Part J. Supervision and Regulation.

§ 26–510.01. Supervision and regulation of credit unions.

The Commissioner shall be responsible for the supervision and regulation of District credit unions. The Commissioner is the District's credit union regulatory authority, whose purpose shall be to protect members' financial interests, the interests of the general public, and to ensure that District credit unions remain viable and competitive.

§ 26–510.02. Deposit of fees in the Securities and Banking Trust Fund.

(a) The Commissioner shall deposit into the Securities and Banking Trust Fund ("Fund") all funds received from, or in connection to the regulation of, District credit unions and foreign credit unions authorized to operate in the District and from the federal government, to the extent consistent with federal law.

(b) Money in the Fund shall be available for expenses incurred in the supervision, examination, and regulation of credit unions under this subchapter.

(c) The Commissioner shall establish fees and assessments related to the supervision and regulation of credit unions through rulemaking.

§ 26–510.03. Powers of Commissioner.

(a) The Commissioner may prescribe rules to implement any provision of this subchapter, including defining any term not defined in this subchapter.

(b) The Commissioner may restrict withdrawals from share or deposit accounts, or both, of any District credit union, if the Commissioner determines that circumstances exist making a restriction necessary for the proper protection of shareholders or depositors.

(c) The Commissioner may issue a cease and desist order if the Commissioner has reasonable cause to believe that a District credit union or a foreign credit union operating in the District is engaged in, or is about to engage in, an unsafe or unsound practice or is violating, or has violated, a material provision of any law, rule, or condition imposed in writing by the Commissioner or written agreement made with the Commissioner.

(d) The Commissioner may suspend from office, or prohibit from participation in the conduct of the affairs of a District credit union, a District credit union director, committee member, or officer, if the Commissioner determines that:

(1) The District credit union director, committee member, or officer has:

(A) Committed any violation of a law, regulation, or a cease and desist order;

(B) Engaged or participated in any unsafe or unsound practice in connection with the District credit union; or

(C) Committed or engaged in any act, omission, or practice that constitutes a breach of that person's fiduciary duty as a director, officer, or committee member; and

(2) The conduct described in paragraph (1) of this subsection has resulted in, or will result in, substantial financial loss or other damage that seriously prejudices the interests of the District credit union's members.

(e) The Commissioner may prohibit a foreign credit union director, committee member, or officer from participation in the operation of a foreign credit union in the District, if the Commissioner determines that:

(1) The foreign credit union director, committee member, or officer has:

(A) Committed any violation of a law, regulation, or a cease and desist order;

(B) Engaged or participated in any unsafe or unsound practice in connection with the foreign credit union; or

(C) Committed or engaged in any act, omission, or practice that constitutes a breach of that person's fiduciary duty as a director, officer, or committee member; and

(f) The Commissioner shall have the power to subpoena witnesses and compel their attendance, to require the production of evidence, to administer oaths, and to examine any person under oath in connection with any hearing conducted by the Commissioner.

(g) The Commissioner may suspend the operations of a District credit union or foreign credit union operating in the District, appoint a conservator to take possession or control of the business and assets of a District credit union, and may involuntarily merge or involuntarily liquidate a District credit union, in accordance with this subchapter.

(h) The Commissioner may suspend the declaration of dividends and the payment of interest if the Commissioner has reasonable cause to believe that the District credit union or foreign credit union operating in the District is insolvent.

(i) The Commissioner shall not hold liable under this subchapter any District credit union, foreign credit union operating in the District, or other person for acts or omissions made in reliance on any rule, interpretation, or opinion issued by the Commissioner.

(j) The Commissioner may exercise all rights, authorities, and duties set forth in this subchapter.

§ 26–510.04. Involuntary merger of credit union.

