 and C, as amended by PL 
1997, c. 660, Pt. A, §3, are further amended to read: 
660, 
660, 
B. 
By 
reason of 
the violation, 
practice or 
breach of 
fiduciary duty described in paragraph A: 
(1) 
The financial institution or financial institution 
holding company has suffered or will probably suffer 
financial loss or other damage: 
(2) 
ihe 
interests 
of 
depositors or creditors 
could be prejudiced; or 
the 
financial 
or the public 
institution's 
have been or 
(3) 
The officer or director has received financial 
gain or other benefit by 
reason of 
the violation, 
practice or breach of fiduciary duty; and 
C. 
The violation, 
practice or breach of fiduciary duty 
described in paragraph A involves personal dishonesty on the 
part of the officer or director or demonstrates willful or 
continuing disregard by the officer or director for 
the 
safety 
or 
soundness 
of 
the 
financial 
institution 
or 
financial institution holding companYf~ 
Sec. 3. 9-B MRSA §232, sub-§I, 1[D, as amended by PL 1997, c. 
Pt. A, §3, is repealed. 
Sec. 4. 9-B MRS A §232. sub-§I, 1[E, as enacted by PL 1997, c. 
Pt. A, §4, is repealed. 
Sec. 5. 9-B MRSA §232, sub-§I-A is enacted to read: 
I-A. 
Additional grounds f_or 
removal. 
The superintendent 
may 
serve written notice of intent to 
remove 
an officer or 
director from office or to prohibit further participation by the 
Page l-LR0444(l) 
-
• 
.34 
i±2 
,16 
')0 
officer or director in any manner in the conduct of the affairs 
of 
a 
financial 
institution or 
financial 
institution holding 
company if: 
A. 
In the opinion of the superintendent, that officer or 
director has evidenced personal dishonesty and unfitness to 
continue 
as 
an 
officer 
or 
director 
of 
the 
financial 
institution or 
financial 
institution holding 
company 
by 
conduct 
with 
resRect 
to 
another 
business 
entity 
that 
resulted, or is likely to result, in substantial financial 
loss or other damage; or 
B. 
The officer or director 
from participation in any 
affairs of 
the financial 
federal banking agency. 
has been removed or prohibited 
manner 
in the conduct of the 
institution by 
the appropriate 
Sec. 6. 9-8 MRSA §241, sub-§8, as enacted by PL 1995, c. 628, 
§18, is amended to read: 
8. 
Deposit production offices prohibited. 
-A-
No financial 
institution authorized to do business in this State or credit 
union authorized to do business in this State is-~£9Hieitee-E£9ffi 
epe!'atiB~ may operate deposit production offices in this State. 
Eaea--~iBaBeia±--iB&~i~~~~&-~~-~~i~--~~-~~~£~~~~€B--~e--ae 
eHsiBess--~-~~~-~~a~e--&ha±±-~~-~~--aBBHa±-~~~-~~-tae 
sHpe!'iBteBaeBt-~~~~~~~-aBa-~~-~f~r~~-eeBsiae!'ea 
Heeessa!'y-by--~a&-6H~e£iB~eBaeR~-~~-m9Bit9F-£~~~~££€-~it~-tais 
seetieHT---~~--~~--&HpeFiBteBGeBt--ae~erffiiRe6--~~--~--aepesit 
p!'eaHetieB-e££i€e-~£-~~~~~~-~~-&~~Fi&~~&~-may-issHe 
a- - -c-e-a-&€- - -aHe - - -de-s-i-s-t.- - -e !'ae!' - - -pur-s-ua-nt- - - te - - -<Jh.a.pt~--- ~ ~ T 
The 
superintendent shall annually review the level of lending in this 
State relative to the level of deposits in this State of each 
financial institution authorized to do business in this State and 
each credit union authorized to do business in this State to 
determine whether deposit production offices are being operated. 
If the superintendent determines that a 
financial institution 
authorized 
to 
do 
business 
in 
this 
State 
or 
credit 
union 
authorized to do business in this State is operating deposit 
production offices, 
the superintendent may issue 
a 
cease 
and 
desist order pursuant to chapter 23. 
