Section 58-11-3 - Supervision and regulation.
58-11-3. Supervision and regulation.
A. The director shall be responsible for the supervision and regulation of credit unions organized under the Credit Union Act [58-1-1 NMSA 1978] or previously organized under the Credit Union Act.
B. The director may delegate to any officer or employee of the division the power to perform any of his duties, except those authorized under Subsection D, E, F, G, H, I, J, L or M of this section.
C. The director may prescribe rules or regulations to implement any provision of the Credit Union Act and to define any term not defined in that act. Such rules or regulations shall serve to foster and maintain an effective level of credit union services and the security of member accounts. Prior to establishment of a rule or regulation, the director shall give written notice to all credit unions affected by the terms and general contents of a proposed rule or regulation. The director may hold a public hearing to consider whether to adopt a proposed rule or regulation. If within twenty days after the notice is given at least two credit unions request a public hearing, it shall be held to consider whether to adopt the proposed rule or regulation. The director shall conduct any hearing held to consider a proposed rule or regulation.
D. The director may require a credit union to establish or activate the use of membership shares when it is deemed necessary for the safety and soundness of that credit union.
E. The director may restrict withdrawals from share accounts or deposit accounts or both from any credit union when he finds circumstances make that restriction necessary for the proper protection of shareholders or depositors.
F. The director may, after providing at least thirty days' prior notice and a hearing, issue cease and desist orders whenever it appears to him upon competent and substantial evidence that a credit union is engaged or has engaged in an unsafe or unsound practice or is violating or has violated a material provision of the credit union's bylaws, any law, rule or regulation or any condition imposed in writing by the director or any written agreement made with the director.
G. The director may remove from office and prohibit from further participation in any manner in the conduct of the affairs of a credit union any board member, executive officer or committee member if the director determines that the board member, executive officer or committee member:
(1) has violated any law, rule, regulation or final cease and desist order;
(2) has engaged or participated in an unsafe or unsound practice in connection with the credit union; or
(3) has committed or engaged in any act, omission or practice that constitutes a breach of such party's fiduciary responsibility, and:
(a) the credit union has suffered or will probably suffer financial loss or other damage;
(b) the interest of the credit union's members have been or could be prejudiced; or
(c) such party has received financial gain or other benefit by reason of such violation, practice or breach, and: 1) involves personal dishonesty on the part of such party; or 2) demonstrates such party's unfitness to serve as a board member, executive officer or committee member or to otherwise participate in the conduct of the affairs of a credit union.
H. Whenever the director makes the determination to remove any board member, executive officer or committee member from office or to prohibit any further participation by the person in the conduct of the affairs of the credit union, he shall give notice of his intention in writing, stating the grounds for such removal or prohibition from participation and providing for a hearing no earlier than thirty days or later than sixty days after such notice has been served on the board member, executive officer or committee member.
I. If the director determines that, pending the hearing for removal or prohibition from participating in the conduct of the affairs of the credit union, it is in the best interest of the credit union, he may suspend the board member, executive officer or committee member. Any suspension order shall be in writing and shall become effective upon service.
J. Unless a suspension order is stayed by a district court in the judicial district where the principal office of the credit union is located or in the first judicial district court of the state of New Mexico within ten days after the service of the order on the party suspended, it shall remain in force until a final order is issued after the hearing for removal. The district courts named in this paragraph shall have jurisdiction to stay such suspension or prohibition.
K. The director has the power to subpoena witnesses, compel their attendance, require the production of evidence, administer oaths and examine any person under oath in connection with any subject relating to a duty imposed upon or a power vested in the director.
L. If it appears that any credit union has willfully violated the Credit Union Act or its bylaws or is operating in an unsafe and unsound manner, the director may issue an order temporarily suspending the credit union's operations. The following provisions shall then apply:
(1) the board of directors of the credit union shall be given notice by certified mail of such suspension, which notice shall include a list of the reasons for such suspension and a list of the specific violation of the Credit Union Act or the credit union's bylaws, if any. The director shall also notify the insuring organization of the credit union of any such suspension;
(2) upon receipt of such suspension notice, the credit union shall cease all operations except those authorized by the director. The board of directors shall then file with the director a reply to the suspension notice and may request a hearing to present a plan of corrective actions proposed if the board desires to continue operations. The board may request that the credit union be declared insolvent and a liquidating agent be appointed;
(3) upon receipt from the suspended credit union of evidence that the conditions causing the order of suspension have been corrected, the director may revoke the suspension notice, permit the credit union to resume normal operations and notify the insuring organization of such action;
(4) if the director, after issuing notice of suspension and providing for a hearing, rejects the credit union's plan to continue operations, he may issue a notice of involuntary liquidation and appoint a liquidating agent. The credit union, within thirty days of issuance of the notice, may apply to the court of appeals for an order to stay execution of such action;
(5) if within the suspension period the credit union fails to answer the suspension notice or request a hearing, the director may then revoke the credit union's charter, appoint a liquidating agent and liquidate the credit union; and
(6) in the event of liquidation, the assets of the credit union or the proceeds from any disposition of the assets shall be applied and distributed in the following sequence:
(a) costs and expenses of liquidation;
(b) secured creditors up to the value of their collateral;
(c) wages due the employees of the credit union;
(d) costs and expenses incurred by creditors in successfully opposing the release of the credit union from certain debts as allowed by the director or liquidating agent;
(e) taxes owed to the United States or any other governmental units;
(f) debts owed to the United States or other governmental units;
(g) general creditors, secured creditors to the extent their claims exceed the value of their collateral and owners of deposit accounts to the extent such accounts are uninsured; and
(h) members, to the extent of uninsured share accounts and the organization that insured the accounts of the credit union.
M. The director has the following authority with respect to the liquidation or conservatorship of any credit union:
(1) the director may, at his sole discretion and without notice, appoint himself, the insuring organization or any other person as conservator to immediately take possession and control of the business and assets of any credit union in any case in which the director determines that such action is necessary to conserve the assets of the credit union or to protect the interests of the members of that credit union. Any credit union may, by a resolution of its board of directors, consent to any such action by the director;
(2) not later than ten days after the date of which the director or his designee takes possession and control of the business and assets of a credit union pursuant to Paragraph (1) of this subsection, the credit union may apply to the court of appeals for an order requiring the director to show cause why he or his designee should not be enjoined from continuing such possession and control;
(3) except as provided in Paragraph (2) of this subsection, the director or his designee may maintain possession and control of the business and assets of the credit union and may operate the credit union until such time as:
(a) the director permits the credit union to continue business, subject to such terms and conditions as he imposes; or
(b) the credit union is liquidated in accordance with this section;
(4) the director may appoint such agents as he considers necessary in order to assist in carrying out the duties of the conservator under this section; and
(5) all expenses incurred by the director in exercising his authority under this section with respect to the liquidation or conservatorship of any credit union shall be paid out of the assets of that credit union.