[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1151 Enrolled Bill (ENR)]

        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 
    Board under paragraph (1) shall apply with respect to any 
    application to form a new credit union, or to alter or expand the 
    field of membership of an existing credit union, that is filed with 
    the Board after the date of enactment of the Credit Union 
    Membership Access Act.''.

                 TITLE II--REGULATION OF CREDIT UNIONS

SEC. 201. FINANCIAL STATEMENT AND AUDIT REQUIREMENTS.

    (a) In General.--Section 202(a)(6) of the Federal Credit Union Act 
(12 U.S.C. 1782(a)(6)) is amended by adding at the end the following 
new subparagraphs:
            ``(C) Accounting principles.--
                ``(i) In general.--Accounting principles applicable to 
            reports or statements required to be filed with the Board 
            by each insured credit union shall be uniform and 
            consistent with generally accepted accounting principles.
                ``(ii) Board determination.--If the Board determines 
            that the application of any generally accepted accounting 
            principle to any insured credit union is not appropriate, 
            the Board may prescribe an accounting principle for 
            application to the credit union that is no less stringent 
            than generally accepted accounting principles.
                ``(iii) De minimus exception.--This subparagraph shall 
            not apply to any insured credit union, the total assets of 
            which are less than $10,000,000, unless prescribed by the 
            Board or an appropriate State credit union supervisor.
            ``(D) Large credit union audit requirement.--
                ``(i) In general.--Each insured credit union having 
            total assets of $500,000,000 or more shall have an annual 
            independent audit of the financial statements of the credit 
            union, performed in accordance with generally accepted 
            auditing standards by an independent certified public 
            accountant or public accountant licensed by the appropriate 
            State or jurisdiction to perform those services.
                ``(ii) Voluntary audits.--If a Federal credit union 
            that is not required to conduct an audit under clause (i), 
            and that has total assets of more than $10,000,000 conducts 
            such an audit for any purpose, using an independent auditor 
            who is compensated for his or her audit services with 
            respect to that audit, the audit shall be performed 
            consistent with the accountancy laws of the appropriate 
            State or jurisdiction, including licensing requirements.''.
    (b) Technical and Conforming Amendment.--Section 202(a)(6)(B) of 
the Federal Credit Union Act (12 U.S.C. 1782(a)(6)(B)) is amended by 
striking ``subparagraph (A)'' and inserting ``subparagraph (A) or 
(D)''.

SEC. 202. CONVERSION OF INSURED CREDIT UNIONS.

    Section 205(b) of the Federal Credit Union Act (12 U.S.C. 1785(b)) 
is amended--
        (1) in paragraph (1), by striking ``Except with the prior 
    written approval of the Board, no insured credit union shall'' and 
    inserting ``Except as provided in paragraph (2), no insured credit 
    union shall, without the prior approval of the Board'';
        (2) by redesignating paragraph (2) as paragraph (3); and
        (3) by inserting after paragraph (1) the following new 
    paragraph:
        ``(2) Conversion of insured credit unions to mutual savings 
    banks.--
            ``(A) In general.--Notwithstanding paragraph (1), an 
        insured credit union may convert to a mutual savings bank or 
        savings association (if the savings association is in mutual 
        form), as those terms are defined in section 3 of the Federal 
        Deposit Insurance Act, without the prior approval of the Board, 
        subject to the requirements and procedures set forth in the 
        laws and regulations governing mutual savings banks and savings 
        associations.
            ``(B) Conversion proposal.--A proposal for a conversion 
        described in subparagraph (A) shall first be approved, and a 
        date set for a vote thereon by the members (either at a meeting 
        to be held on that date or by written ballot to be filed on or 
        before that date), by a majority of the directors of the 
        insured credit union. Approval of the proposal for conversion 
        shall be by the affirmative vote of a majority of the members 
        of the insured credit union who vote on the proposal.
            ``(C) Notice of proposal to members.--An insured credit 
        union that proposes to convert to a mutual savings bank or 
        savings association under subparagraph (A) shall submit notice 
        to each of its members who is eligible to vote on the matter of 
        its intent to convert--
                ``(i) 90 days before the date of the member vote on the 
            conversion;
                ``(ii) 60 days before the date of the member vote on 
            the conversion; and
                ``(iii) 30 days before the date of the member vote on 
            the conversion.
            ``(D) Notice of proposal to board.--The Board may require 
        an insured credit union that proposes to convert to a mutual 
        savings bank or savings association under subparagraph (A) to 
        submit a notice to the Board of its intent to convert during 
        the 90-day period preceding the date of the completion of the 
        conversion.
            ``(E) Inapplicability of act upon conversion.--Upon 
        completion of a conversion described in subparagraph (A), the 
        credit union shall no longer be subject to any of the 
        provisions of this Act.
            ``(F) Limit on compensation of officials.--
                ``(i) In general.--No director or senior management 
            official of an insured credit union may receive any 
            economic benefit in connection with a conversion of the 
            credit union as described in subparagraph (A), other than--

                    ``(I) director fees; and
                    ``(II) compensation and other benefits paid to 
                directors or senior management officials of the 
                converted institution in the ordinary course of 
                business.