The superintendent saa;!,;!, 
may adopt rules tRat-6e~-~~~£-~~~~~~~~-~a&-eHFeaH-sRa±± 
e9Hsiae!'-~£-~~~~~-whetheF-a-~~-i&-eeiB~-~~~~-a 
aepesit--p-r--oduot-i-on---effiee to implement this subsection. 
Rules 
adopted pursuant to this subsection are routine technical rules 
as defined in Title 5, chapter 375, subchapter Il-A 2-A. 
This 
subsection does not apply to limited purpose banks. 
Sec. 3. 9-8 MRSA §363-A is enacted to read: 
§363-A. 
Conservation of assets 
1. 
Appointment of 
con~ervator. 
Whenever, in the judgment 
of the superintendent, because of unsafe or unsound practice in 
conducting the business 
of 
a 
financial 
institution or 
other 
potentially hazardous conoition, it is _necessary to conserve or 
revalue the assets of the financial institution or to reorganize 
and put into sound condition the financial institution for the 
benefit 
of 
depositors, 
beneficiaries 
of 
fiduciary 
accounts, 
creditors or the public, the superintendent may issue an order 
describing the unsafe, unsound or other hazardous condition and 
appointing 
one 
or 
more 
conservators 
for 
the 
financial 
institution, who shall endeavor promptly to remedy the condition 
or conditions stated in the order. 
A. 
The 
superintendent 
may 
require 
a 
bond 
as 
the 
superintendent 
determines 
proper 
and 
issue 
orders 
as 
necessary to carry out the provisions of this section. 
The 
superintendent may appoint a deputy superintendent or other 
person, 
including 
the 
federal 
corporation 
insuring 
the 
financial institution's accounts pursuant to section 422, as 
conservator. 
B. 
A conservator, 
in addition to the powers set forth 
elsewhere in this chapter and other powers authorized in an 
order of the superintendent, has all the rights, 
powers, 
privileges 
and 
authority 
possessed 
by 
the 
officers, 
governing body, 
corporators, members and investors of the 
financial institution, 
including the power 
to 
remove 
any 
officer or member of the governing body if the order of 
removal is approved in writing by the superintendent. 
The 
conservator may, in the name of the financial institution: 
(1) 
Prosecute and defend all suits and other legal 
proceedings; and 
(2) 
Execute, 
acknowledge 
and 
deliver 
all 
deeds---" 
assignments, 
releases and other instruments necessary 
and proper to effectuate any sale of real or personal 
property 
or 
any 
compromise 
approved 
by 
the 
superintendent. 
Any deed or other instrument executed 
pursuant to this subparagraph is valid and effective 
for all purposes to the same extent as though fully 
authorized by the financial institution. 
C. 
If a 
deputy superi_ntendent or other employee of the 
bureau is appointed conservator, no additional compensation 
need be paid, but any reasonable and necessary expenses as 
conservator, including expenses for assistants and counsel, 
must be paid by the financial institution. 
If a 
person 
other 
than 
an 
employee 
of 
the 
bureau 
is 
appointed 
• 
• 
I U 
conservator, 
then the 
compe~on is dete(mined by the 
superintendent and must be paid by the financial institution 
along with any reasonable and necessary expenses of the 
conservator, including expenses for assistants and counsel. 
D. 
In the event that the federal corporation insuring the 
financial institution's deposits or accounts 
pursuant to 
section 422 
accepts 
an appointment 
as 
conservator, 
the 
corporation acquires both legal and equitable title to all 
assets, 
rights 
or 
claims 
and 
to all 
real 
or 
personal 
property 
of 
the 
financial 
institution 
to 
the 
extent 
necessary for 
the corporation to perform its duties 
as 
conservator or as may be necessary under applicable federal 
law to effectuate the appointment. 
If the corporation pays 
or 
makes 
available 
for 
payment 
the 
insured 
deposit 
liabilities of a financial institution by reason of actions 
taken pursuant to this section, 
the corporation becomes 
subrogated to 
the rights 
of all the depositors of the 
financial 
institution, 
wl}ether 
or 
not 
it 
has 
become 
conservator of the financial institution, in the same manner 
and to the sa!1le extent as it would be subrogated in the 
conservation of a financial institution operating under a 
federal charter and insured by the corporation. 
