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SECTION 36
Examinations; right of inspection; penalties for refusing to permit examination
Banking (BNK) CHAPTER 2, ARTICLE 2
§ 36. Examinations; right of inspection; penalties for refusing to
permit examination. 1. The superintendent shall have the power to
examine every banking organization, every bank holding company and any
non-banking subsidiary thereof (as such terms "bank holding company" and
"non-banking subsidiary" are defined in article three-A of this chapter)
and every licensed lender at any time prior to its dissolution whenever
in his judgment such examination is necessary or advisable.

2. At least once in each calendar year upon such date or dates within
each such period as in his or her discretion he or she deems proper, the
superintendent shall cause every banking organization to be examined;
provided, however, that:

(a) the provisions of this subdivision shall not be applicable to an
investment company unless (i) such investment company has been
authorized by the superintendent of financial services to receive
deposits, in accordance with the terms of subdivision three of section
five hundred eight of this chapter, (ii) a bank or trust company, or any
two or more of such organizations, shall own an aggregate of twenty-five
per centum or more of the capital stock of such investment company, or
(iii) such investment company is a corporation which, under the terms of
subdivision six of this section, is deemed for the purposes of this
section to be a corporation affiliated with a corporate banking
organization, and

(b) the superintendent may extend the examination interval from at
least once in each calendar year to at least once in each eighteen month
period if the banking organization to be examined:

(1) has total assets of less than one billion dollars;

(2) is well-capitalized, which for purposes of this paragraph is
defined as having capital which significantly exceeds the required
minimum level for each relevant capital measure or as having such
capital as the superintendent shall otherwise define by regulation;

(3) at its most recent examination, was found to be well-managed and
its composite condition was found to be outstanding or good;

(4) is not currently subject to a formal enforcement proceeding or
order by the superintendent, the federal deposit insurance corporation
or any other federal banking agency; and

(5) has not been acquired by any person during the twelve month period
in which an examination would be required but for this paragraph, and

(c) the superintendent may modify the examination intervals as
prescribed by this subdivision to the extent the superintendent deems
appropriate, in his or her sole discretion, in order to obtain the
efficient use of the personal and nonpersonal resources of the
department by maximizing coordination with identical or parallel
examinations having differing or varying intervals performed by federal
banking regulators, whether such examinations are performed in
conjunction with the department or on an alternating schedule with such
federal banking regulators; provided, that nothing in this paragraph
shall be deemed in any manner to lessen or modify the requirement
imposed pursuant to section ten of this article.

3. On every such examination of any banking organization inquiry shall
be made as to (a) its financial condition, (b) the security afforded to
those by whom its engagements are held, (c) the policies of its
management, (d) whether the requirements of law have been complied with
in the administration of its affairs, and (e) such other matters as the
superintendent may prescribe. Examination of a licensed lender shall be
made only for the purposes set forth in section three hundred
forty-eight of this chapter.

4. The superintendent shall also have power at any time to examine
every agency, branch or office located in this state of any foreign
banking corporation, including, but not limited to, all of the books,
accounts or records of every agency, branch or office located in this
state of such foreign banking corporation as well as all of the books,
accounts or records maintained in this state of any agency, branch or
office not located in this state of such foreign banking corporation for
the purpose of ascertaining whether it has violated any law and for any
other purpose.

5. The superintendent shall have the power to make such special
investigations as he shall deem necessary to determine whether any
individual, partnership, unincorporated association or corporation has
violated any of the provisions of this chapter; and to the extent
necessary for this purpose the superintendent shall have the power to
examine all relevant books, records, accounts and documents.

6. For the purpose of determining the financial condition of a banking
organization, the superintendent shall have the power, when in his or
her judgment it is necessary or advisable, to examine corporations or
any other entity affiliated with any such banking organization. The
following are deemed for the purposes of this section to be corporations
or other entities affiliated with a banking organization:

(a) (i) Any corporation or other entity, the capital stock of which
such banking organization directly or indirectly, or through a
subsidiary or subsidiaries, owns or controls ten per centum or more of
the voting shares of such corporation or other entity; or (ii) any
corporation or other entity the election of a majority of the board of
directors of which is in any manner directly or indirectly controlled by
such banking organization; or (iii) any corporation or other entity the
management or policies over which the banking organization has the
power, directly or indirectly, to exercise a controlling influence, as
determined by the superintendent; provided, however, the foregoing
definition of affiliate corporations and other entities shall not apply
to small business investment companies as defined in and operating
pursuant to the provisions of an act of congress entitled "Small
Business Investment Act of 1958," and such companies shall be deemed to
be corporations affiliated with the banking organization for the
purposes of this subdivision, if such banking organization directly or
indirectly owns or controls twenty-five per centum or more of the voting
shares or more than twenty-five per centum of the shares voted for the
election of directors at the preceding annual meeting of such small
business investment company; or any such small business investment
company the election of at least twenty-five per centum of the board of
directors of which is in any other manner directly or indirectly
controlled by such banking organization; or

(b) Any corporation or other entity which directly or indirectly, or
through a subsidiary or subsidiaries, owns or controls ten per centum or
more of the voting shares of capital stock of such banking organization;
or any corporation or other entity which in any manner directly or
indirectly controls the election of a majority of the board of directors
of such banking organization; or with respect to the management or
policies of such banking organization has the power, directly or
indirectly, to exercise a controlling influence, as determined by the
superintendent.