                ``(ii) Senior management official.--For purposes of 
            this subparagraph, the term `senior management official' 
            means a chief executive officer, an assistant chief 
            executive officer, a chief financial officer, and any other 
            senior executive officer (as defined by the appropriate 
            Federal banking agency pursuant to section 32 (f) of the 
            Federal Deposit Insurance Act).
            ``(G) Consistent rules.--
                ``(i) In general.--Not later than 6 months after the 
            date of enactment of the Credit Union Membership Access 
            Act, the Administration shall promulgate final rules 
            applicable to charter conversions described in this 
            paragraph that are consistent with rules promulgated by 
            other financial regulators, including the Office of Thrift 
            Supervision and the Office of the Comptroller of the 
            Currency. The rules required by this clause shall provide 
            that charter conversion by an insured credit union shall be 
            subject to regulation that is no more or less restrictive 
            than that applicable to charter conversions by other 
            financial institutions.
                ``(ii) Oversight of member vote.--The member vote 
            concerning charter conversion under this paragraph shall be 
            administered by the Administration, and shall be verified 
            by the Federal or State regulatory agency that would have 
            jurisdiction over the institution after the conversion. If 
            either the Administration or that regulatory agency 
            disapproves of the methods by which the member vote was 
            taken or procedures applicable to the member vote, the 
            member vote shall be taken again, as directed by the 
            Administration or the agency.''.

SEC. 203. LIMITATION ON MEMBER BUSINESS LOANS.

    (a) In General.--The Federal Credit Union Act (12 U.S.C. 1701 et 
seq.) is amended by inserting after section 107 the following new 
section:

``SEC. 107A. LIMITATION ON MEMBER BUSINESS LOANS.

    ``(a) In General.--On and after the date of enactment of this 
section, no insured credit union may make any member business loan that 
would result in a total amount of such loans outstanding at that credit 
union at any one time equal to more than the lesser of--
        ``(1) 1.75 times the actual net worth of the credit union; or
        ``(2) 1.75 times the minimum net worth required under section 
    216(c)(1)(A) for a credit union to be well capitalized.
    ``(b) Exceptions.--Subsection (a) does not apply in the case of--
        ``(1) an insured credit union chartered for the purpose of 
    making, or that has a history of primarily making, member business 
    loans to its members, as determined by the Board; or
        ``(2) an insured credit union that--
            ``(A) serves predominantly low-income members, as defined 
        by the Board; or
            ``(B) is a community development financial institution, as 
        defined in section 103 of the Community Development Banking and 
        Financial Institutions Act of 1994.
    ``(c) Definitions.--As used in this section--
        ``(1) the term `member business loan'--
            ``(A) means any loan, line of credit, or letter of credit, 
        the proceeds of which will be used for a commercial, corporate 
        or other business investment property or venture, or 
        agricultural purpose; and
            ``(B) does not include an extension of credit--
                ``(i) that is fully secured by a lien on a 1- to 4-
            family dwelling that is the primary residence of a member;
                ``(ii) that is fully secured by shares in the credit 
            union making the extension of credit or deposits in other 
            financial institutions;
                ``(iii) that is described in subparagraph (A), if it 
            was made to a borrower or an associated member that has a 
            total of all such extensions of credit in an amount equal 
            to less than $50,000;
                ``(iv) the repayment of which is fully insured or fully 
            guaranteed by, or where there is an advance commitment to 
            purchase in full by, any agency of the Federal Government 
            or of a State, or any political subdivision thereof; or
                ``(v) that is granted by a corporate credit union (as 
            that term is defined by the Board) to another credit union.
        ``(2) the term `net worth'--
            ``(A) with respect to any insured credit union, means the 
        credit union's retained earnings balance, as determined under 
        generally accepted accounting principles; and
            ``(B) with respect to a credit union that serves 
        predominantly low-income members, as defined by the Board, 
        includes secondary capital accounts that are--
                ``(i) uninsured; and
                ``(ii) subordinate to all other claims against the 
            credit union, including the claims of creditors, 
            shareholders, and the Fund; and
        ``(3) the term `associated member' means any member having a 
    shared ownership, investment, or other pecuniary interest in a 
    business or commercial endeavor with the borrower.
    ``(d) Effect on Existing Loans.--An insured credit union that has, 
on the date of enactment of this section, a total amount of outstanding 
member business loans that exceeds the amount permitted under 
subsection (a) shall, not later than 3 years after that date of 
enactment, reduce the total amount of outstanding member business loans 
to an amount that is not greater than the amount permitted under 
subsection (a).
    ``(e) Consultation and Cooperation With State Credit Union 
Supervisors.--In implementing this section, the Board shall consult and 
seek to work cooperatively with State officials having jurisdiction 
over State-chartered insured credit unions.''.
    (b) Study and Report.--
        (1) Study.--The Secretary shall conduct a study of member 
    business lending by insured credit unions, including--
            (A) an examination of member business lending over $500,000 
        and under $50,000, and a breakdown of the types and sizes of 
        businesses that receive member business loans;
            (B) a review of the effectiveness and enforcement of 
        regulations applicable to insured credit union member business 
        lending;
            (C) whether member business lending by insured credit 
        unions could affect the safety and soundness of insured credit 
        unions or the National Credit Union Share Insurance Fund;
            (D) the extent to which member business lending by insured 
        credit unions helps to meet financial services needs of low- 
        and moderate-income individuals within the field of membership 
        of insured credit unions;
            (E) whether insured credit unions that engage in member 
        business lending have a competitive advantage over other 
        insured depository institutions, and if any such advantage 
        could affect the viability and profitability of such other 
        insured depository institutions; and
            (F) the effect of enactment of this Act on the number of 
        insured credit unions involved in member business lending and 
        the overall amount of commercial lending.
        (2) NCUA cooperation.--The National Credit Union Administration 
    shall, upon request, provide such information as the Secretary may 
    require to conduct the study required under paragraph (1).
        (3) Report.--Not later than 12 months after the date of 
    enactment of this Act, the Secretary shall submit a report to the 
    Congress on the results of the study conducted under paragraph (1).