2. 
Seg~~_tiQD-.Q.t_g#i~etJ'i. 
A conservator appointed under 
subsection 1 may order that there be segregated and set aside 
investments that in the conservator's judgment are of slow or 
doubtful value or that, on account of unusual conditions, cannot 
be converted into cash at their full fair value. 
A. 
Pursuant to the conservator's segregation orger, 
the 
clerk 
or 
treasurer 
of 
the 
financial 
institution 
shall 
withdraw all investments so segregated and the then book 
value of the investments from the list of investments and 
book values of assets as shown on the books of the financial 
institution. 
B. 
The clerk or treasurer of the financial institution 
shall make and keep a 
complete and accurate list of the 
investments 
segregated under this subsection, 
their book 
values and any other records with respect to the investments 
as the superintendent or conservator may from time to time 
prescribe. 
As 
used 
in 
this 
suJ}Se<;:--.tiDll~' in'[~~tm~nt" 
or 
"i.nvestments " 
includes all assets of the financial institution, whether real or 
personal. 
3. Deposit reductions. 
Simultaneously with the reductions 
taken pursuant to subsection 2, 
the following actions must be 
taken by the financial institution. 
]0 
]2 
A. 
In 
the 
case 
of 
a 
mutual 
financial 
institution or 
cooperative financial institution, each de.J2.QJi.it standing in 
that financial institution must be reduced so as to divide 
pro rata among the depositors or members the aggregate book 
value of all 
inv_es.tment~~qI..eg9-.ted under 
subsection 
2. 
After the order under subsection 2 has been delivered, 
a 
depositor or member mQY not demand or receive on account of 
a deposit more than the amount remaining to the credit of 
the deposit after the reduction~_as been made, and dividend~ 
must be computed only on the amounts so remaining, except as 
otherwise provided in this_section. 
The treasurer or clerk 
of that financial institution shall withdraw the sum of any 
deposit reductions from the statements of the amounts due to 
depositors or members and enter the reductions on individual 
Qassbooks 
as 
they 
are 
presented. 
The 
investments 
and 
amounts 
due 
depositors 
or 
members 
then 
remaining 
with 
changes thereafter made in a usual course of business are 
deemed to be the investments held by and de120sits standing 
in that financial institution for the purpose of taxation 
and all other purposes, except as elsewhere provided in this 
chapter. 
B. 
In the case of an investor-owned financi_al institution, 
if the liabilities of that financial institution, excluding 
the outstanding equity interest, 
exceed its assets, 
the 
deficit, after making due allowances for priorities, must be 
divided pro 
rata 
among 
the depositors 
and 
each 
account 
charged with its proportionate share of the deficit. 
A 
depositor 
is 
entitled 
to 
withdraw 
the 
amount 
of 
the 
depositor's account as fixed and determined in the amounts 
and at the times the conservator, with the l?rior written 
approval 
of 
the superintendent, 
directs. 
That financial 
institution shall __ i~sue 
t9~£ch depositor 
a 
certificate 
showing the amount of the deficit charged to the depositor's 
account. 
The certificate is negotiable and may not bear 
interest. 
No 
divid_~~J2KQfl~thdrawal or distribution 
may be made thereafter in liq~idation of equity interests in 
that financJal institl).tion until the certificates have been 
paid in full with interest compounded at the rate of 3% per 
year; otherwise, the certifiG9tes may not be deemed to be a 
liability of that financial institution. 
C. 
Nothing in this subsection permits a conservator or the 
super intendent to reduce deposits or accounts insured by a 
federal corporation pursuant to section 422 without written 
approval of the federal corporation. 
• 
-
.\8 
4. 
Sale of segregated ~D~stments. 
Investments segregated 
under subsection 2 m~be sold or exchanged for other securities 
or investments by a vote of the members of the governing body of 
the financial in~itution but must be sold when so ordered by the 
conservator or the superintendent. 
All money received from the 
sales of or as income from the 
secur~ties or investments must be 
entered 
into 
a 
special 
account 
and 
held 
by 
the 
financial 
institution for the benefit of the depositors or members whose 
deposi ts were reduced under subsection 3, to be disposed of as 
provided in subsection 5. 
