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





                                                       Calendar No. 384

105th CONGRESS

  2d Session

                               H. R. 1151

                          [Report No. 105-193]

_______________________________________________________________________

                                 A BILL

  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.

_______________________________________________________________________

                              May 21, 1998

                       Reported with an amendment





                                                       Calendar No. 384
105th CONGRESS
  2d Session
                                H.R. 1151

                          [Report No. 105-193]

  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.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 2, 1998

                                Received

                             April 20, 1998

Read twice and referred to the Committee on Banking, Housing, and Urban 
                                Affairs

                              May 21, 1998

               Reported by Mr. D'Amato, with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 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,

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Credit Union Membership 
Access Act''.</DELETED>

<DELETED>SEC. 2. FINDINGS.</DELETED>

<DELETED>    The Congress finds the following:</DELETED>
        <DELETED>    (1) The American credit union movement began as a 
        cooperative effort to serve the productive and provident credit 
        needs of individuals of modest means.</DELETED>
        <DELETED>    (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.</DELETED>
        <DELETED>    (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.</DELETED>
        <DELETED>    (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.</DELETED>
        <DELETED>    (5) Improved credit union safety and soundness 
        provisions will enhance the public benefit that citizens 
        receive from these cooperative financial services 
        institutions.</DELETED>

         <DELETED>  TITLE I--CREDIT UNION MEMBERSHIP</DELETED>

<DELETED>SEC. 101. FIELDS OF MEMBERSHIP.</DELETED>

<DELETED>    Section 109 of the Federal Credit Union Act (12 U.S.C. 
1759) is amended--</DELETED>
        <DELETED>    (1) in the first sentence--</DELETED>
                <DELETED>    (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</DELETED>
                <DELETED>    (B) by striking ``, except that'' and all 
                that follows through the period at the end of such 
                sentence and inserting a period; and</DELETED>
        <DELETED>    (2) by adding at the end the following new 
        subsections:</DELETED>
<DELETED>    ``(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:</DELETED>
        <DELETED>    ``(1) Single common-bond credit union.--1 group 
        which has a common bond of occupation or association.</DELETED>
        <DELETED>    ``(2) Multiple common-bond credit union.--More 
        than 1 group--</DELETED>
                <DELETED>    ``(A) each of which has (within such 
                group) a common bond of occupation or association; 
                and</DELETED>
                <DELETED>    ``(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).</DELETED>
        <DELETED>    ``(3) Community credit union.--Persons or 
        organizations within a well-defined local community, 
        neighborhood, or rural district.</DELETED>
<DELETED>    ``(c) Grandfathered Members and Groups.--</DELETED>
        <DELETED>    ``(1) In general.--Notwithstanding subsection 
        (b)--</DELETED>
                <DELETED>    ``(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</DELETED>
                <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(d) Multiple Common-Bond Credit Union Group 
Requirements.--</DELETED>
        <DELETED>    ``(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).</DELETED>
        <DELETED>    ``(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:</DELETED>
                <DELETED>    ``(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--
                </DELETED>
                        <DELETED>    ``(i) the group lacks sufficient 
                        volunteer and other resources to support the 
                        efficient and effective operation of a credit 
                        union;</DELETED>
                        <DELETED>    ``(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</DELETED>
                        <DELETED>    ``(iii) the group would be 
                        unlikely to operate a safe and sound credit 
                        union.</DELETED>
                <DELETED>    ``(B) Transactions for supervisory 
                reasons.--Any group transferred from another credit 
                union--</DELETED>
                        <DELETED>    ``(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</DELETED>
                        <DELETED>    ``(ii) by the Board in the Board's 
                        capacity as conservator or liquidating agent 
                        with respect to such other credit 
                        union.</DELETED>
        <DELETED>    ``(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--</DELETED>
                <DELETED>    ``(A) the Board determines that such local 
                community, neighborhood, or rural district--</DELETED>
                        <DELETED>    ``(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</DELETED>
                        <DELETED>    ``(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</DELETED>
                <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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).</DELETED>
<DELETED>    ``(e) Additional Membership Eligibility Provisions.--
</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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.''.</DELETED>

<DELETED>SEC. 102. CRITERIA FOR APPROVAL OF EXPANSION OF MEMBERSHIP OF 
              MULTIPLE COMMON-BOND CREDIT UNIONS.</DELETED>