SEC. 204. NATIONAL CREDIT UNION ADMINISTRATION BOARD MEMBERSHIP.

    Section 102(b) of the Federal Credit Union Act (12 U.S.C. 1752a(b)) 
is amended--
        (1) by striking ``(b) The Board'' and inserting ``(b) 
    Membership and Appointment of Board.--
        ``(1) In general.--The Board''; and
        (2) by adding at the end the following new paragraph:
        ``(2) Appointment criteria.--
            ``(A) Experience in financial services.--In considering 
        appointments to the Board under paragraph (1), the President 
        shall give consideration to individuals who, by virtue of their 
        education, training, or experience relating to a broad range of 
        financial services, financial services regulation, or financial 
        policy, are especially qualified to serve on the Board.
            ``(B) Limit on appointment of credit union officers.--Not 
        more than one member of the Board may be appointed to the Board 
        from among individuals who, at the time of the appointment, 
        are, or have recently been, involved with any insured credit 
        union as a committee member, director, officer, employee, or 
        other institution-affiliated party.''.

SEC. 205. REPORT AND CONGRESSIONAL REVIEW REQUIREMENT FOR CERTAIN 
              REGULATIONS.

    A regulation prescribed by the Board shall be treated as a major 
rule for purposes of chapter 8 of title 5, United States Code, if the 
regulation defines, or amends the definition of--
        (1) the term ``immediate family or household'' for purposes of 
    section 109(e)(1) of the Federal Credit Union Act (as added by 
    section 101 of this Act); or
        (2) the term ``well-defined local community, neighborhood, or 
    rural district'' for purposes of section 109(g) of the Federal 
    Credit Union Act (as added by section 103 of this Act).

        TITLE III--CAPITALIZATION AND NET WORTH OF CREDIT UNIONS

SEC. 301. PROMPT CORRECTIVE ACTION.

    (a) In General.--Title II of the Federal Credit Union Act (12 
U.S.C. 1781 et seq.) is amended by adding at the end the following new 
section:

``SEC. 216. PROMPT CORRECTIVE ACTION.

    ``(a) Resolving Problems To Protect Fund.--
        ``(1) Purpose.--The purpose of this section is to resolve the 
    problems of insured credit unions at the least possible long-term 
    loss to the Fund.
        ``(2) Prompt corrective action required.--The Board shall carry 
    out the purpose of this section by taking prompt corrective action 
    to resolve the problems of insured credit unions.
    ``(b) Regulations Required.--
        ``(1) Insured credit unions.--
            ``(A) In general.--The Board shall, by regulation, 
        prescribe a system of prompt corrective action for insured 
        credit unions that is--
                ``(i) consistent with this section; and
                ``(ii) comparable to section 38 of the Federal Deposit 
            Insurance Act.
            ``(B) Cooperative character of credit unions.--The Board 
        shall design the system required under subparagraph (A) to take 
        into account that credit unions are not-for-profit cooperatives 
        that--
                ``(i) do not issue capital stock;
                ``(ii) must rely on retained earnings to build net 
            worth; and
                ``(iii) have boards of directors that consist primarily 
            of volunteers.
        ``(2) New credit unions.--
            ``(A) In general.--In addition to regulations under 
        paragraph (1), the Board shall, by regulation, prescribe a 
        system of prompt corrective action that shall apply to new 
        credit unions in lieu of this section and the regulations 
        prescribed under paragraph (1).
            ``(B) Criteria for alternative system.--The Board shall 
        design the system prescribed under subparagraph (A)--
                ``(i) to carry out the purpose of this section;
                ``(ii) to recognize that credit unions (as cooperatives 
            that do not issue capital stock) initially have no net 
            worth, and give new credit unions reasonable time to 
            accumulate net worth;
                ``(iii) to create adequate incentives for new credit 
            unions to become adequately capitalized by the time that 
            they either--

                    ``(I) have been in operation for more than 10 
                years; or
                    ``(II) have more than $10,000,000 in total assets;

                ``(iv) to impose appropriate restrictions and 
            requirements on new credit unions that do not make 
            sufficient progress toward becoming adequately capitalized; 
            and
                ``(v) to prevent evasion of the purpose of this 
            section.
    ``(c) Net Worth Categories.--
        ``(1) In general.--For purposes of this section the following 
    definitions shall apply:
            ``(A) Well capitalized.--An insured credit union is `well 
        capitalized' if--
                ``(i) it has a net worth ratio of not less than 7 
            percent; and
                ``(ii) it meets any applicable risk-based net worth 
            requirement under subsection (d).
            ``(B) Adequately capitalized.--An insured credit union is 
        `adequately capitalized' if--
                ``(i) it has a net worth ratio of not less than 6 
            percent; and
                ``(ii) it meets any applicable risk-based net worth 
            requirement under subsection (d).
            ``(C) Undercapitalized.--An insured credit union is 
        `undercapitalized' if--
                ``(i) it has a net worth ratio of less than 6 percent; 
            or
                ``(ii) it fails to meet any applicable risk-based net 
            worth requirement under subsection (d).
            ``(D) Significantly undercapitalized.--An insured credit 
        union is `significantly undercapitalized'--
                ``(i) if it has a net worth ratio of less than 4 
            percent; or
                ``(ii) if--