5. 
Repayment of redyctio~s. 
The members of the governi~ 
body of a financial institution from time to time may, and when 
directed by the superintendent shall, declare pro rata dividends 
of money received as provided in subsection 4 to be distributed 
among the depositors or members whose deposits were reduced under 
subsection 3, payable to those who would then have been entitled 
to receive the sums deducted if the sums had continued to be 
included in the reduced deposits, and payable as other dividends 
are paid. 
A. 
Any depositor 
o_~5!mbeJ;:_whosg deposit was reduced, any 
holder of a certificate issued pursuant to subsection 3, 
paragraph 
B 
or 
the 
financial 
institution 
may 
file 
a 
complaint with the superintendent after one year from the 
date of the reduction f~ an order of distribution whenever 
the 
condition of the financial institution, 
taking into 
account 
the 
rights 
of 
creditors 
and 
of 
preferred 
stockholders, if any, warrants the payment. 
B. 
The su~erintendent mgy at any time declare the repayment 
under paragraph A to be final. 
6. 
Conservator continuing business. 
The conservator may 
continue to operate the 
finan~ial institution in accordance with 
the following conditions and limitations . 
A. 
All depositors, members and investors of the financial 
institution may continue to make payments to the financial 
institution in accordance with the terms and conditions of 
their contracts. 
B. 
The conservator may set asjde and make available for 
wi thdrawal by deposi tors or me_mbers 
and payment to other 
credi tors on a ratable basis the amounts as in the opinion 
of the superintendent may safely be used for that purpose. 
C. 
The conservq.tor !lliU'_H~cei ve deposits under the following 
limitations. 
The deposits: 
7. 
without 
(1) 
May not be subject to any limitation as to payment 
or withdrawal; 
(2) 
Must be segreg~ed; 
(3) 
May not be used to liquidate any indebtedness o[ 
the financial institution existing at the time that the 
conservator 
was 
appointed 
or 
any 
subsequent 
indebtedness incurred for the purpose of liquidating 
the indebtedness of the financial institution existing 
at the time the conservator was appointed; and 
(4) 
Must 
be 
kept 
in 
cash or 
invested 
in direct 
ob 1 iga t ions 
f 
the U n".,i"-t",-e",-d=_--=S..."t""a...,t""e...,s"----,o",-r=-----=d""ec&p,-"o,-"s...,i,,..t=e,,,-d=_---,-,-w-",i,-"t=h 
another financial institution. 
Replacement 
conservatQ'-"r'--' .......... _~T""l"'l""'e_-"'s'-"u".lp"-'e"--r~i .... 
n'-"t'-'e"-'n""d~e"<-",n,-"t~--"m"-,a,,,,yl--L-' 
notice or hearing, replace a conservator 
with another 
conservator. 
8. 
Termination of conservatorship. 
The superintendent by 
Q~r may 
terminate 
subsection. 
the 
conservatorship 
according 
to 
this 
A. 
The superintendent may terminate the conservatorship at 
the superintendent's discretion. 
B. 
Any interested party may petition the superintendent [or 
termination 
of 
the 
conservatorship 
months 
following 
appointment of the conservator. 
C. Upon termination o[ the conservatorship, the powers and 
duties of the conservator appointed pursuant to subsection 1 
cease. 
D. 
Upon termination o[ the conservatorship: 
(1) 
The 
financial 
institution is 
returned 
to its 
governing body and operates as if the conservator had 
not been appointedL-Q£ 
(2) 
A receiver is appointed as provided in section 365. 
L~~I.tified copy of any 
orq~~i~l1arsi_ng the co_nservator ang 
returning the financial 
insti~tion to its governing body is 
sufficient evidence of termination of conservatorship. 
9. 
Inmunity frolll civil li~ility. 
A person serving as a 
conservator is immune from any civil~bility for acts performed 
-
within the scope of the conservator's duties in the same manner 
pnd to the same extent as 
em~~Qyees of governmental entities are 
under the Maine Tort Claims Act. 
10. 
