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ACT NO. 153

(H.374)

The Modernization of the Laws Related to Banks and Banking

This act is an update of Vermont’s banking laws. The act provides for a universal state financial institution charter providing each institution with equal powers. Financial institutions will be given more flexibility to convert from one charter to another using a simple process. Two new types of financial institutions will be permitted—merchant banks and uninsured banks—that will focus on specialized financial services needs. Vermont’s modern corporate code, with few exceptions, will form the basis for a bank’s operations and management. This act permits institutions to use a modern approach to investment of assets; namely, board policy and control. It also gives institutions more flexibility in developing loan products and structuring their loan portfolio. The act formally acknowledges the authority for electronic banking. The banking statutes are reorganized in a comprehensive, logical structure. All consumer protection laws are consolidated and left intact. This act is designed to modernize, simplify, organize, clarify and, in some ways, expand existing law in order to encourage financial institutions to remain state chartered, to entice the organizers of new banks to choose a state charter, and to persuade national banks and federal savings banks to convert to a state charter.

Effective Date: January 1, 2001, except for the credit union amendment which is effective July 1, 2000, and the sections regarding disclosures, spousal consent to amendment of a homestead mortgage, lien priorities, and the consumer financial privacy study which became effective May 24, 2000.