[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1151 Reported in House (RH)]





                                                 Union Calendar No. 272

105th CONGRESS

  2d Session

                               H. R. 1151

                          [Report No. 105-472]

_______________________________________________________________________

                                 A BILL

   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.

_______________________________________________________________________

                             March 30, 1998

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed





                                                 Union Calendar No. 272
105th CONGRESS
  2d Session
                                H. R. 1151

                          [Report No. 105-472]

   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.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 20, 1997

 Mr. LaTourette (for himself, Mr. Kanjorski, Mr. Solomon, Mr. Brown of 
   California, Mr. Lewis of California, Ms. Kaptur, Mr. McDade, Mr. 
Dingell, Mr. Burton of Indiana, Ms. Rivers, Mr. Livingston, Ms. Roybal-
 Allard, Mr. Quinn, Mr. Yates, Mr. Wamp, Mr. Sanders, Mr. Hinchey, and 
 Mr. Cardin) introduced the following bill; which was referred to the 
              Committee on Banking and Financial Services

                             March 30, 1998

 Additional sponsors: Mr. Kildee, Mr. Conyers, Mr. Barcia, Mr. Klink, 
 Mrs. Johnson of Connecticut, Mr. Walsh, Mr. Kucinich, Mr. Filner, Mr. 
   Hilliard, Mr. Gejdenson, Mr. Lantos, Mr. Sherman, Mr. Dixon, Mr. 
Markey, Mr. Thompson, Mr. Rothman, Ms. Eshoo, Mr. Bonior, Mrs. Mink of 
  Hawaii, Mr. Neal of Massachusetts, Mr. Kennedy of Rhode Island, Mr. 
 Lipinski, Mr. Gonzalez, Ms. Norton, Mr. Lewis of Georgia, Mr. Stupak, 
Mr. Weldon of Pennsylvania, Mr. Sabo, Mrs. Kennelly of Connecticut, Mr. 
     Gibbons, Mr. Stark, Mr. Towns, Mr. Boehlert, Mr. Dellums, Mr. 
   Faleomavaega, Mr. Weygand, Mr. Condit, Mr. Coyne, Mr. Torres, Mr. 
   Kolbe, Ms. Stabenow, Mr. Frank of Massachusetts, Mr. Pallone, Mr. 
 Stokes, Ms. Sanchez, Mr. Kim, Mr. Berman, Mr. Fattah, Mr. Olver, Mr. 
