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Home Source documents Committee Statement — Senate Bill No. 2947, Senate Commerce Committee (November 3, 2022)

Committee Statement — Senate Bill No. 2947, Senate Commerce Committee (November 3, 2022)

Summary

The Senate Commerce Committee statement, dated November 3, 2022, reports favorably Senate Bill No. 2947. The bill revises the effects of delinquency and insolvency proceedings against insurer-members of federal home loan banks. The commencement of a delinquency proceeding with respect to an insurer-member shall not operate as a stay, injunction, or prohibition of the exercise by a federal home loan bank of rights regarding collateral pledged by that insurer-member. A receiver may not void a transfer arising under a federal home loan bank security agreement, except under certain circumstances. The statement says federal home loan banks require more stringent and burdensome collateral terms from New Jersey-domiciled insurance companies because of differences between federal and State law.

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“Committee Statement — Senate Bill No. 2947, Senate Commerce Committee (November 3, 2022).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2022-11-03-scm-s2947-s1-e48867acae/, SHA-256 035e3b0b20b9c92c13d43b7d7ba3b02419f8822c8fa5b41d6ec4ccb923f522dd.

Full text

     SENATE COMMERCE COMMITTEE

                    STATEMENT TO

                  SENATE, No. 2947

 STATE OF NEW JERSEY
                  DATED: NOVEMBER 3, 2022

    The Senate Commerce Committee reports favorably Senate Bill
No. 2947.
   This bill revises the effects of delinquency and insolvency
proceedings against insurer-members of federal home loan banks.
Specifically, the bill provides that the commencement of a
delinquency proceeding with respect to an insurer-member shall not
operate as a stay, injunction, or prohibition of exercise by a federal
home loan bank of its rights regarding collateral pledged by that
insurer-member.
   The bill provides that a receiver may not void a transfer of
money or other property arising under or in conjunction with a
federal home loan bank security agreement, except under certain
circumstances. The bill also provides that a receiver for an insurer-
member subject to a delinquency may not void a transfer made to a
federal home loan bank, except under certain circumstances.
   The bill provides, following the appointment of a receiver for an
insurer-member and upon request of the receiver, that a federal
home loan bank is required to provide a process and establish a
timeline for:
   (1) the release of the collateral that exceeds the lending value
required to support secured obligations remaining after a repayment
of advances, as determined in accordance with the federal home
loan bank security agreement;
   (2) the release of any collateral remaining in the federal home
loan bank’s possession following repayment of all outstanding
secured obligations in full;
   (3) the payment of fees and the operation of deposits and other
accounts with the federal home loan bank; and
   (4) the possible redemption or repurchase of federal home loan
bank stock or excess stock of any class that an insurer-member is
required to own.
   Upon the request of the receiver for an insurer-member, the
federal home loan bank is required to provide any available options
for the insurer-member to renew or restructure an advance to defer
associated prepayment fees, to the extent that market conditions, the
terms of the advance outstanding to the insurer-member, the
applicable policies of the federal home loan bank, and compliance
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with the “Federal Home Loan Bank Act” (12 U.S.C. s.1421 et seq.)
and corresponding regulations permit.
   The bill provides that it does not affect the receiver’s rights
pursuant to federal regulations regarding advances to an insurer-
member in delinquency proceedings.
   Due to differences between federal and State law, federal home
loan banks require more stringent and burdensome collateral terms
from New Jersey-domiciled insurance companies, even if the credit
worthiness of a New Jersey-domiciled insurance company is
superior to other members of the bank. By amending New Jersey
law to comport with federal law, federal home loan banks will be
able to offer their New Jersey-domiciled insurance company
members collateral on terms similar to those offered to the other
federal home loan bank members, which are more favorable than
the terms that can be presently offered. Further, this bill requires
federal home loan banks to communicate and work with receivers to
provide available options for the federal home loan banks, where
permissible, to provide liquidity to help stabilize troubled insurance
companies.

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