Home > 105th Congressional Bills > H.R. 1151 (ih) To amend the Federal Credit Union Act to clarify existing law and ratify the longstanding policy of the National Credit Union Administration Board with regard to field of membership of Federal credit unions. ...H.R. 1151 (ih) To amend the Federal Credit Union Act to clarify existing law and ratify the longstanding policy of the National Credit Union Administration Board with regard to field of membership of Federal credit unions. ...
H.R.1151
One Hundred Fifth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the twenty-seventh day of January, one thousand nine hundred and ninety-
eight
An Act
To amend the Federal Credit Union Act to clarify existing law with
regard to the field of membership of Federal credit unions, to preserve
the integrity and purpose of Federal credit unions, to enhance
supervisory oversight of insured credit unions, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Credit Union
Membership Access Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Definitions.
TITLE I--CREDIT UNION MEMBERSHIP
Sec. 101. Fields of membership.
Sec. 102. Criteria for approval of expansion of membership of multiple
common-bond credit unions.
Sec. 103. Geographical guidelines for community credit unions.
TITLE II--REGULATION OF CREDIT UNIONS
Sec. 201. Financial statement and audit requirements.
Sec. 202. Conversion of insured credit unions.
Sec. 203. Limitation on member business loans.
Sec. 204. National Credit Union Administration Board membership.
Sec. 205. Report and congressional review requirement for certain
regulations.
TITLE III--CAPITALIZATION AND NET WORTH OF CREDIT UNIONS
Sec. 301. Prompt corrective action.
Sec. 302. National credit union share insurance fund equity ratio,
available assets ratio, and standby premium charge.
Sec. 303. Access to liquidity.
TITLE IV--MISCELLANEOUS PROVISIONS
Sec. 401. Study and report on differing regulatory treatment.
Sec. 402. Update on review of regulations and paperwork reductions.
Sec. 403. Treasury report on reduced taxation and viability of small
banks.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) The American credit union movement began as a cooperative
effort to serve the productive and provident credit needs of
individuals of modest means.
(2) Credit unions continue to fulfill this public purpose, and
current members and membership groups should not face divestiture
from the financial services institution of their choice as a result
of recent court action.
(3) To promote thrift and credit extension, a meaningful
affinity and bond among members, manifested by a commonality of
routine interaction, shared and related work experiences,
interests, or activities, or the maintenance of an otherwise well-
understood sense of cohesion or identity is essential to the
fulfillment of the public mission of credit unions.
(4) Credit unions, unlike many other participants in the
financial services market, are exempt from Federal and most State
taxes because they are member-owned, democratically operated, not-
for-profit organizations generally managed by volunteer boards of
directors and because they have the specified mission of meeting
the credit and savings needs of consumers, especially persons of
modest means.
(5) Improved credit union safety and soundness provisions will
enhance the public benefit that citizens receive from these
cooperative financial services institutions.
SEC. 3. DEFINITIONS.
As used in this Act--
(1) the term ``Administration'' means the National Credit Union
Administration;
(2) the term ``Board'' means the National Credit Union
Administration Board;
(3) the term ``Federal banking agencies'' has the same meaning
as in section 3 of the Federal Deposit Insurance Act;
(4) the terms ``insured credit union'' and ``State-chartered
insured credit union'' have the same meanings as in section 101 of
the Federal Credit Union Act; and
(5) the term ``Secretary'' means the Secretary of the Treasury.
TITLE I--CREDIT UNION MEMBERSHIP
SEC. 101. FIELDS OF MEMBERSHIP.
Section 109 of the Federal Credit Union Act (12 U.S.C. 1759) is
amended--
(1) in the first sentence--
(A) by striking ``Federal credit union membership shall
consist of'' and inserting ``(a) In General.--Subject to
subsection (b), Federal credit union membership shall consist
of''; and
(B) by striking ``, except that'' and all that follows
through ``rural district''; and
(2) by adding at the end the following new subsections:
``(b) Membership Field.--Subject to the other provisions of this
section, the membership of any Federal credit union shall be limited to
the membership described in one of the following categories:
``(1) Single common-bond credit union.--One group that has a
common bond of occupation or association.
``(2) Multiple common-bond credit union.--More than one group--
``(A) each of which has (within the group) a common bond of
occupation or association; and
``(B) the number of members, each of which (at the time the
group is first included within the field of membership of a
credit union described in this paragraph) does not exceed any
numerical limitation applicable under subsection (d).
``(3) Community credit union.--Persons or organizations within
a well-defined local community, neighborhood, or rural district.
``(c) Exceptions.--
``(1) Grandfathered members and groups.--
``(A) In general.--Notwithstanding subsection (b)--
``(i) any person or organization that is a member of
any Federal credit union as of the date of enactment of the
Credit Union Membership Access Act may remain a member of
the credit union after that date of enactment; and
``(ii) a member of any group whose members constituted
a portion of the membership of any Federal credit union as
of that date of enactment shall continue to be eligible to
become a member of that credit union, by virtue of
membership in that group, after that date of enactment.
``(B) Successors.--If the common bond of any group referred
to in subparagraph (A) is defined by any particular
organization or business entity, subparagraph (A) shall
continue to apply with respect to any successor to the
organization or entity.