Judicial reyie~ny person affected adversely by any 
act or omission of the superintendent or conservator under this 
section or section 367-A may bring an action in the Superior 
[\ 
Court of Kennebec County seeking an order annulling, altering or 
modifying the act or enjoining the--12.erformance of the act or 
requiring action to be taken under any provision of this section. 
A. 
The proceedings 
mUj;t 
be given precedence over other 
pending court cases 
and must 
be expedited. 
The 
person 
bringing the action has the burden of proof to show that the 
act or omission is unlawful or arbitrary and capricious. 
Only 
the 
financial 
institution 
may 
bring 
an 
action 
challenging 
t~s~p..erint~ndent' s 
order 
establishing 
the 
conservatorship. 
The court must uphold the superintendent's 
order establishing the conservatorship and the appointment 
of 
a 
C9nS5!~vato_r 
unless 
the 
court 
finds 
that 
the 
super intendent 's 
action 
was 
unlawful 
or 
arbitrary 
and 
capricious. 
B. 
The person must bring the action under paragraph A 
within 10 business days after receiving notice of the act or 
omissiQ!L-.iJL-perSOn, by register_ed mail or by publication of 
a 
certificate 
signed 
by 
the 
conservator, 
by 
the 
~8 
superintendent or by the president, treasurer or clerk of 
the 
financial 
institution 
in 
a 
newsp-aper 
of 
general 
circulation in the county where the financial institution 
has its principal office. 
C. 
Notwithst~ndin~~r9~ph B, action may not be brought 
more than 30 
days after the order of the superintendent 
under subsection 8. 
D. 
The court ma-Y-i~s~~L-.iillunction~~event multiplicity 
of proceedings seeking to annul, alter or modify the actions 
of the superintendent or the conservator made 
under 
the 
provisions of this chapt_er or t~event undue 
interferenc_~ 
with 
the 
regulation 
and 
conservation 
of 
the 
financial 
institution. 
E. 
The 
CO_~Lt,_UPQ1L~Q.p£U_~Q.J,JQ~J;!L-th~jlJ2er int~Jie1L~QX 
conservator, has jurisdiction to enforce orders relating to 
the 
conservatorship 
and 
the 
financial 
institution 
in 
conservatorship. 
F. 
Notw~~hstanding Title 
5, 
section 
Administrative 
Procedure 
Act 
does 
not 
procedures described in this subsection. 
8003, 
the 
Maine 
apply 
to 
the 
Sec. 4. 9-B MRSA §365, sub-§l·A, as amended by PL 1997, c. 
398, Pt. H, §4, is further amended to read: 
I-A. 
Appointment of receiver. 
If, upon examination of a 
financial institution, the superintendent is of the opinion that 
it is 
insolvent or 
that its 
condition 
renders 
its 
further 
proceedings hazardous to the public or to those having funds 
including trust assets in its custody, 
the superintendent may 
order the institution closed aIlQ appoint a 
receiver who shall 
proceed to el9se liquidate the financial institution. 
Sec. 5. 9-B MRSA §365, sub-§l1 is enacted to read: 
11. 
ImmJ1D.ity (rom civil liability. 
A person serving as a 
receiver is immune from any civil liability, in the same manner 
as and to the same extent as employees of governmental entities 
are under the Maine Tort Claims Act, for acts per formed within 
the scope of the receiver's duties. 
Sec. 6. 9·B MRSA §367·A is enacted to read: 
§367-A. 
Additional authority in cons~rvation and liquidation 
1. 
Att~cllme~t~ __ ~!t---PI;'ef~rEt~ce~. 
The superintendent or a 
conservator or receiver may bring an action: 
A. 
To 
dissolve 
all 
financial 
institution 
appointment made under 
attachments 
on 
the 
property 
made 
within 
months 
before 
section 363-A or 365: 
of 
a 
the 
B. 
To void as a prefere]!ce allY tran::;fer made after, or in 
contemplation of, the appointment 
under section 363-A or 
365; and 
C. 
To discontinue all actions pending against the financial 
institution. 
2. 
Injunctions. 
Whenever proceedings are instituted under 
this 
chapter, 
the 
Superior 
Court 
may 
issue 
an 
injunction 
restraining all persons 
from proceeding against the financial 
institution described in section 363-A or 365 until termination 
of 
conservatorship 
or 
final 
liquidation, 
including 
trustee 
processes. 