                    ``(I) it has a net worth ratio of less than 5 
                percent; and
                    ``(II) it--

                        ``(aa) fails to submit an acceptable net worth 
                    restoration plan within the time allowed under 
                    subsection (f); or
                        ``(bb) materially fails to implement a net 
                    worth restoration plan accepted by the Board.
            ``(E) Critically undercapitalized.--An insured credit union 
        is `critically undercapitalized' if it has a net worth ratio of 
        less than 2 percent (or such higher net worth ratio, not to 
        exceed 3 percent, as the Board may specify by regulation).
        ``(2) Adjusting net worth levels.--
            ``(A) In general.--If, for purposes of section 38(c) of the 
        Federal Deposit Insurance Act, the Federal banking agencies 
        increase or decrease the required minimum level for the 
        leverage limit (as those terms are used in section 38), the 
        Board may, by regulation, and subject to subparagraph (B) of 
        this paragraph, correspondingly increase or decrease 1 or more 
        of the net worth ratios specified in subparagraphs (A) through 
        (D) of paragraph (1) of this subsection in an amount that is 
        equal to not more than the difference between the required 
        minimum level most recently established by the Federal banking 
        agencies and 4 percent of total assets (with respect to 
        institutions regulated by those agencies).
            ``(B) Determinations required.--The Board may increase or 
        decrease net worth ratios under subparagraph (A) only if the 
        Board--
                ``(i) determines, in consultation with the Federal 
            banking agencies, that the reason for the increase or 
            decrease in the required minimum level for the leverage 
            limit also justifies the adjustment in net worth ratios; 
            and
                ``(ii) determines that the resulting net worth ratios 
            are sufficient to carry out the purpose of this section.
            ``(C) Transition period required.--If the Board increases 
        any net worth ratio under this paragraph, the Board shall give 
        insured credit unions a reasonable period of time to meet the 
        increased ratio.
    ``(d) Risk-Based Net Worth Requirement for Complex Credit Unions.--
        ``(1) In general.--The regulations required under subsection 
    (b)(1) shall include a risk-based net worth requirement for insured 
    credit unions that are complex, as defined by the Board based on 
    the portfolios of assets and liabilities of credit unions.
        ``(2) Standard.--The Board shall design the risk-based net 
    worth requirement to take account of any material risks against 
    which the net worth ratio required for an insured credit union to 
    be adequately capitalized may not provide adequate protection.
    ``(e) Earnings-Retention Requirement Applicable to Credit Unions 
That Are Not Well Capitalized.--
        ``(1) In general.--An insured credit union that is not well 
    capitalized shall annually set aside as net worth an amount equal 
    to not less than 0.4 percent of its total assets.
        ``(2) Board's authority to decrease earnings-retention 
    requirement.--
            ``(A) In general.--The Board may, by order, decrease the 
        0.4 percent requirement in paragraph (1) with respect to a 
        credit union to the extent that the Board determines that the 
        decrease--
                ``(i) is necessary to avoid a significant redemption of 
            shares; and
                ``(ii) would further the purpose of this section.
            ``(B) Periodic review required.--The Board shall 
        periodically review any order issued under subparagraph (A).
    ``(f) Net Worth Restoration Plan Required.--
        ``(1) In general.--Each insured credit union that is 
    undercapitalized shall submit an acceptable net worth restoration 
    plan to the Board within the time allowed under this subsection.
        ``(2) Assistance to small credit unions.--The Board (or the 
    staff of the Board) shall, upon timely request by an insured credit 
    union with total assets of less than $10,000,000, and subject to 
    such regulations or guidelines as the Board may prescribe, assist 
    that credit union in preparing a net worth restoration plan.
        ``(3) Deadlines for submission and review of plans.--The Board 
    shall, by regulation, establish deadlines for submission of net 
    worth restoration plans under this subsection that--
            ``(A) provide insured credit unions with reasonable time to 
        submit net worth restoration plans; and
            ``(B) require the Board to act on net worth restoration 
        plans expeditiously.
        ``(4) Failure to submit acceptable plan within time allowed.--
            ``(A) Failure to submit any plan.--If an insured credit 
        union fails to submit a net worth restoration plan within the 
        time allowed under paragraph (3), the Board shall--
                ``(i) promptly notify the credit union of that failure; 
            and
                ``(ii) give the credit union a reasonable opportunity 
            to submit a net worth restoration plan.
            ``(B) Submission of unacceptable plan.--If an insured 
        credit union submits a net worth restoration plan within the 
        time allowed under paragraph (3), and the Board determines that 
        the plan is not acceptable, the Board shall--
                ``(i) promptly notify the credit union of why the plan 
            is not acceptable; and
                ``(ii) give the credit union a reasonable opportunity 
            to submit a revised plan.
        ``(5) Accepting plan.--The Board may accept a net worth 
    restoration plan only if the Board determines that the plan is 
    based on realistic assumptions and is likely to succeed in 
    restoring the net worth of the credit union.
    ``(g) Restrictions on Undercapitalized Credit Unions.--
        ``(1) Restriction on asset growth.--An insured credit union 
    that is undercapitalized shall not generally permit its average 
    total assets to increase, unless--
            ``(A) the Board has accepted the net worth restoration plan 
        of the credit union for that action;
            ``(B) any increase in total assets is consistent with the 
        net worth restoration plan; and
            ``(C) the net worth ratio of the credit union increases at 
        a rate that is consistent with the net worth restoration plan.
        ``(2) Restriction on member business loans.--Notwithstanding 
    section 107A(a), an insured credit union that is undercapitalized 
    may not make any increase in the total amount of member business 
    loans (as defined in section 107A(c)) outstanding at that credit 
    union at any one time, until such time as the credit union becomes 
    adequately capitalized.
    ``(h) More Stringent Treatment Based on Other Supervisory 
Criteria.--With respect to the exercise of authority by the Board under 
regulations comparable to section 38(g) of the Federal Deposit 
Insurance Act--
        ``(1) the Board may not reclassify an insured credit union into 
    a lower net worth category, or treat an insured credit union as if 
    it were in a lower net worth category, for reasons not pertaining 
    to the safety and soundness of that credit union; and
        ``(2) the Board may not delegate its authority to reclassify an 
    insured credit union into a lower net worth category or to treat an 
    insured credit union as if it were in a lower net worth category.
    ``(i) Action Required Regarding Critically Under- capitalized   
Credit   Unions.--
        ``(1) In general.--The Board shall, not later than 90 days 
    after the date on which an insured credit union becomes critically 
    undercapitalized--
            ``(A) appoint a conservator or liquidating agent for the 
        credit union; or
            ``(B) take such other action as the Board determines would 
        better achieve the purpose of this section, after documenting 
        why the action would better achieve that purpose.
        ``(2) Periodic redeterminations required.--Any determination by 
    the Board under paragraph (1)(B) to take any action with respect to 
    an insured credit union in lieu of appointing a conservator or 
    liquidating agent shall cease to be effective not later than the 
    end of the 180-day period beginning on the date on which the 
    determination is made, and a conservator or liquidating agent shall 
    be appointed for that credit union under paragraph (1)(A), unless 
    the Board makes a new determination under paragraph (1)(B) before 
    the end of the effective period of the prior determination.
        ``(3) Appointment of liquidating agent required if other action 
    fails to restore net worth.--
            ``(A) In general.--Notwithstanding paragraphs (1) and (2), 
        the Board shall appoint a liquidating agent for an insured 
        credit union if the credit union is critically undercapitalized 
        on average during the calendar quarter beginning 18 months 
        after the date on which the credit union became critically 
        undercapitalized.
            ``(B) Exception.--Notwithstanding subparagraph (A), the 
        Board may continue to take such other action as the Board 
        determines to be appropriate in lieu of appointment of a 
        liquidating agent if--
                ``(i) the Board determines that--