 Evans, Mrs. Linda Smith of Washington, Mr. Sanford, Mr. Oberstar, Mr. 
  Mascara, Mr. Foglietta, Mr. Dicks, Mr. Calvert, Mr. Gilchrest, Mr. 
  McDermott, Mr. Martinez, Mr. Payne, Mr. Andrews, Mr. Underwood, Mr. 
 Peterson of Pennsylvania, Mr. Fox of Pennsylvania, Ms. McKinney, Mr. 
Hoyer, Mr. Rodriquez, Mr. Davis of Illinois, Mr. Johnson of Wisconsin, 
 Mr. Clay, Mr. Capps, Mr. Horn, Mr. Menendez, Mr. Shays, Mr. Cummings, 
Mr. Nadler, Mr. Blunt, Mr. Becerra, Mr. Talent, Mr. Owens, Ms. Jackson-
   Lee of Texas, Mr. Fazio of California, Ms. Kilpatrick, Ms. Eddie 
     Bernice Johnson of Texas, Ms. Waters, Mr. Wynn, Mr. Miller of 
  California, Mrs. McCarthy of New York, Mr. Holden, Mr. Gilman, Mrs. 
   Morella, Mr. English of Pennsylvania, Mr. Farr of California, Ms. 
DeLauro, Mr. Levin, Mr. McGovern, Mr. Rangel, Mr. Manton, Mr. Rush, Mr. 
 Packard, Mrs. Tauscher, Mr. Blagojevich, Mr. Cunningham, Mr. Serrano, 
Ms. Woolsey, Mr. Costello, Mr. Doyle, Mr. Fawell, Mr. Abercrombie, Mr. 
Sessions, Mr. Ortiz, Mr. Hunter, Mr. Gingrich, Mr. Mollohan, Mr. Green, 
Mr. Waxman, Ms. Brown of Florida, Mrs. Chenoweth, Mr. Barr of Georgia, 
  Mr. Shuster, Mr. Royce, Mr. Young of Alaska, Mr. Wise, Ms. Lofgren, 
Mrs. Thurman, Mr. Bilbray, Mr. McHugh, Mr. Souder, Mr. McHale, Mr. Burr 
  of North Carolina, Mr. Obey, Mr. Matsui, Ms. DeGette, Mr. Smith of 
Michigan, Mr. Jones, Mr. McNulty, Mr. Etheridge, Mr. Meehan, Mr. Lewis 
    of Kentucky, Mr. Wolf, Mr. Greenwood, Mr. Kind, Mr. Peterson of 
 Minnesota, Ms. Pelosi, Mr. Reyes, Mr. Knollenberg, Mr. Traficant, Mr. 
Petri, Mr. Cramer, Ms. McCarthy of Missouri, Mr. Weldon of Florida, Mr. 
   Hall of Ohio, Mr. Forbes, Mr. Rahall, Mr. Foley, Mr. Herger, Mr. 
 Ensign, Mr. Bishop, Mr. Frost, Mr. Allen, Mrs. Lowey, Mr. Crapo, Mr. 
Doolittle, Mr. Baldacci, Mr. Snyder, Mr. Metcalf, Mr. Roemer, Mr. Ford, 
 Mr. Goodling, Mr. Coble, Mr. Rogan, Mr. Engel, Mr. Meeks of New York, 
 Mr. Strickland, Mr. Pappas, Mr. Spratt, Mrs. Capps, Mr. Clyburn, Mr. 
 Weller, Mr. Hastings of Florida, Mr. Hill, Mr. Paul, Mr. Graham, Mr. 
Price of North Carolina, Mr. Pickett, Mr. LaHood, Mr. Poshard, Mr. Adam 
                   Smith of Washington, and Mr. Minge