6-a. (a) For the purposes of determining the financial condition of a
banking organization, the superintendent shall have the power, when in
his or her judgment it is necessary or advisable, to examine a
non-banking subsidiary of a corporation or other entity which
corporation or other entity, pursuant to paragraph (b) of subdivision
six of this section, is deemed to be an affiliate of a banking
organization.

(b) For the purposes of this subdivision, a "subsidiary" of such
affiliated corporation or other entity shall mean:

(1) Any corporation or other entity ten per centum or more of whose
voting stock is directly or indirectly, or through a subsidiary or
subsidiaries, owned, controlled, or held with power to vote, by an
affiliated corporation or other entity; or (2) any corporation or other
entity, the election of a majority of whose directors is controlled in
any manner by an affiliated corporation or other entity; or (3) any
corporation or other entity, ten per centum or more of whose voting
stock is directly or indirectly owned, controlled, or held with power to
vote, by a trustee or trustees for the benefit of the stockholders or
members of an affiliated corporation or other entity; or (4) any
corporation or other entity, at least ten per centum of the voting stock
of which is directly or indirectly, or through a subsidiary or
subsidiaries, owned, controlled or held with power to vote by a
combination of an affiliated corporation or other entity and by a
trustee or trustees for the benefit of the stockholders or members of
such affiliated corporation or other entity; or (5) any entity,
corporate or unincorporated, with respect to the management or policies
of which such affiliated corporation or other entity has the power,
directly or indirectly, to exercise a controlling influence, as
determined by the superintendent, after notice and opportunity for a
hearing. For the purposes of this subdivision, voting stock shall not be
deemed to include voting stock owned by the United States or by any
corporation wholly owned by the United States.

(c) A "non-banking subsidiary" for the purposes of this subdivision
means one which is not a banking organization or which is not engaged in
the banking business as defined in subdivision one of section one
hundred thirty-one of this chapter.

(d) The superintendent may use the reports of regulatory agencies of
this state, of other states, of any foreign government, and of federal
regulatory agencies in making such examinations or in conjunction with
such examination. All regulatory agencies of this state, shall upon
request of the superintendent, furnish or make available to him or her
reports of examination made by them of any such non-banking subsidiary.

6-b. For purposes of subdivisions six and six-a of this section, any
references contained therein to "voting stock" or "voting shares" shall
be deemed to include any ownership interest with respect to any entity
other than a corporation, any references to "stockholders" or
"shareholders" shall include persons or entities who have an equity
interest in any entity other than a corporation, and any references to
"board of directors" shall be deemed to mean the governing body with
respect to any entity other than a corporation.

7. The superintendent may cause any corporation, association or
partnership having business transactions or relations with any corporate
banking organization to be examined if such examination is found by a
justice of the supreme court, on application of the superintendent and
on notice to such company, to be necessary or expedient in order to
ascertain whether the capital stock of such corporate banking
organization is impaired or whether safety of depositors with it has
been imperilled.

8. Examinations may be made and inquiries instituted or continued in
the discretion of the superintendent after he has taken possession of
the property and business of any banking organization or after it has
entered upon voluntary dissolution until it shall resume business or its
affairs shall be finally liquidated.

9. Any individual, partnership, unincorporated association or
corporation, or any other entity, which refuses to permit examination or
investigation in accordance with the terms of this section shall forfeit
to the people of the state an amount as determined pursuant to section
forty-four of this chapter for every day such refusal continues.

10. All reports of examinations and investigations, correspondence and
memoranda concerning or arising out of such examination and
investigations, including any duly authenticated copy or copies thereof
in the possession of any banking organization, bank holding company or
any subsidiary thereof (as such terms "bank holding company" and
"subsidiary" are defined in article three-A of this chapter), any
corporation or any other entity affiliated with a banking organization
within the meaning of subdivision six of this section and any
non-banking subsidiary of a corporation or any other entity which is an
affiliate of a banking organization within the meaning of subdivision
six-a of this section, foreign banking corporation, licensed lender,
licensed casher of checks, licensed mortgage banker, registered mortgage
broker, licensed mortgage loan originator, licensed sales finance
company, registered mortgage loan servicer, licensed student loan
servicer, licensed insurance premium finance agency, licensed
transmitter of money, licensed budget planner, any other person or
entity subject to supervision under this chapter, or the department,
shall be confidential communications, shall not be subject to subpoena
and shall not be made public unless, in the judgment of the
superintendent, the ends of justice and the public advantage will be
subserved by the publication thereof, in which event the superintendent
may publish or authorize the publication of a copy of any such report or
any part thereof in such manner as may be deemed proper or unless such
laws specifically authorize such disclosure. For the purposes of this
subdivision, "reports of examinations and investigations, and any
correspondence and memoranda concerning or arising out of such
examinations and investigations", includes any such materials of a bank,
insurance or securities regulatory agency or any unit of the federal
government or that of this state any other state or that of any foreign
government which are considered confidential by such agency or unit and
which are in the possession of the department or which are otherwise
confidential materials that have been shared by the department with any
such agency or unit and are in the possession of such agency or unit.