Michigan Laws 487.14108 – Pledging bank assets as collateral security
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Terms Used In Michigan Laws 487.14108
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Association: means a federal savings association organized under section 5 of the home owners' loan act, 12 USC 1464, or a savings and loan association, building and loan association, or homestead association that is organized under the laws of a state, the District of Columbia, or a territory or protectorate of the United States, and whose deposits are insured by the Federal Deposit Insurance Corporation. See Michigan Laws 487.11201
- Bank: means a state banking corporation that is organized or reorganized under this act or organized under any law of this state enacted before March 1, 2000, including a state banking corporation that voluntarily limits its activities. See Michigan Laws 487.11201
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- department: means the department of insurance and financial services. See Michigan Laws 487.11201
- Depository institution: means a bank, out-of-state bank, national bank, foreign bank branch, association, savings bank, or credit union organized under the laws of this state, another state, the District of Columbia, the United States, or a territory or protectorate of the United States. See Michigan Laws 487.11201
- director: means the director of the department. See Michigan Laws 487.11201
- Federal home loan bank act: means the federal home loan bank act, 12 USC 1421 to 1449. See Michigan Laws 487.11201
- Federal reserve act: means the federal reserve act, 12 USC 221 to 522. See Michigan Laws 487.11201
- Federal Reserve System: The central bank of the United States. The Fed, as it is commonly called, regulates the U.S. monetary and financial system. The Federal Reserve System is composed of a central governmental agency in Washington, D.C. (the Board of Governors) and twelve regional Federal Reserve Banks in major cities throughout the United States. Source: OCC
- Institution: means a bank, state agency, or state foreign bank branch operating or organized or reorganized under this act or operating or organized under any law of this state enacted before August 20, 1969. See Michigan Laws 487.11202
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Member: means a person with an ownership interest under the Michigan limited liability company act, 1993 PA 23, MCL 450. See Michigan Laws 487.11202
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- shall not apply: means that the pertinent provision is not operative as to certain persons or things or in conjunction with a particular date or dates. See Michigan Laws 8.4c
- state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories belonging to the United States; and the words "United States" shall be construed to include the district and territories. See Michigan Laws 8.3o
- Surplus: means the amount paid for issued and outstanding common and preferred stock of a bank in excess of the stated par value, plus any amount of transferred undivided profits and any additional amounts paid in or contributed to increase total capital. See Michigan Laws 487.11203
- United States: shall be construed to include the district and territories. See Michigan Laws 8.3o
(1) Except as otherwise provided in this section, a bank or bank officer shall not give preference to a depositor or creditor by pledging the assets of the bank as collateral security or otherwise.
(2) A bank may pledge its assets in an aggregate amount that does not exceed 10% of its total assets for the purpose of securing the following:
(a) Funds belonging to the United States or belonging to or being administered by an officer, instrumentality, or agent of the United States, funds of estates being administered by a federal court under a federal bankruptcy law, and other funds when required or permitted to do so under the laws of the United States or an order of a federal court.
(b) Surplus funds of the state held by the state treasurer.
(c) Funds of the Mackinac Bridge Authority, which is declared to be a political subdivision of this state, under 1950 (Ex Sess) PA 21, MCL 254.301 to 254.302.
(d) Funds of the international bridge authority, which is declared to be a political subdivision of this state, under 1954 PA 99, MCL 254.221 to 254.240.
(e) Funds on deposit under 1941 PA 205, MCL 252.51 to 252.64, providing for limited access highways.
(f) Funds on deposit to the credit of the Michigan employment security commission.
(g) Funds of the Michigan state housing development authority constituting proceeds of the sale of the authority’s notes and bonds and repayments of those notes and bonds, under the state housing development authority act of 1966, 1966 PA 346, MCL 125.1401 to 125.1499c.
(h) Funds belonging to any political subdivision of this state.
(i) Funds belonging to any federally recognized Indian tribe.
(j) Funds representing the proceeds of a grant or loan from a department or agency of the United States, the award of which is conditioned upon the recipient depositing the proceeds in an account secured by a pledge of assets of the depository institution.
(3) The requirements, restrictions, and limitations imposed under this section shall not apply to the pledging of an obligation of the United States, direct or fully guaranteed, or both, for the purpose of securing a deposit of the United States when the deposit is established coincidentally with the purchase of an obligation of the United States by or through an institution.
(4) A bank may pledge its assets to secure liabilities of any of the following types:
(a) In the case of member banks, liabilities incurred under the federal reserve act. In the case of nonmember banks, liabilities incurred through borrowing under the same conditions as are imposed upon members of the federal reserve system by the federal reserve act.
(b) In the case of federal home loan bank members, liabilities incurred under the federal home loan bank act.
(c) Liabilities incurred under former section 202 of title II of the federal farm loan act, chapter 245, 39 Stat. 360.
(d) Liabilities incurred on account of a loan made with the express approval of the director under section 4202(3)(c).
(e) Liabilities incurred on account of borrowings from 1 business day to the next from a bank or national banking association of excess reserve balances from time to time maintained by the bank or national banking association under section 19 of the federal reserve act, 12 USC 461.
(f) Liabilities incurred on account of securities sold under a repurchase agreement.
(g) Liabilities incurred in connection with administration of treasury tax and loan accounts.
(5) A bank may pledge its assets to counterparties to secure the counterparties’ exposure in interest rate swap transactions.