                             March 30, 1998

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
 [For text of introduced bill, see copy of bill as introduced on March 
                               20, 1997]

_______________________________________________________________________

                                 A BILL


 
   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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Credit Union Membership Access 
Act''.

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 credit unions' public mission.
            (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.

                     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 1st 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 the period at the end of such sentence 
                and inserting a period; 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 1 of the following categories:
            ``(1) Single common-bond credit union.--1 group which has a 
        common bond of occupation or association.
            ``(2) Multiple common-bond credit union.--More than 1 
        group--
                    ``(A) each of which has (within such group) a 
                common bond of occupation or association; and
                    ``(B) the number of members of 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) Grandfathered Members and Groups.--
            ``(1) In general.--Notwithstanding subsection (b)--
                    ``(A) any person or organization who is a member of 
                any Federal credit union as of the date of the 
                enactment of the Credit Union Membership Access Act may 
                remain a member of such credit union after such date; 
                and
                    ``(B) a member of any group whose members 
                constituted a portion of the membership of any Federal 
                credit union as of such date of enactment shall 
                continue to be eligible to become a member of such 
                credit union, by virtue of membership in such group, 
                after such date.
            ``(2) Successors.--If the common bond of any group referred 
        to in paragraph (1) is defined by any particular organization 
        or business entity, paragraph (1) shall continue to apply with 
        respect to any successor to such organization or entity.
    ``(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 of a 
        credit union described in subsection (b)(2).
            ``(2) Exceptions.--In the case of any Federal credit union 
        whose field of membership is determined under subsection 
        (b)(2), the numerical limitation described in paragraph (1) 
        shall not apply with respect to the following:
                    ``(A) Certain larger groups incapable of supporting 
                and operating a single-group credit union.--Any group 
                which the Board determines, in writing and in 
                accordance with the guidelines and regulations 
                described in paragraph (4), could not feasibly or 
                reasonably establish a new single common-bond credit 
                union 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 
                        which 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 which 
                        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) Transactions for supervisory reasons.--Any 
                group transferred from another credit union--
                            ``(i) in connection with a merger or 
                        consolidation which has been recommended by the 
                        Board or any appropriate State credit union 
                        supervisor for safety and soundness concerns 
                        with respect to such other credit union; or
                            ``(ii) by the Board in the Board's capacity 
                        as conservator or liquidating agent with 
                        respect to such other credit union.
            ``(3) Exception for underserved areas.--Notwithstanding 
        subsection (b), in the case of a Federal credit union described 
        in paragraph (2) of such subsection, 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 such local 
                community, neighborhood, or rural district--
                            ``(i) meets the requirements of paragraph 
                        (3) and subparagraphs (A) and (B) of paragraph 
                        (4) of section 233(b) of the Bank Enterprise 
                        Act of 1991, and 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 such local community, 
                neighborhood, or rural district at which credit union 
                services are available.
            ``(4) Regulations and guidelines.--The Board shall issue 
        guidelines or regulations, after notice and opportunity for 
        comment, setting forth the criteria the Board will apply in 
        determining whether or not an additional group may be included 
        within the field of membership of an existing credit union 
        pursuant to paragraph (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 such individual to another person who is eligible for 
        membership in such credit union unless the individual is a 
        member of the immediate family or household (as such terms are 
        defined by the Board by regulation) of such 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, such person or organization may 
        remain a member of such 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 inserting after subsection (e) (as added by section 101 of 
this title) 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 such group is not practicable or consistent with 
                such standards, require the inclusion of such group in 
                the field of membership of a credit union which 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 described in subsection 
        (b)(2) to include any additional group within the field of 
        membership of such credit union (or an application by a Federal 
        credit union described in paragraph (1) to include an 
        additional group and become a credit union described in 
        paragraph (2)) unless the Board determines, in writing, that--
                    ``(A) such credit union has not engaged in any 
                unsafe or unsound practice (as defined in section 
                206(b)) which is material during the 1-year period 
                preceding the 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) pursuant to the most recent evaluation of 
                such credit union under section 215, the credit union 
                is satisfactorily providing affordable credit union 
                services to all individuals of modest means within the 
                field of membership of such credit union;
                    ``(E) any potential harm 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
                    ``(F) the credit union has met such additional 
                requirements as the Board may prescribe in 
                regulations.''.

SEC. 103. GEOGRAPHICAL GUIDELINES FOR COMMUNITY CREDIT UNIONS.

    Section 109 of the Federal Credit Union Act (12 U.S.C. 1759) is 
amended by inserting after subsection (f) (as added by section 102 of 
this title) 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 
        regulations defining 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.--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, which is filed with the Board after the date of the 
        enactment of 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 such credit unions which 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.--Each 
                insured credit union which has total assets of 
                $500,000,000 or more shall have an annual independent 
                audit of the financial statement 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 such 
                services.''.
    (b) Technical and Conforming Amendment.--Section 202(a)(6)(B) of 
the Federal Credit Union Act (12 1786(b)(6)(B)) is amended by striking 
``subparagraph (A)'' and inserting ``subparagraph (A) or (D)''.

SEC. 202. CONVERSIONS OF CREDIT UNIONS INTO OTHER DEPOSITORY 
              INSTITUTIONS.