(a) Notwithstanding any other provision of law, if the Commissioner determines that an emergency requiring expeditious action exists with respect to a District credit union, other alternatives are not reasonably available, and the public interest, including the interests of the members of the District credit union, would best be served by taking the following action, the Commissioner may:

(1) Initiate the involuntary merger of a District credit union that is insolvent or is in danger of insolvency with any other District credit union;

(2) If authorized under, and to the extent consistent with, applicable federal or state law:

(A) Initiate actions designed to result in the involuntary merger of a District credit union that is insolvent or is in danger of insolvency with any federal or foreign credit union; or

(B) Authorize a District credit union, federal credit union, or foreign credit union to purchase any of the assets of, or assume any of the liabilities of, a District credit union that is insolvent or in danger of insolvency; or

(3) Authorize a financial institution whose deposits or accounts are insured to purchase any of the assets of, or to assume any of the liabilities of, a District credit union that is insolvent or in danger of insolvency; except, that before exercising this authority, the Commissioner shall attempt to effect a merger with, or purchase and assumption, by another District credit union, federal credit union, or foreign credit union as provided in paragraphs (1) and (2) of this subsection.

(b) For purposes of the authority contained in this section, insured share and deposit accounts of the District credit union undergoing an involuntary merger may, upon consummation of the purchase and assumption, be converted to insured deposits or other comparable accounts in the acquiring institution.

§ 26–510.05. Involuntary liquidation.

(a)(1) If the Commissioner determines that a District credit union is bankrupt or insolvent, the Commissioner may issue a notice of involuntary liquidation, revoke the District credit union's charter, and appoint a liquidating agent.

(2) The District credit union may request the appropriate court to stay execution of the action authorized by this subsection.

(b) In the event of liquidation, the assets of the District credit union or the proceeds from any disposition of assets shall be applied and distributed in the following priority:

(1) Secured creditors up to the value of their collateral;

(2) Costs and expenses of liquidation;

(3) Wages due the employees of the District credit union;

(4) Taxes owed to any government unit;

(5) Debts, other than taxes, owed to the United States;

(6) General creditors, and secured creditors to the extent their claims exceed the value of their collateral;

(7) Costs and expenses incurred by creditors in successfully opposing the release of the District credit union from certain debts as allowed by the Commissioner;

(8) Shareholders or depositors, to the extent of uninsured share or deposit accounts; and

(9) Members, to the extent of membership shares.

§ 26–510.06. Conservatorship.

(a) If the Commissioner determines that a District credit union is engaging in a materially unsafe or unsound practice, the Commissioner may, at the Commissioner's sole discretion and without advance notice:

(1) Appoint an insuring organization or any other person as conservator, that shall immediately take possession and control of the business and assets of the District credit union, represent the best interests of the District credit union members, and be vested with the full power of management of the District credit union.

(2) Petition the Superior Court of the District of Columbia to appoint a receiver for the District credit union, in accordance with § 26-1401.19.

(3) For the purposes of this section, the term "materially unsafe and unsound practice" means a practice where:

(A)(i) Immediate action is necessary to conserve the assets of a District credit union or to protect the interests of the members of the District credit union; or

(ii) A District credit union, by resolution of its board of directors, has consented to the Commissioner's action; and

(B)(i) The Commissioner receives written notification from the appropriate authority that a director or an officer of the District credit union has been convicted of a criminal offense under 18 U.S.C. § 1956 or 1957;

(ii) There is a willful violation by a District credit union or a director or officer of the District credit union of a cease and desist order issued by the Commissioner; or

(iii) A District credit union or a director or officer of the District credit union has engaged in the concealment of books, papers, records, or assets of the District credit union, or has refused to submit books, papers, records, or other sources of information relating to the affairs of the District credit union for inspection to any examiner or lawful agent of the Commissioner.

(b) A District credit union may apply to the appropriate court for an order requiring the Commissioner to show cause why the Commissioner or the conservator designee should not be enjoined from continuing possession and control not later than 15 days after the date on which the conservator takes possession and control of the business and assets of a District credit union pursuant to subsection (a) of this section.

(c) Except as provided in subsection (b) of this section, the conservator may maintain possession and control of the business and assets of the District credit union and may operate the District credit union until:

(1) The Commissioner permits the District credit union's officials to continue business, subject to terms and conditions the Commissioner imposes; or

(2) The District credit union is involuntarily merged or involuntarily liquidated in accordance with § 26-510.05.

(d) The Commissioner may appoint any person that the Commissioner considers necessary to assist the conservator in carrying out the duties of the conservator under this section.

