Article 3. Purpose And Scope Of Guaranty Corporation of California Financial Code >> Division 7. >> Chapter 7. >> Article 3.

It shall be the purpose of Guaranty Corporation to guarantee full payment of guaranteed accounts of members, exclusive of special members, up to fifty thousand dollars ($50,000) for each account, subject to the express limitations provided in this chapter.

(a) Notwithstanding Section 18521 or 18100.5, until July 1, 1990, each industrial loan company, other than a premium finance agency, which has issued and has outstanding thrift obligations shall, as a condition of its authority to continue to conduct business under this division, have its outstanding thrift obligations insured or guaranteed by Thrift Guaranty Corporation, or participate as a member of the Federal Deposit Insurance Corporation; however, each industrial loan company shall, as a condition of its authority to continue to conduct business under this division, continue to participate as a member or a special member as defined in Section 18476, in Thrift Guaranty Corporation in accordance with this chapter and rules established by the Board of Directors of Thrift Guaranty Corporation until it has paid assessments required by Section 18537.
  (b) On and after July 1, 1990, each industrial loan company, other than a premium finance agency, which has issued and has outstanding thrift obligations, shall, as a condition of its authority to continue to conduct business under this division, participate as a member of the Federal Deposit Insurance Corporation.
  (c) Any person not transacting the business of an industrial loan company prior to the effective date of this section, who thereafter commences business under the provisions of this division, shall, upon commencement of its business, participate as a member of the Federal Deposit Insurance Corporation.
  (d) Thrift Guaranty Corporation shall have the power to seek insurance, guarantee, or surety, with an insurer or surety, or guarantor authorized to transact business in this state. The insurance shall be subject to the approval of the commissioner after consultation with the Insurance Commissioner. It is the intent of the Legislature to permit Thrift Guaranty Corporation to seek insurance and Thrift Guaranty Corporation's insurer to seek reinsurance. Thrift Guaranty Corporation shall remain in existence after July 1, 1990, to assist in the winding up, liquidation, or merger of industrial loan companies unable to comply with the requirements of subdivision (b) by that date. Thrift Guaranty Corporation shall continue to guarantee outstanding thrift obligations sold and issued prior to July 1, 1990, by an industrial loan company which has not complied with the requirements of subdivision (b) by July 1, 1990, until all outstanding thrift obligations have been redeemed by the issuer, a successor to the issuer in compliance with the requirements of subdivision (b), or Thrift Guaranty Corporation.
  (e) In addition to any other provision of this section, if during that period of time ending July 1, 1990, the United States Congress or the Board of Governors of the Federal Reserve System adopt or amend a law or regulations which pertain to an industrial loan company applying for and obtaining membership in the Federal Deposit Insurance Corporation, and the new federal law or regulations prevent an industrial loan company from obtaining Federal Deposit Insurance Corporation coverage solely because the company's holding company status prevents Federal Deposit Insurance Corporation membership, a successor to the Thrift Guaranty Corporation approved by the commissioner, or some other institutional mechanism approved by the commissioner, which obtains insurance in accordance with this subdivision, may continue to discharge its function so long as the insurance remains in effect.
  (f) Within one year of the effective date of the act which adds this section, and annually thereafter until July 1, 1990, the commissioner shall report to the Legislature on the following:
  (1) The progress of Thrift Guaranty Corporation in obtaining reinsurance.
  (2) The progress of licensees in converting to coverage by an instrumentality of the United States government or by a private insurer, surety, or guarantor.
  (3) Recommendations for additional legislation if, in the commissioner's opinion, additional legislation would be desirable to encourage industrial loan companies to seek coverage for investment certificates from sources other than Thrift Guaranty Corporation. The commissioner shall submit special reports on these matters as may be required by the circumstances.

No industrial loan company which fails to comply with the requirements of subdivision (b) of Section 18521.5 by June 30, 1990, may continue to sell and issue investment certificates beyond that date.