                    ``(I) the insured credit union has been in 
                substantial compliance with an approved net worth 
                restoration plan that requires consistent improvement 
                in the net worth of the credit union since the date of 
                the approval of the plan; and
                    ``(II) the insured credit union has positive net 
                income or has an upward trend in earnings that the 
                Board projects as sustainable; and

                ``(ii) the Board certifies that the credit union is 
            viable and not expected to fail.
        ``(4) Nondelegation.--
            ``(A) In general.--Except as provided in subparagraph (B), 
        the Board may not delegate the authority of the Board under 
        this subsection.
            ``(B) Exception.--The Board may delegate the authority of 
        the Board under this subsection with respect to an insured 
        credit union that has less than $5,000,000 in total assets, if 
        the Board permits the credit union to appeal any adverse action 
        to the Board.
    ``(j) Review Required When Fund Incurs Material Loss.--For purposes 
of determining whether the Fund has incurred a material loss with 
respect to an insured credit union (such that the inspector general of 
the Board must make a report), a loss is material if it exceeds the sum 
of--
        ``(1) $10,000,000; and
        ``(2) an amount equal to 10 percent of the total assets of the 
    credit union at the time at which the Board initiated assistance 
    under section 208 or was appointed liquidating agent.
    ``(k) Appeals Process.--Material supervisory determinations, 
including decisions to require prompt corrective action, made pursuant 
to this section by Administration officials other than the Board may be 
appealed to the Board pursuant to the independent appellate process 
required by section 309 of the Riegle Community Development and 
Regulatory Improvement Act of 1994 (or, if the Board so specifies, 
pursuant to separate procedures prescribed by regulation).
    ``(l) Consultation and Cooperation With State Credit Union 
Supervisors.--
        ``(1) In general.--In implementing this section, the Board 
    shall consult and seek to work cooperatively with State officials 
    having jurisdiction over State-chartered insured credit unions.
        ``(2) Evaluating net worth restoration plan.--In evaluating any 
    net worth restoration plan submitted by a State-chartered insured 
    credit union, the Board shall seek the views of the State official 
    having jurisdiction over the credit union.
        ``(3) Deciding whether to appoint conservator or liquidating 
    agent.--With respect to any decision by the Board on whether to 
    appoint a conservator or liquidating agent for a State-chartered 
    insured credit union--
            ``(A) the Board shall--
                ``(i) seek the views of the State official having 
            jurisdiction over the credit union; and
                ``(ii) give that official an opportunity to take the 
            proposed action;
            ``(B) the Board shall, upon timely request of an official 
        referred to in subparagraph (A), promptly provide the official 
        with--
                ``(i) a written statement of the reasons for the 
            proposed action; and
                ``(ii) reasonable time to respond to that statement;
            ``(C) if the official referred to in subparagraph (A) makes 
        a timely written response that disagrees with the proposed 
        action and gives reasons for that disagreement, the Board shall 
        not appoint a conservator or liquidating agent for the credit 
        union, unless the Board, after considering the views of the 
        official, has determined that--
                ``(i) the Fund faces a significant risk of loss with 
            respect to the credit union if a conservator or liquidating 
            agent is not appointed; and
                ``(ii) the appointment is necessary to reduce--

