§ 420-K — Termination of insurance

§ 420-k. Termination of insurance. 1. Whenever in the opinion of the\nfund any insured savings and loan association has continued unsafe or\nunsound practices in conducting the business of such savings and loan\nassociation, or has knowingly or negligently permitted any of its\nofficers or agents to violate any provision of any law or regulation to\nwhich the insured savings and loan association is subject, said fund\nshall first give to the superintendent a statement with respect to such\npractices or violations for the purpose of securing the correction\nthereof and shall give a copy thereof to the savings and loan\nassociation. Unless such correction shall be made within one hundred and\ntwenty days or such shorter period of time as the superintendent shall\nrequire, the fund, if it shall determine to proceed further, shall give\nto the savings and loan association not less than thirty days' written\nnotice of intention to terminate the status of the savings and loan\nassociation as an insured savings and loan association, and shall fix a\ntime and place for a hearing before the fund or a person designated by\nthe fund. The fund shall make written findings. Unless the savings and\nloan association shall appear at the hearing by a duly authorized\nrepresentative, it shall be deemed to have consented to the termination\nof its status as an insured savings and loan association. If the fund\nshall find that any unsafe or unsound practice or violation specified in\nsuch notice has been established and has not been corrected within the\ntime above prescribed in which to make such correction, the fund may\nissue its order terminating the insured status of the association\neffective on a date subsequent to such finding and to the expiration of\nthe time specified in such notice of intention. The order shall be\nsubject to review under article seventy-eight of the civil practice law\nand rules. In the event of the termination of such status, insurance of\nits accounts to the extent that they were insured on the date of such\norder of termination, less any amounts thereafter withdrawn,\nrepurchased, or redeemed which reduce the insured accounts of an insured\nmember below the amount insured on the date of such order, shall\ncontinue for a period of two years, but no investments or deposits made\nafter the date of such order of termination shall be insured. The fund\nshall have the right to examine such association from time to time\nduring the two-year period aforesaid. Such insured savings and loan\nassociation shall be obligated to pay, within thirty days after any such\norder of termination, as a final insurance premium, a sum equivalent to\ntwice the last annual insurance premium paid by it pursuant to\nsubdivision one of section four hundred twenty-h of this chapter. In the\nevent of the termination of insurance of accounts as herein provided the\nsavings and loan association which was the insured savings and loan\nassociation shall give prompt notice in writing sent to all its account\nholders that it has ceased to be an insured savings and loan association\nand it may include in such notice the fact that insured accounts, to the\nextent not withdrawn, repurchased, or redeemed, remain insured for two\nyears from the date of such termination, but it shall not further\nrepresent itself in any manner as an insured association. In the event\nof failure to give the notice to account holders as herein provided the\nfund is authorized to give such notice.\n 2. (a) At any time after five years of membership, but not before, an\ninsured savings and loan association may submit to the fund a\ncertificate of intention to terminate its membership therein.\nTermination shall become effective on the first day of the sixth month\nfollowing the submission of the certificate provided that:\n (i) The member pay a termination fee equivalent to twice the last\nannual premium paid by it pursuant to subdivision one of section four\nhundred twenty-h of this chapter; this fee shall not extend or enlarge\ninsurance coverage.\n (ii) The insured savings and loan association sends to each holder of\na savings account a notice in writing not later than two months after\nsubmission of the certificate; the notice shall be in a form prescribed\nby the fund and shall set forth the facts of the termination.\n (b) The fund may elect to refund to the association its original\ncapital contribution to the fund subject to terms it may prescribe,\nprovided that such refund is made within two years of termination of\nmembership.\n