``(2) Exception for underserved areas.--Notwithstanding
subsection (b), in the case of a Federal credit union, the field of
membership category of which is described in subsection (b)(2), the
Board may allow the membership of the credit union to include any
person or organization within a local community, neighborhood, or
rural district if--
``(A) the Board determines that the local community,
neighborhood, or rural district--
``(i) is an `investment area', as defined in section
103(16) of the Community Development Banking and Financial
Institutions Act of 1994 (12 U.S.C. 4703(16)), and meets
such additional requirements as the Board may impose; and
``(ii) is underserved, based on data of the Board and
the Federal banking agencies (as defined in section 3 of
the Federal Deposit Insurance Act), by other depository
institutions (as defined in section 19(b)(1)(A) of the
Federal Reserve Act); and
``(B) the credit union establishes and maintains an office
or facility in the local community, neighborhood, or rural
district at which credit union services are available.
``(d) Multiple Common-Bond Credit Union Group Requirements.--
``(1) Numerical limitation.--Except as provided in paragraph
(2), only a group with fewer than 3,000 members shall be eligible
to be included in the field of membership category of a credit
union described in subsection (b)(2).
``(2) Exceptions.--In the case of any Federal credit union, the
field of membership category of which is described in subsection
(b)(2), the numerical limitation in paragraph (1) of this
subsection shall not apply with respect to--
``(A) any group that the Board determines, in writing and
in accordance with the guidelines and regulations issued under
paragraph (3), could not feasibly or reasonably establish a new
single common-bond credit union, the field of membership
category of which is described in subsection (b)(1) because--
``(i) the group lacks sufficient volunteer and other
resources to support the efficient and effective operation
of a credit union;
``(ii) the group does not meet the criteria that the
Board has determined to be important for the likelihood of
success in establishing and managing a new credit union,
including demographic characteristics such as geographical
location of members, diversity of ages and income levels,
and other factors that may affect the financial viability
and stability of a credit union; or
``(iii) the group would be unlikely to operate a safe
and sound credit union;
``(B) any group transferred from another credit union--
``(i) in connection with a merger or consolidation
recommended by the Board or any appropriate State credit
union supervisor based on safety and soundness concerns
with respect to that other credit union; or
``(ii) by the Board in the Board's capacity as
conservator or liquidating agent with respect to that other
credit union; or
``(C) any group transferred in connection with a voluntary
merger, having received conditional approval by the
Administration of the merger application prior to October 25,
1996, but not having consummated the merger prior to October
25, 1996, if the merger is consummated not later than 180 days
after the date of enactment of the Credit Union Membership
Access Act.
``(3) Regulations and guidelines.--The Board shall issue
guidelines or regulations, after notice and opportunity for
comment, setting forth the criteria that the Board will apply in
determining under this subsection whether or not an additional
group may be included within the field of membership category of an
existing credit union described in subsection (b)(2).
``(e) Additional Membership Eligibility Provisions.--
``(1) Membership eligibility limited to immediate family or
household members.--No individual shall be eligible for membership
in a credit union on the basis of the relationship of the
individual to another person who is eligible for membership in the
credit union, unless the individual is a member of the immediate
family or household (as those terms are defined by the Board, by
regulation) of the other person.
``(2) Retention of membership.--Except as provided in section
118, once a person becomes a member of a credit union in accordance
with this title, that person or organization may remain a member of
that credit union until the person or organization chooses to
withdraw from the membership of the credit union.''.
SEC. 102. CRITERIA FOR APPROVAL OF EXPANSION OF MEMBERSHIP OF MULTIPLE
COMMON-BOND CREDIT UNIONS.
Section 109 of the Federal Credit Union Act (12 U.S.C. 1759) is
amended by adding at the end the following new subsection:
``(f) Criteria for Approval of Expansion of Multiple Common-Bond
Credit Unions.--
``(1) In general.--The Board shall--
``(A) encourage the formation of separately chartered
credit unions instead of approving an application to include an
additional group within the field of membership of an existing
credit union whenever practicable and consistent with
reasonable standards for the safe and sound operation of the
credit union; and
``(B) if the formation of a separate credit union by the
group is not practicable or consistent with the standards
referred to in subparagraph (A), require the inclusion of the
group in the field of membership of a credit union that is
within reasonable proximity to the location of the group
whenever practicable and consistent with reasonable standards
for the safe and sound operation of the credit union.
``(2) Approval criteria.--The Board may not approve any
application by a Federal credit union, the field of membership
category of which is described in subsection (b)(2) to include any
additional group within the field of membership of the credit union
(or an application by a Federal credit union described in
subsection (b)(1) to include an additional group and become a
credit union described in subsection (b)(2)), unless the Board
determines, in writing, that--
``(A) the credit union has not engaged in any unsafe or
unsound practice (as defined in section 206(b)) that is
material during the 1-year period preceding the date of filing
of the application;
``(B) the credit union is adequately capitalized;
``(C) the credit union has the administrative capability to
serve the proposed membership group and the financial resources
to meet the need for additional staff and assets to serve the
new membership group;
``(D) any potential harm that the expansion of the field of
membership of the credit union may have on any other insured
credit union and its members is clearly outweighed in the
public interest by the probable beneficial effect of the
expansion in meeting the convenience and needs of the members
of the group proposed to be included in the field of
membership; and
``(E) the credit union has met such additional requirements
as the Board may prescribe, by regulation.''.
SEC. 103. GEOGRAPHICAL GUIDELINES FOR COMMUNITY CREDIT UNIONS.
Section 109 of the Federal Credit Union Act (12 U.S.C. 1759) is
amended by adding at the end the following new subsection:
``(g) Regulations Required for Community Credit Unions.--
``(1) Definition of well-defined local community, neighborhood,
or rural district.--The Board shall prescribe, by regulation, a
definition for the term `well-defined local community,
neighborhood, or rural district' for purposes of--
``(A) making any determination with regard to the field of
membership of a credit union described in subsection (b)(3);
and
``(B) establishing the criteria applicable with respect to
any such determination.
``(2) Scope of application.--The definition prescribed by the
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