The following described thrift obligations will be guaranteed by Guaranty Corporation in the amounts hereinafter set forth below:
  (a) Single ownership investment certificates. Funds owned by an individual and invested in the manner set forth below shall be added together and guaranteed up to fifty thousand dollars ($50,000) in the aggregate.
  (1) Individual investment certificates (or investment certificates of the husband-wife community of which the individual is a member) and invested in one or more investment certificates in his or her own name shall be guaranteed up to fifty thousand dollars ($50,000) in the aggregate.
  (2) Funds owned by a principal and invested in one or more investment certificates in the name or names of agents or nominees shall be added to any individual investment certificates of the principal and guaranteed up to fifty thousand dollars ($50,000) in the aggregate.
  (3) Investment certificates held by guardians, custodians or conservators for the benefit of their wards or for the benefit of a minor under a Uniform Gifts to Minors Act and invested in one or more investment certificates in the name of the guardian, custodian or conservator shall be added to any individual investment certificates of the ward or minor and guaranteed up to fifty thousand dollars ($50,000) in the aggregate.
  (b) Testamentary investment certificates.
  (1) Funds owned by an individual and invested in a revocable trust investment certificate, tentative trust investment certificate, payable-on-death investment certificate, or similar investment certificate evidencing an intention that on his or her death the funds shall belong to his or her spouse, child or grandchild, shall be guaranteed up to fifty thousand dollars ($50,000) in the aggregate, as to each such named beneficiary, separately from any other investment certificates of the owner.
  (2) If the named beneficiary of such an investment certificate is other than the owner's spouse, child or grandchild, the funds in the investment certificate shall be added to any individual investment certificates of such owner and guaranteed up to fifty thousand dollars ($50,000) in the aggregate, separately from the individual investment certificates of the beneficiaries of the estate or of the executor or administrator.
  (c) Investment certificates held by executors or administrators. Funds of a decedent held in the name of the decedent or in the name of the executor or administrator of his or her estate and invested in one or more investment certificates shall be guaranteed up to fifty thousand dollars ($50,000) in the aggregate, separately from the individual investment certificates of the beneficiaries of the estate or of the executor or administrator.
  (d) Corporation or partnership investment certificates. Investment certificates of a corporation or partnership engaged in any independent activity shall be guaranteed up to fifty thousand dollars ($50,000) in the aggregate. An investment certificate of a corporation or partnership not engaged in an independent activity shall be deemed to be owned by the person or persons owning such corporation or comprising such partnership and, for guarantee purposes, the interest of each person in the investment certificate shall be added to any other investment certificates individually owned by such person and guaranteed up to fifty thousand dollars ($50,000) in the aggregate. The term "independent activity" means any activity other than one directed solely at increasing guarantee coverage under this chapter.
  (e) Unincorporated associations. Investment certificates of an unincorporated association engaged in any independent activity shall be guaranteed up to fifty thousand dollars ($50,000) in the aggregate. An investment certificate of an unincorporated association not engaged in an independent activity shall be deemed to be owned by the persons comprising such association and, for guarantee purposes, the interest of each owner in the investment certificate shall be added to any other investment certificates individually owned by such person and guaranteed up to fifty thousand dollars ($50,000) in the aggregate.
  (f) Joint investment certificates.
  (1) Investment certificates owned jointly, whether as joint tenants with right of survivorship, as tenants by the entireties, as tenants in common, or by husband and wife as community property, shall be guaranteed separately from investment certificates individually owned by the co-owners.
  (2) A joint investment certificate shall be deemed to exist, for purposes of guarantee of investment certificates, only if each co-owner has personally executed an investment certificate signature card and possesses redemption rights.
  (3) An investment certificate owned jointly which does not qualify as a joint investment certificate for purposes of guarantee of investment certificates shall be treated as owned by the named persons as individuals and the actual ownership interest of each such person in such investment certificate shall be added to any other investment certificates individually owned by such person and guaranteed up to fifty thousand dollars ($50,000) in the aggregate.
  (4) All joint investment certificates owned by the same combination of individuals shall first be added together and guaranteed up to fifty thousand dollars ($50,000) in the aggregate.
  (5) The interest of each co-owner in all joint investment certificates owned by different combinations of individuals shall then be added together and guaranteed up to fifty thousand dollars ($50,000) in the aggregate.
  (g) Trust investment certificates. All trust interests for the same beneficiary invested in investment certificates established pursuant to valid trust arrangements created by the same settlor (grantor) shall be added together and guaranteed up to fifty thousand dollars ($50,000) in the aggregate, separately from other investment certificates of the trustee of such trust funds or the settlor or beneficiary of such trust arrangements.
  (h) Thrift obligations withdrawn by checks that have not cleared a member's bank account at the time the commissioner has taken possession of the property and business of a member. The owner of the funds represented by such a check shall be recognized for all purposes of a claim for guaranteed thrift obligations to the same extent as if his or her name and interest were disclosed on the records of the member.

Notwithstanding any other provision of this division, Guaranty Corporation, with the written consent of the commissioner, shall have the power to assume obligations, enter into contracts, including contracts of guarantee or suretyship, incur liabilities, borrow money, lend money or otherwise use its credit, and secure any of its obligations, contracts, or liabilities by mortgage, pledge, security interest, or other encumbrances of all or any part of its property and assets, including, but not limited to, income from assessments of members or rights thereto, and income.