    (a) Review of Regulations Required.--The National Credit Union 
Administration Board shall conduct a detailed review of all regulations 
which govern or affect the conversion of a credit union into any other 
form of depository institution, including regulations relating to the 
form of disclosure required preceding a vote by the members of a credit 
union with regard to any such conversion and the manner in which such 
vote shall be conducted, to ensure that such regulations freely and 
fairly permit any such conversion after free, fair, and objective 
disclosure to the members of the credit union of the facts and issues 
involved in any such conversion.
    (b) Report to the Congress.--
            (1) In general.--Before the end of the 12-month period 
        beginning on the date of the enactment of this Act, the 
        National Credit Union Administration Board shall submit a 
        detailed report on the findings and conclusions of the Board in 
        connection with the review required under subsection (a).
            (2) Contents of report.--The report submitted pursuant to 
        paragraph (1) shall contain--
                    (A) any recommendation for any administrative or 
                legislative change which the Board may determine to be 
                appropriate with regard to any aspect of the conversion 
                of a credit union into another form of depository 
                institution; and
                    (B) the justification for any recommendation of the 
                Board--
                            (i) to retain in effect any provision of 
                        the regulations in effect on March 13, 1998, 
                        which govern or affect the conversion of a 
                        credit union into any other form of depository 
                        institution; or
                            (ii) to amend or alter any such provision.
    (c) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) Credit union.--The term ``credit union'' means any 
        Federal credit union or State credit union (as such terms are 
        defined in paragraphs (1) and (6), respectively, of section 101 
        of the Federal Credit Union Act).
            (2) Depository institution.--The term ``depository 
        institution'' has the meaning given such term in section 3 of 
        the Federal Deposit Insurance Act.

SEC. 203. FREEZE ON BOARD REGULATIONS RELATING TO COMMERCIAL LOANS AND 
              CERTAIN APPRAISAL REQUIREMENTS RELATING TO SUCH LOANS.

    (a) In General.--The regulations of the National Credit Union 
Administration Board which are codified in parts 701.21(h) and 722.3(a) 
of the Code of Federal Regulations, as in effect on March 13, 1998 
(relating to business loans and lines of credit to members and 
appraisal requirements), including any other regulations which are 
applicable with respect to loans or lines of credit to which the part 
applies, shall remain in effect without amendment or altered 
application until the end of the 1-year period beginning on such date 
and, notwithstanding the Federal Credit Union Act or any other 
provision of law, any action of the National Credit Union 
Administration Board, or the National Credit Union Administration, on 
or after such date which purports to amend (including an amendment by 
substitution) or otherwise apply any such regulation differently than 
in effect on such date shall have no force or legal effect before the 
end of such 1-year period.
    (b) Review and Report to the Congress.--Before the end of the 1-
year period described in subsection (a), the National Credit Union 
Administration Board shall conduct a review of the effectiveness of the 
regulations referred to in such subsection as in effect on March 13, 
1998, and shall submit a report to the Congress on the results of such 
review before the end of such 1-year period.

SEC. 204. SERVING PERSONS OF MODEST MEANS WITHIN THE FIELD OF 
              MEMBERSHIP OF CREDIT UNIONS.

    (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. 215. SERVING PERSONS OF MODEST MEANS WITHIN THE FIELD OF 
              MEMBERSHIP OF CREDIT UNIONS.

    ``(a) Continuing and Affirmative Obligation.--The purpose of this 
section is to reaffirm that insured credit unions have a continuing and 
affirmative obligation to meet the financial services needs of persons 
of modest means consistent with safe and sound operation.
    ``(b) Evaluation by the Board.--The Board shall, before the end of 
the 12-month period beginning on the date of the enactment of the 
Credit Union Membership Access Act--
            ``(1) prescribe criteria for periodically reviewing the 
        record of each insured credit union in providing affordable 
        credit union services to all individuals of modest means 
        (including low- and moderate-income individuals) within the 
field of membership of such credit union; and
            ``(2) provide for making the results of such review 
        publicly available.
    ``(c) Additional Criteria for Community Credit Unions Required.--
The Board shall, by regulation--
            ``(1) prescribe additional criteria for annually evaluating 
        the record of any insured credit union which is organized to 
        serve a well-defined local community, neighborhood, or rural 
        district in meeting the credit needs and credit union service 
        needs of the entire field of membership of such credit union; 
        and
            ``(2) prescribe procedures for remedying the failure of any 
        insured credit union described in paragraph (1) to meet the 
        criteria established pursuant to such paragraph, including the 
        disapproval of any application by such credit union to expand 
        the field of membership of such credit union.
    ``(d) Emphasis on Performance, Not Paperwork.--In evaluating any 
insured credit union under this section, the Board shall--
            ``(1) focus on the actual performance of the insured credit 
        union; and
            ``(2) not impose burdensome paperwork or recordkeeping 
        requirements.''.
    (b) Annual Reports.--With respect to each of the 1st 5 years which 
begin after the date of the enactment of this Act, the National Credit 
Union Administration Board shall include in the annual report to the 
Congress under section 102(d) of the Federal Credit Union Act a report 
on the progress of the Board in implementing section 215 of such Act 
(as added by subsection (a) of this section).