                    ``(I) the risk that the Fund would incur a loss 
                with respect to the credit union; or
                    (II) any loss that the Fund is expected to incur 
                with respect to the credit union; and

            ``(D) the Board may not delegate any determination under 
        subparagraph (C).
    ``(m) Corporate Credit Unions Exempted.--This section does not 
apply to any insured credit union that--
        ``(1) operates primarily for the purpose of serving credit 
    unions; and
        ``(2) permits individuals to be members of the credit union 
    only to the extent that applicable law requires that such persons 
    own shares.
    ``(n) Other Authority Not Affected.--This section does not limit 
any authority of the Board or a State to take action in addition to 
(but not in derogation of) that is required under this section.
    ``(o) Definitions.--For purposes of this section the following 
definitions shall apply:
        ``(1) Federal banking agency.--The term `Federal banking 
    agency' has the same meaning as in section 3 of the Federal Deposit 
    Insurance Act.
        ``(2) Net worth.--The term `net worth'--
            ``(A) with respect to any insured credit union, means 
        retained earnings balance of the credit union, as determined 
        under generally accepted accounting principles; and
            ``(B) with respect to a low-income credit union, includes 
        secondary capital accounts that are--
                ``(i) uninsured; and
                ``(ii) subordinate to all other claims against the 
            credit union, including the claims of creditors, 
            shareholders, and the Fund.
        ``(3) Net worth ratio.--The term `net worth ratio' means, with 
    respect to a credit union, the ratio of the net worth of the credit 
    union to the total assets of the credit union.
        ``(4) New credit union.--The term `new credit union' means an 
    insured credit union that--
            ``(A) has been in operation for less than 10 years; and
            ``(B) has not more than $10,000,000 in total assets.''.
    (b) Conservatorship and Liquidation Amendments To Facilitate Prompt 
Corrective Action.--
        (1) Conservatorship.--Section 206(h) of the Federal Credit 
    Union Act (12 U.S.C. 1786(h)) is amended--
            (A) in paragraph (1)--
                (i) in subparagraph (D), by striking ``or'' at the end;
                (ii) in subparagraph (E), by striking the period at the 
            end and inserting a semicolon; and
                (iii) by adding at the end the following new 
            subparagraphs:
        ``(F) the credit union is significantly undercapitalized, as 
    defined in section 216, and has no reasonable prospect of becoming 
    adequately capitalized, as defined in section 216; or
        ``(G) the credit union is critically undercapitalized, as 
    defined in section 216.''; and
            (B) in paragraph (2)--
                (i) in subparagraph (A), by striking ``In the case'' 
            and inserting ``Except as provided in subparagraph (C), in 
            the case''; and
                (ii) by adding at the end the following new 
            subparagraph:
        ``(C) In the case of a State-chartered insured credit union, 
    the authority conferred by subparagraphs (F) and (G) of paragraph 
    (1) may not be exercised unless the Board has complied with section 
    216(l).''.
        (2) Liquidation.--Section 207(a) of the Federal Credit Union 
    Act (12 U.S.C. 1787(a)) is amended--
            (A) in paragraph (1)(A), by striking ``himself'' and 
        inserting ``itself''; and
            (B) by adding at the end the following new paragraph:
        ``(3) Liquidation to facilitate prompt corrective action.--The 
    Board may close any credit union for liquidation, and appoint 
    itself or another (including, in the case of a State-chartered 
    insured credit union, the State official having jurisdiction over 
    the credit union) as liquidating agent of that credit union, if--
            ``(A) the Board determines that--
                ``(i) the credit union is significantly 
            undercapitalized, as defined in section 216, and has no 
            reasonable prospect of becoming adequately capitalized, as 
            defined in section 216; or
                ``(ii) the credit union is critically undercapitalized, 
            as defined in section 216; and
            ``(B) in the case of a State-chartered insured credit 
        union, the Board has complied with section 216(l).''.
    (c) Consultation Required.--In developing regulations to implement 
section 216 of the Federal Credit Union Act (as added by subsection (a) 
of this section), the Board shall consult with the Secretary, the 
Federal banking agencies, and the State officials having jurisdiction 
over State-chartered insured credit unions.
    (d) Deadlines for Regulations.--
        (1) In general.--Except as provided in paragraph (2), the Board 
    shall--
            (A) publish in the Federal Register proposed regulations to 
        implement section 216 of the Federal Credit Union Act (as added 
        by subsection (a) of this section) not later than 270 days 
        after the date of enactment of this Act; and
            (B) promulgate final regulations to implement section 216 
        not later than 18 months after the date of enactment of this 
        Act.
        (2) Risk-based net worth requirement.--
            (A) Advance notice of proposed rulemaking.--Not later than 
        180 days after the date of enactment of this Act, the Board 
        shall publish in the Federal Register an advance notice of 
        proposed rulemaking, as required by section 216(d) of the 
        Federal Credit Union Act, as added by this Act.
            (B) Final regulations.--The Board shall promulgate final 
        regulations, as required by section 216(d) not later than 2 
        years after the date of enactment of this Act.
    (e) Effective Date.--
        (1) In general.--Except as provided in paragraph (2), section 
    216 of the Federal Credit Union Act (as added by this section) 
    shall become effective 2 years after the date of enactment of this 
    Act.
        (2) Risk-based net worth requirement.--Section 216(d) of the 
    Federal Credit Union Act (as added by this section) shall become 
    effective on January 1, 2001.
     (f) Report to Congress Required.--When the Board publishes 
proposed regulations pursuant to subsection (d)(1)(A), or promulgates 
final regulations pursuant to subsection (d)(1)(B), the Board shall 
submit to the Congress a report that specifically explains--
        (1) how the regulations carry out section 216(b)(1)(B) of the 
    Federal Credit Union Act (as added by this section), relating to 
    the cooperative character of credit unions; and
        (2) how the regulations differ from section 38 of the Federal 
    Deposit Insurance Act, and the reasons for those differences.
    (g) Conforming Amendments.--
        (1) Amendments relating to enforcement of prompt corrective 
    action.--Section 206(k) of the Federal Credit Union Act (12 U.S.C. 
    1786(k)) is amended--
            (A) in paragraph (1), by inserting ``or section 216'' after 
        ``this section'' each place it appears; and
            (B) in paragraph (2)(A)(ii), by inserting ``, or any final 
        order under section 216'' before the semicolon.
        (2) Conforming amendment regarding appointment of state credit 
    union supervisor as conservator.--Section 206(h)(1) of the Federal 
    Credit Union Act (12 U.S.C. 1786(h)(1)) is amended by inserting 
    ``or another (including, in the case of a State-chartered insured 
    credit union, the State official having jurisdiction over the 
    credit union)'' after ``appoint itself''.
        (3) Amendment repealing superseded provision.-- Section 116 of 
    the Federal Credit Union Act (12 U.S.C. 1762) is repealed.