(e) A conservator or receiver may terminate or adopt any executory contract to which the credit union may be a party, including leases of real or personal property, within 6 months after obtaining knowledge of the existence of the contract or lease. Any provision in the contract or lease that provides for damages, other than actual direct compensatory damages determined as of the date of appointment of the conservator or receiver, shall not be binding on the conservator, receiver, or District credit union.

(f) All expenses incurred by a conservator in exercising the authority of that office under this section with respect to any District credit union shall be paid out of the assets of the District credit union; except, that the Commissioner may waive all or a part of these expenses.

§ 26–510.07. Examinations.

(a) The Commissioner shall examine or cause to be examined each District credit union on a regular basis. A District credit union and any of its officers and agents shall give full access to all books, papers, securities, records, and other sources of information (collectively "sources of information") under their control to the Commissioner or the Commissioner's agents, unless the disclosure of these sources of information is prohibited by law.

(b) A report of the examination conducted pursuant to subsection (a) of this section ("examination report") shall be forwarded by the Commissioner or the Commissioner's designee to the District credit union's chair of the board within 30 days after completion. The examination report shall contain comments relative to the management of the affairs of the District credit union and the general condition of District credit union's assets. The board of directors of the District credit union shall meet to consider and respond to matters contained in the examination report within 30 days of receipt of the report.

(c) All information contained in or related to the examination report prepared by, or on behalf of, the Commissioner shall be deemed the confidential property of the Department. No officer, employee, or agent of the Department or the District credit union may disseminate the contents of an examination report for any reason other than the business of the Department or the District credit union. Violation of this subsection constitutes a misdemeanor and upon conviction thereof the misdemeanant shall be fined not more than $ 1,000 for each violation. The contents of the examination report shall not be subject to subpoena.

(d) The Commissioner may accept an examination of the credit union made by the NCUA in lieu of making an examination of a District credit union. The cost of any examination under this subsection shall be borne by the District credit union; except, that the costs of any regular or special examination shall not be assessed more than once annually.

(e) The Commissioner shall adopt rules that ensure consistency and due process in the examination process. The Commissioner may also establish guidelines and provide formal guidance, interpretive letters, or other written materials that:

(1) Define the scope of the examination process; and

(2) Clarify examination items to be resolved.

§ 26–510.08. Records.

(a) A District credit union shall maintain all books, records, accounting systems, and procedures that accurately reflect its operations and which enable the Commissioner to readily ascertain the true financial condition of the District credit union and whether it is complying with this subchapter. These books, records, accounting systems, and procedures shall be maintained at the District credit union's principal place of business in accordance with the District credit union's record retention policy.

(b) The Commissioner shall prescribe the minimum retention requirements for District credit union records by rule.

§ 26–510.09. Records of the Department.

(a) Information from the records of the Department related to District credit unions shall only be disclosed as required by law.

(b) A copy of any document on file with the Department that is certified by the Commissioner as being a true copy may be introduced as evidence in any court in the District as if it were the original.

(1) Examination reports, as defined in § 26-510.07, and related information from insurers or other regulators;

(2) Business plans and other proprietary information of a District credit union, and its subsidiaries or affiliates;

(3) Reports of investigations; and

(4) Notices related to enforcement actions and consent orders.

(d) Examination reports furnished by the Commissioner remain the property of the Department. No person to whom an examination report is furnished, or any officer, director, or employee thereof may disclose or make public the examination report or information contained in the examination report except information that is already in the public domain. Violation of this subsection constitutes a misdemeanor punishable by a fine of not more than $1,000 for each violation, by imprisonment for not more than one year, or both.

(e) Upon notice to the Commission, a party in a civil action in which an examination report or information discussed in this section is sought to be discovered or used as evidence may petition the court for an in-camera review of the examination report or information. The court may permit discovery and introduction of only those portions of the examination report or information that are relevant and otherwise unobtainable by the requesting party.

§ 26–510.10. Conflicts of interest.

(a) In addition to any general conflict of interest statute applicable to District employees, no employee of the Department shall be an officer, director, committee member, employee, or attorney for any credit union, or receive, directly or indirectly, any payment or gratuity from any credit union, or be indebted to any credit union, or engage in the negotiation of loans for others with any credit union.

(b) An employee of the Department may be a member of a credit union on the same terms as are available to other credit union members and may do business at another financial institution on the same terms as other customers.