SEC. 205. NATIONAL CREDIT UNION ADMINISTRATION BOARD MEMBERSHIP.

    Section 102(b) of the Federal Credit Union Act (12 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 1 member of the Board may be 
                appointed to the Board from among individuals who, at 
                the time of such 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. 206. REPORT AND CONGRESSIONAL REVIEW REQUIREMENT FOR CERTAIN 
              REGULATIONS.

    Any regulation prescribed by the National Credit Union 
Administration Board defining, or amending the definition of--
            (1) the term ``immediate family or household'' for purposes 
        of subsection (e)(1) of section 109 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 subsection (g) of such 
        section (as added by section 103 of this Act),
shall be treated as a major rule for purposes of chapter 8 of title 5, 
United States Code.

        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 inserting after section 215 (as 
added by section 204 of this Act) 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 National Credit Union Share Insurance 
        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.--The Board shall implement subsection (a) of 
this section by prescribing regulations, after public notice and 
opportunity for comment, which--
            ``(1) establish criteria and procedures for classifying 
        credit unions as `well capitalized', `adequately capitalized', 
        `undercapitalized', `significantly undercapitalized', or 
        `critically undercapitalized';
            ``(2) specify a series of graduated regulatory enforcement 
        actions that may be imposed upon any credit union which fails 
        to meet the requirements for classification as an adequately 
        capitalized credit union, including--
                    ``(A) the submission of net worth restoration 
                plans;
                    ``(B) earnings retention requirements;
                    ``(C) prior written approval by the Board for 
                certain activities such as branching and entry into new 
                lines of business; and
                    ``(D) the appointment of a conservator or 
                liquidating agent in appropriate circumstances;
            ``(3) establish reasonable net worth requirements, 
        including risk-based net worth requirements in the case of 
        complex credit unions, for various categories of credit unions 
        and prescribe the manner in which net worth is calculated (for 
        purposes of such requirements) with regard to various types of 
        investments, including investments in corporate credit unions, 
        taking into account the unique nature and role of credit 
        unions;
            ``(4) establish criteria for reclassifying the capital 
        classifications of credit unions that engage in unsafe or 
        unsound practices; and
            ``(5) are generally comparable with the prompt corrective 
        action provisions set forth in section 38 of the Federal 
        Deposit Insurance Act, taking into account the distinct capital 
        structure, cooperative nature, and other characteristics of 
        credit unions.''.
    (b) Effective Date of Regulations.--
            (1) Proposed regulations.--The National Credit Union 
        Administration Board shall publish, in the Federal Register, 
        proposed regulations which meet the requirements of the 
        amendment made by subsection (a) before the end of the 270-day 
        period beginning on the date of the enactment of this Act.
            (2) Final regulations.--The regulations required by the 
        amendment made by subsection (a) shall take effect in final 
        form by the end of the 18-month period beginning on the date of 
        the enactment of this Act.
    (c) Report to Congress.--At the time the proposed prompt corrective 
action regulations are published in the Federal Register by the 
National Credit Union Administration Board pursuant to subsection 
(b)(1), the Board shall submit a report to the Congress on the 
differences and similarities between such prompt corrective action 
regulations and the regulations prescribed by the Federal bank agencies 
under section 38 of the Federal Deposit Insurance Act.

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 amending subsection (b) to read as follows:
    ``(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 such statement, 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) by amending clause (iii) of subsection (c)(1)(A) to 
        read as follows:
                            ``(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) by amending paragraphs (2) and (3) of subsection (c) to 
        read as follows:
            ``(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) by adding at the end of subsection (c) 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 amending subsection (h) to read as follows:
    ``(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 fund's retained earnings balance (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 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. ASSURING INDEPENDENT DECISION MAKING IN CONNECTION WITH 
              CERTAIN CONVERSIONS.

    Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is 
amended by adding at the end the following new subsection:
    ``(t) Conversions Involving Former Credit Unions.--
            ``(1) In general.--Notwithstanding any other provision of 
        law--
                    ``(A) an insured credit union may not convert into 
                an insured depository institution; and
                    ``(B) an insured depository institution which 
                resulted from a prior conversion of an insured credit 
                union into such insured depository institution may not 
                convert from the mutual form to the stock form and may 
                not convert from 1 form of depository institution into 
                another,
        unless the appropriate Federal banking agency for the insured 
        depository institution which results from any such conversion 
        reviews the conversion and determines that the requirements of 
        paragraphs (2) and (3) have been met.
            ``(2) Prohibition on economic benefit from conversion for 
        credit union officers, directors, and committee members.--An 
        individual who is or, at any time during the 5-year period 
        preceding any conversion described in paragraph (1), was a 
        director, committee member, or senior management official of an 
        insured credit union described in subparagraph (A) or (B) of 
        such paragraph (in connection with such conversion) may not 
        receive any economic benefit as a result of the conversion with 
        regard to the shares or interests of such director, member, or 
        officer in the former insured credit union or in any resulting 
        insured depository institution.
            ``(3) Acknowledgement and attestation by officers, 
        directors, and committee members.--Any insured credit union or 
        insured depository institution which is seeking to engage in a 
        conversion which is subject to this subsection shall submit--
                    ``(A) a written acknowledgement, in such form and 
                manner as the appropriate Federal banking agency may 
                prescribe, by every individual who is subject to the 
                prohibition contained in paragraph (2), that such 
                individual is aware of such prohibition; and
                    ``(B) an attestation that the conversion under 
                review will not result in a violation of such 
                prohibition.
            ``(4) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Insured credit union.--The term `insured 
                credit union' has the meaning given to such term in 
                section 101(7) of the Federal Credit Union Act.
                    ``(B) Senior management official.--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)).''.

SEC. 402. PAYMENT OF INTEREST ON RESERVES AT FEDERAL RESERVE BANKS.

    (a) In General.--Section 19(b) of the Federal Reserve Act (12 
U.S.C. 461(b)) is amended by adding at the end the following new 
paragraph:
            ``(12) Earnings on reserves.--
                    ``(A) In general.--Balances maintained at a Federal 
                reserve bank by or on behalf of a depository 
                institution to meet the reserve requirements of this 
                subsection applicable with respect to such depository 
                institution shall receive earnings to be paid by the 
                Federal reserve bank at least once each calendar 
                quarter at a rate not to exceed the rate earned on the 
                securities portfolio of the Federal Reserve System 
                during the preceding quarter.
                    ``(B) Regulations relating to payments and 
                distributions.--The Board may prescribe regulations 
                concerning--
                            ``(i) the payment of earnings in accordance 
                        with this paragraph;
                            ``(ii) the distribution of such earnings to 
                        the depository institutions which maintain 
                        balances at such banks or on whose behalf such 
                        balances are maintained; and
                            ``(iii) the responsibilities of depository 
                        institutions, Federal home loan banks, and the 
                        National Credit Union Administration Central 
                        Liquidity Facility with respect to the 
                        crediting and distribution of earnings 
                        attributable to balances maintained, in 
                        accordance with subsection (c)(1)(B), in a 
                        Federal reserve bank by any such entity on 
                        behalf of depository institutions which are not 
                        member banks.''.
    (b) Technical and Conforming Amendment.--
            (1) Section 19(b)(4) of the Federal Reserve Act (12 U.S.C. 
        461(b)(4)) is amended by striking subparagraph (C).
            (2) Section 19(c)(1)(A) of the Federal Reserve Act (12 
        U.S.C. 461(c)(1)(A)) is amended by striking ``subsection 
        (b)(4)(C)'' and inserting ``subsection (b)''.