3. 
Other authority. 
The 
superintendent, 
conservator or 
receiver may disaffirm or 
repudi~~e any contract or lease to 
which the financial institution is a party, fix the rights of the 
claimants and adjudicate and fix the time and mode of payment of 
all claims, accounts and deposits having priority. 
4. 
Proceedings generally. 
The superintendent, conservator 
or receiver may bring an action described in this chapter, or any 
Qther action as deter_mined approlllj.ate, in the cOJ,mty in which 
the financial institution is located or has its principal place 
of business or in the Superior Court of Kennebec County. 
The 
proceedings must be given precedence over other pending court 
H 
cases and must be expedited. 
2H 
_, 
_L. 
5. 
Powers of superintendent. 
The superintendent has the 
following powers. 
A. 
The 
slmerintendent mg..Y--take 
any actions necessary to 
carry out the terms and provisions of this chapter. 
B. 
All 
powers 
conferred 
under 
this 
superintendent 
are 
in addition to 
the 
conferred upon the superintendent by law. 
chapter 
on 
the 
powers 
otherwise 
C. 
The superintendent may adopt rules for the purpose of 
carrying out 
provisions 
of 
this 
chapter. 
Rules 
adopted 
pursuant to this paragraph are routine technical rules as 
defined in Title 5, chapter 375, subchapter 2-A. 
6. 
Mergers. 
The conservator or receiver, with the approval 
of the superintendent, may order the merger or consolidation of 
any financial institution that is described in section 363-A or 
with 
any other financial 
ins.titution, 
state-Chartered or 
federally chartered, with the consent of the other financial 
institution and may prescribe the mode 
or procedure for the 
merger or consolidation and 
the 
terms 
and conditions of the 
merger or consolidation. 
Sec. 7. 9-B MRSA §469 is enacted to read: 
§469. 
Fundamental change in asset composition 
1. 
Requiremen~~rior approval. 
A financial institution, 
without the prior written approval of the superintendent, may not 
change the composition of all or substantially all of its assets 
through sales or other dispositions of assets, through purchases 
or other acquisitions of assets or through other expansions of 
its operations. 
2. 
Considerations. 
In determining whether to approve the 
'.16 
change in the asset composition of a financial institution, the 
superintendent 
shall 
consider 
the 
purpose 
of 
the 
proposed 
transaction, its impact 
on the 
safety and 
soundness 
of 
the 
financial institution and any effect on the customers of the 
financial institution. 
If the superintendent concludes that a 
filing presents significant or novel policy, supervisory or legal 
issues, the superintendent may reguire an application to be filed 
in accordance with section 252. 
3. 
Exception. 
Prior written approval is not reguired for a 
change in the composition of assets that is part of the financial 
institution's ordinary and ongoing core banking activities. 
4. 
Rules. 
The 
su~rintendent may 
adopt 
rules 
furtheX 
defining a fundamental change in asset composition and setting 
forth the factors to consider in determining what constitutes a 
fundamental 
change in assets. 
Rules adopted pursuant to this 
subsection are routine technical rules as defined in Title 5, 
chapter 375, subchapter 2-A. 
Sec. 8. 9-B MRSA §1213-A is enacted to read: 
§12l3-A. 
Asset pledgg 
1. 
Pledge requirement. 
The superintendent may reguire a 
nondepository trust company to pledge readily marketable assets 
to 
the 
superintendent 
if 
the 
superintendent 
believes 
that 
circumstances warrant the action. 
The pledged assets must be 
United States dollar denominated, investment grade and subject to 
the prior written approval of the superintendent. 
The pledged 
assets 
must 
be 
held 
on 
deposit 
or 
in 
safekeeping 
by 
an 
FDIC-insured 
depository 
institution 
approved 
by 
the 
superintendent. 
The 
pledged assets 
may 
be 
released 
to 
the 
superintendent 
only 
upon 
certification 
that 
a 
receiver 
or 
conservator 
of 
the 
nondepository 
trust 
company 
has 
been 
appointed. 
