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BANKING > SAFE AND SOUND METHODS OF BANKING
Short Summary
The provided legal document content includes provisions from the New Jersey Administrative Code section on Safe and Sound Methods of Banking. It governs the required fidelity coverage of counsel for banks, savings banks, and State associations in New Jersey. When banks or associations permit counsel to handle funds, they must obtain an endorsement rider to their fidelity bond or a letter from their insurance company certifying coverage for attorneys and their employees involved in such transactions. The document also requires periodic reviews of fire insurance policies supporting loans secured by mortgages and real estate owned by banks, savings banks, and State associations. The purpose of the review is to ensure sufficient insurance coverage considering present values, especially when the policy contains a coinsurance clause. Financial institutions may also use other prudent means, such as obtaining insurance for inadequate coverage, to protect themselves from exposure to loss due to insufficient insurance coverage on these properties. Additionally, all banks, savings banks, and State associations are required to obtain closing statements from counsel or title companies immediately following mortgage loan closings and file such statements with the documents evidencing the loans. They are also required to verify the payment of taxes by mortgage borrowers at least annually. The document further governs the examination of banks and savings banks under the direction of the board of directors, board of managers, or board of trustees. It specifies the time period for commencing the examination and the notification requirements to avoid conflicts with other examinations. The person conducting the examination must specify the date of completion in the transmittal or report to the bank. The document also pertains to the statement of interest required from directors, trustees, managers, and executive officers of banks, savings banks, and state associations. It outlines the reporting requirements for disclosing ownership interests, indebtedness, positions, and the power to direct or cause the direction of the management or policies of a business enterprise. The document provides exemptions for certain types of entities and specifies the location and retention requirements for the statement of interest forms. Access to the forms is granted to State and Federal bank examiners, directors, senior loan officers, the bank’s designated auditor, and the bank’s designated public accounting firm. The forms filed with a designated bank are confidential.
Whom does it apply to?
Banks, savings banks, State associations, counsel handling funds, financial institutions operating in New Jersey, directors, trustees, managers, and executive officers of banks, savings banks, and state associations
What does it govern?
Required fidelity coverage of counsel for banks, savings banks, and State associations in New Jersey, periodic review of fire insurance policies supporting loans secured by mortgages and real estate owned by banks, savings banks, and State associations, examination of banks and savings banks under the direction of the board of directors, board of managers, or board of trustees, statement of interest required from directors, trustees, managers, and executive officers of banks, savings banks, and state associations
What are exemptions?
No specific exemptions are mentioned in the documents.
What are the Penalties?
No specific penalties are mentioned in the documents.
Jurisdiction
New Jersey