SEC. 302. NATIONAL CREDIT UNION SHARE INSURANCE FUND EQUITY RATIO, 
              AVAILABLE ASSETS RATIO, AND STANDBY PREMIUM CHARGE.

    (a) In General.--Section 202 of the Federal Credit Union Act (12 
U.S.C. 1782) is amended--
        (1) by striking subsection (b) and inserting the following:
    ``(b) Certified Statement.--
        ``(1) Statement required.--
            ``(A) In general.--For each calendar year, in the case of 
        an insured credit union with total assets of not more than 
        $50,000,000, and for each semi-annual period in the case of an 
        insured credit union with total assets of $50,000,000 or more, 
        an insured credit union shall file with the Board, at such time 
        as the Board prescribes, a certified statement showing the 
        total amount of insured shares in the credit union at the close 
        of the relevant period and both the amount of its deposit or 
        adjustment of deposit and the amount of the insurance charge 
        due to the Fund for that period, both as computed under 
        subsection (c).
            ``(B) Exception for newly insured credit union.--
        Subparagraph (A) shall not apply with respect to a credit union 
        that became insured during the reporting period.
        ``(2) Form.--The certified statements required to be filed with 
    the Board pursuant to this subsection shall be in such form and 
    shall set forth such supporting information as the Board shall 
    require.
        ``(3) Certification.--The president of the credit union or any 
    officer designated by the board of directors shall certify, with 
    respect to each statement required to be filed with the Board 
    pursuant to this subsection, that to the best of his or her 
    knowledge and belief the statement is true, correct, complete, and 
    in accordance with this title and the regulations issued under this 
    title.'';
        (2) in subsection (c)(1)(A), by striking clause (iii) and 
    inserting the following:
                ``(iii) Periodic adjustment.--The amount of each 
            insured credit union's deposit shall be adjusted as 
            follows, in accordance with procedures determined by the 
            Board, to reflect changes in the credit union's insured 
            shares:

                    ``(I) annually, in the case of an insured credit 
                union with total assets of not more than $50,000,000; 
                and
                    ``(II) semi-annually, in the case of an insured 
                credit union with total assets of $50,000,000 or 
                more.'';