The asset pledge reguirement may be lifted by the 
superintendent 
if 
the 
superintendent 
determines 
that 
the 
condi tion of the nondeposi tory trust company so warrants that 
action. 
2. 
Amount of pledge. 
The 
aggregate 
amount 
of 
pledged 
assets is determined by the superintendent but may not exceed the 
greater of $1, 000,000 or 50°<. of the minimum reguired capital of 
the nondepository trust company at the time the asset pledge is 
imposed. 
'i2 
3. 
Pledge 
ag~eement. 
The asset pledge must be maintained 
pursuant to an asset pledge agreement in the form and containing 
any limitations and conditions the superintendent reguires. 
As 
long as the nondepository trust company continues business in the 
ordinary course, the nondepository trust company may be permitted 
to collect income on the pledged assets and examine and exchange 
those assets. 
The aggregate amount of assets pledged may not be 
less 
than 
reguired 
under 
subsection 
without 
the 
superintendent's approval. 
Page ll-LR0444(1) 
4. 
NoncQmplicmc;;e. 
If a nondlll1ository trust company fails 
~o maintain the minim~~~~uired asset pledge, tbe superintendent 
may determine that the nondepository trust company does not meet 
the 
capital 
requirements 
under 
section 
412-A 
and 
any 
rules 
adopted pursuant to section 412-A. 
5. 
Ru~~aki~g. 
The 
sUQ.erintendent 
may 
adopt 
rules 
to 
implement 
this 
section. 
Rules 
adopted 
pursuant 
to 
this 
subsection are routine technical rules as defined in Title 5, 
chapter 375, subchapter 2-A. 
Sec. 9. 9·B MRSA §1223.A is enacted to read: 
§1223-A. 
Asset pledge 
1. 
Ple~req~ir~m.~nt. 
The superintendent may require a 
merchant 
bank 
to 
pledge 
readily 
marketable 
assets 
to 
the 
superintendent if the superintendent believes that the action is 
necessary for the protection of the public. 
The pledged assets 
must be United States dollar denomi.nated, 
investment grade and 
subject to the prior written approval of the superintendent. 
The 
pledged assets must be held on de.Qosi t or in safekeeping by an 
FDIC-insured 
depository 
institution 
approved 
by 
the 
supex.int~ndent. 
The ---p.ledged 
2.QJ~.eJ~_~roay be 
released 
to 
the 
superintendent 
only 
upon 
certification 
that 
a 
receiver 
or 
conservator of the merchant 
ba~k has been appointed. 
The asset 
pledge requirement may be lifted by the superintendent if the 
superintendent determines that the condition of the merchant bank 
so warrants that action. 
2. 
Am~unt Of--pAegge. 
Th~Q.gg.r5l.gate amount 
of 
pled9-e-Q 
assets is determined by the superintendent but may not exceed the 
greater of $1,000,000 or 50°" of the minimum required capital of 
the merchant bank at the time the asset pledge is imposed. 
3. 
Pledge agreement. 
The asset pledge must be maintained 
3B 
pursuant to an asset pledge agreement in the form and containing 
any limitations and conditions the superintendent reguires. 
As 
long as the merchant bank continues business in the ordinary 
course, the merchant !;lank may be permitted to collect income on 
the pledged assets and examine and exchange those assets. 
The 
aggregate amount of assets pledged may not be less than reguired 
under subsection 2 without the superintendent's approval. 
4. 
Noncompliance. 
If a merchant bank fails to maintain the 
minimum required asset pl.!:!dge, the superintendent may determine 
that the merchant bank does not meet the capital requirements 
under section 4l2-A and any rules adopted pursuant to section 
4l2-A. 
Page l2-LR0444(l) 
5. 
Rulemaking. 
The 
superintendent 
may 
adopt 
implement 
this 
section. 
Rules 
adopted 
pursuant 
subsection are routine technical rules as defined in 
chapter 375, subchapter 2-A. 
Sec. 10. 9-8 MRSA §1233-A is enacted to read: 
§1233-A. 
Asset pledge 
rules 
to 
to 
this 
Title 5, 
1. 
Pledge requi:r;:ement. 