        (3) in subsection (c), by striking paragraphs (2) and (3) and 
    inserting the following:
        ``(2) Insurance premium charges.--
            ``(A) In general.--Each insured credit union shall, at such 
        times as the Board prescribes (but not more than twice in any 
        calendar year), pay to the Fund a premium charge for insurance 
        in an amount stated as a percentage of insured shares (which 
        shall be the same for all insured credit unions).
            ``(B) Relation of premium charge to equity ratio of fund.--
        The Board may assess a premium charge only if--
                ``(i) the Fund's equity ratio is less than 1.3 percent; 
            and
                ``(ii) the premium charge does not exceed the amount 
            necessary to restore the equity ratio to 1.3 percent.
            ``(C) Premium charge required if equity ratio falls below 
        1.2 percent.--If the Fund's equity ratio is less than 1.2 
        percent, the Board shall, subject to subparagraph (B), assess a 
        premium charge in such an amount as the Board determines to be 
        necessary to restore the equity ratio to, and maintain that 
        ratio at, 1.2 percent.
        ``(3) Distributions from fund required.--
            ``(A) In general.--The Board shall effect a pro rata 
        distribution to insured credit unions after each calendar year 
        if, as of the end of that calendar year--
                ``(i) any loans to the Fund from the Federal 
            Government, and any interest on those loans, have been 
            repaid;
                ``(ii) the Fund's equity ratio exceeds the normal 
            operating level; and
                ``(iii) the Fund's available assets ratio exceeds 1.0 
            percent.
            ``(B) Amount of distribution.--The Board shall distribute 
        under subparagraph (A) the maximum possible amount that--
                ``(i) does not reduce the Fund's equity ratio below the 
            normal operating level; and
                ``(ii) does not reduce the Fund's available assets 
            ratio below 1.0 percent.
            ``(C) Calculation based on certified statements.--In 
        calculating the Fund's equity ratio and available assets ratio 
        for purposes of this paragraph, the Board shall determine the 
        aggregate amount of the insured shares in all insured credit 
        unions from insured credit unions certified statements under 
        subsection (b) for the final reporting period of the calendar 
        year referred to in subparagraph (A).'';
        (4) in subsection (c), by adding at the end the following new 
    paragraph:
        ``(4) Timeliness and accuracy of data.--In calculating the 
    available assets ratio and equity ratio of the Fund, the Board 
    shall use the most current and accurate data reasonably 
    available.''; and
        (5) by striking subsection (h) and inserting the following:
    ``(h) Definitions.--For purposes of this section, the following 
definitions shall apply:
        ``(1) Available assets ratio.--The term `available assets 
    ratio', when applied to the Fund, means the ratio of--
            ``(A) the amount determined by subtracting--
                ``(i) direct liabilities of the Fund and contingent 
            liabilities for which no provision for losses has been 
            made, from
                ``(ii) the sum of cash and the market value of 
            unencumbered investments authorized under section 203(c), 
            to
            ``(B) the aggregate amount of the insured shares in all 
        insured credit unions.
        ``(2) Equity ratio.--The term `equity ratio', when applied to 
    the Fund, means the ratio of--
            ``(A) the amount of Fund capitalization, including insured 
        credit unions' 1 percent capitalization deposits and the 
        retained earnings balance of the Fund (net of direct 
        liabilities of the Fund and contingent liabilities for which no 
        provision for losses has been made); to
            ``(B) the aggregate amount of the insured shares in all 
        insured credit unions.
        ``(3) Insured shares.--The term `insured shares', when applied 
    to this section, includes share, share draft, share certificate, 
    and other similar accounts as determined by the Board, but does not 
    include amounts exceeding the insured account limit set forth in 
    section 207(c)(1).
        ``(4) Normal operating level.--The term `normal operating 
    level', when applied to the Fund, means an equity ratio specified 
    by the Board, which shall be not less than 1.2 percent and not more 
    than 1.5 percent.''.
    (b) Effective Date.--This section and the amendments made by this 
section shall become effective on January 1 of the first calendar year 
beginning more than 180 days after the date of enactment of this Act.

SEC. 303. ACCESS TO LIQUIDITY.

    Section 204 of the Federal Credit Union Act (12 U.S.C. 1784) is 
amended by adding at the end the following new subsections:
    ``(f) Access to Liquidity.--The Board shall--
        ``(1) periodically assess the potential liquidity needs of each 
    insured credit union, and the options that the credit union has 
    available for meeting those needs; and
        ``(2) periodically assess the potential liquidity needs of 
    insured credit unions as a group, and the options that insured 
    credit unions have available for meeting those needs.
    ``(g) Sharing Information With Federal Reserve Banks.--The Board 
shall, for the purpose of facilitating insured credit unions' access to 
liquidity, make available to the Federal reserve banks (subject to 
appropriate assurances of confidentiality) information relevant to 
making advances to such credit unions, including the Board's reports of 
examination.''.

                   TITLE IV--MISCELLANEOUS PROVISIONS

SEC. 401. STUDY AND REPORT ON DIFFERING REGULATORY TREATMENT.

    (a) Study.--The Secretary shall conduct a study of--
        (1) the differences between credit unions and other federally 
    insured financial institutions, including regulatory differences 
    with respect to regulations enforced by the Office of Thrift 
    Supervision, the Office of the Comptroller of the Currency, the 
    Federal Deposit Insurance Corporation, and the Administration; and
        (2) the potential effects of the application of Federal laws, 
    including Federal tax laws, on credit unions in the same manner as 
    those laws are applied to other federally insured financial 
    institutions.
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Secretary shall submit a report to the Congress on the 
results of the study required by subsection (a).

SEC. 402. UPDATE ON REVIEW OF REGULATIONS AND PAPERWORK REDUCTIONS.

    Not later than 1 year after the date of enactment of this Act, the 
Federal banking agencies shall submit a report to the Congress 
detailing their progress in carrying out section 303(a) of the Riegle 
Community Development and Regulatory Improvement Act of 1994, since 
their submission of the report dated September 23, 1996, as required by 
section 303(a)(4) of that Act.

SEC. 403. TREASURY REPORT ON REDUCED TAXATION AND VIABILITY OF SMALL 
              BANKS.

    The Secretary shall, not later than 1 year after the date of 
enactment of this Act, submit a report to the Congress containing--
        (1) recommendations for such legislative and administrative 
    action as the Secretary deems appropriate, that would reduce and 
    simplify the tax burden for--
            (A) insured depository institutions having less than 
        $1,000,000,000 in assets; and
            (B) banks having total assets of not less than 
        $1,000,000,000 nor more than $10,000,000,000; and
        (2) any other recommendations that the Secretary deems 
    appropriate that would preserve the viability and growth of small 
    banking institutions in the United States.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.