The 
sup~rintendent may require an 
uninsured 
bank 
to 
pledge 
readily 
marketable 
assets 
to 
the 
superintendent if the supftrintendent believes that the action is 
necessary for the protection of the public. 
The pledged assets 
must be United States dollar denominated, investment grade and 
subject to the prior written approval of the superintendent. 
The 
pledged assets mu~e held on @£osit or in safekeeping by an 
FDIC-insured 
depository 
institution 
approved 
by 
the 
superintendent. 
The 
pledged 
asset~ may 
be 
released 
to 
the 
superintendent 
only 
upon 
certification 
that 
a 
receiver 
or 
conservator of the uninsured bank has been appointed. 
The asset 
pledge reguirement may be lifted by the superintendent if the 
superintendent determines that the condition of the uninsured 
bank so warrants that action. 
2. 
AmQ.M,ll~~_p-.1ftqge~. __ 
Th~ggre...9'ate 
amQU:Q_t 
of 
pl~eQ 
assets is determined by the superintendent but may not exceed the 
greater of $1,000,000 or 5000 of the minimum reguired capital of 
the uninsured bank at the time the asset pledge is imposed. 
3. 
Pledge agreement. 
The asset pledge must be maintained 
pursuant to an asset pledge agreement in the form and containing 
any limitations and conditions the superintendent reguires. 
As 
l4 
long as the uninsured bank continues business in the ordinary 
course, the uninsured bank m9Y be permitted to collect income on 
the pledged assets and examine and exchange those assets. 
The 
aggregate amount of assets plegged~ not be less than reguired 
under subsection 2 without the superintendent's approval. 
4. 
Noncompliance. 
If an uninsured bank fails to maintain 
the 
minimum 
reguired 
asset 
pledge, 
the 
superintendent 
may 
determine that the uninsured bank does 
not meet the capital 
reguirements under section 412-A and any rules adopted pursuant 
to section 4l2-A. 
5. 
Rulemaking. 
The 
~uperintendent may 
adopt 
implement 
this 
section. 
Rules 
adopted 
pursuant 
subsection are routine technical rules as defined in 
chapter 375, subchapter 2-A. 
Page l3-LR0444(l) 
rules 
to 
to 
this 
Title 5, 
I 
SUMMARY 
This bill 
changes 
the 
banking 
laws 
to 
clarify certain 
provisions and provides additional regulatory powers essential to 
effective regulation of Maine chartered banks and credit unions. 
n 
The bill clarifies the definition of deposit production 
offices and amends the statutory prohibition for the operation of 
deposit production offices to more closely align it to federal 
law. 
The bill establishes procedures for the appointment of a 
conservator 
in 
the 
event 
that 
a 
financial 
institution 
is 
operating in an unsafe or unsound or other potentially hazardous 
condition 
and 
needs 
to 
reorganize 
or 
be 
put 
into 
a 
sound 
condition. 
Conservation 
is 
a 
step 
that 
can 
be 
taken, 
specifically 
in 
the 
case 
of 
limited 
purpose 
financial 
institutions 
whose 
accounts 
are 
not 
insured 
by 
a 
federal 
insurance 
agency, 
before 
liquidation 
is 
ordered 
by 
the 
Superintendent of Financial Institutions. 
The bill clarifies the superintendent's 
an institution closed and the appointment of 
forth 
additional 
authority 
and 
limitation 
authori ty to order 
a receiver and sets 
from 
liability in 
conservation or liquidation. 
The bill establishes a notification procedure that 
followed 
if 
a 
state-chartered financial 
institution 
fundamental change in asset composition. 
must 
makes 
be 
a 
The bill 
superintendent 
merchant bank 
of the public. 
establishes an asset pledge requirement that the 
may 
enforce in 
a 
nondepository trust company, 
or uninsured bank as necessary for the protection 
This bill clarifies existing authority of the superintendent 
to remove an officer or director from office or prohibit further 
participation by the officer or dil-ector in the conduct of the 
'10 
affairs of a 
financial institution or a financial institution 
holding 
company 
when 
similar 
action 
has 
been 
taken 
by 
the 
appropriate federal banking agency or when an officer or director 
has evidenced dishonesty or unfitness by conduct with respect to 
another business entity.