<DELETED>    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:</DELETED>
<DELETED>    ``(f) Criteria for Approval of Expansion of Multiple 
Common-Bond Credit Unions.--</DELETED>
        <DELETED>    ``(1) In General.--The Board shall--</DELETED>
                <DELETED>    ``(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</DELETED>
                <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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--
        </DELETED>
                <DELETED>    ``(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;</DELETED>
                <DELETED>    ``(B) the credit union is adequately 
                capitalized;</DELETED>
                <DELETED>    ``(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;</DELETED>
                <DELETED>    ``(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;</DELETED>
                <DELETED>    ``(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</DELETED>
                <DELETED>    ``(F) the credit union has met such 
                additional requirements as the Board may prescribe in 
                regulations.''.</DELETED>

<DELETED>SEC. 103. GEOGRAPHICAL GUIDELINES FOR COMMUNITY CREDIT 
              UNIONS.</DELETED>

<DELETED>    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:</DELETED>
<DELETED>    ``(g) Regulations Required for Community Credit Unions.--
</DELETED>
        <DELETED>    ``(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--</DELETED>
                <DELETED>    ``(A) making any determination with regard 
                to the field of membership of a credit union described 
                in subsection (b)(3); and</DELETED>
                <DELETED>    ``(B) establishing the criteria applicable 
                with respect to any such determination.</DELETED>
        <DELETED>    ``(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.''.</DELETED>

        <DELETED>TITLE II--REGULATION OF CREDIT UNIONS</DELETED>

<DELETED>SEC. 201. FINANCIAL STATEMENT AND AUDIT 
              REQUIREMENTS.</DELETED>

<DELETED>    (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:</DELETED>
                <DELETED>    ``(C) Accounting principles.--</DELETED>
                        <DELETED>    ``(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.</DELETED>
                        <DELETED>    ``(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.</DELETED>
                        <DELETED>    ``(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.</DELETED>
                <DELETED>    ``(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.''.</DELETED>
<DELETED>    (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)''.</DELETED>

<DELETED>SEC. 202. CONVERSIONS OF CREDIT UNIONS INTO OTHER DEPOSITORY 
              INSTITUTIONS.</DELETED>

<DELETED>    (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.</DELETED>
<DELETED>    (b) Report to the Congress.--</DELETED>
        <DELETED>    (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).</DELETED>
        <DELETED>    (2) Contents of report.--The report submitted 
        pursuant to paragraph (1) shall contain--</DELETED>
                <DELETED>    (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</DELETED>
                <DELETED>    (B) the justification for any 
                recommendation of the Board--</DELETED>
                        <DELETED>    (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</DELETED>
                        <DELETED>    (ii) to amend or alter any such 
                        provision.</DELETED>
<DELETED>    (c) Definitions.--For purposes of this section, the 
following definitions shall apply:</DELETED>
        <DELETED>    (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).</DELETED>
        <DELETED>    (2) Depository institution.--The term ``depository 
        institution'' has the meaning given such term in section 3 of 
        the Federal Deposit Insurance Act.</DELETED>

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

<DELETED>    (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.</DELETED>
<DELETED>    (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.</DELETED>

<DELETED>SEC. 204. SERVING PERSONS OF MODEST MEANS WITHIN THE FIELD OF 
              MEMBERSHIP OF CREDIT UNIONS.</DELETED>

<DELETED>    (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:</DELETED>

<DELETED>``SEC. 215. SERVING PERSONS OF MODEST MEANS WITHIN THE FIELD 
              OF MEMBERSHIP OF CREDIT UNIONS.</DELETED>

<DELETED>    ``(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.</DELETED>
<DELETED>    ``(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--</DELETED>
        <DELETED>    ``(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</DELETED>
        <DELETED>    ``(2) provide for making the results of such 
        review publicly available.</DELETED>
<DELETED>    ``(c) Additional Criteria for Community Credit Unions 
Required.--The Board shall, by regulation--</DELETED>
        <DELETED>    ``(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</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(d) Emphasis on Performance, Not Paperwork.--In 
evaluating any insured credit union under this section, the Board 
shall--</DELETED>
        <DELETED>    ``(1) focus on the actual performance of the 
        insured credit union; and</DELETED>
        <DELETED>    ``(2) not impose burdensome paperwork or 
        recordkeeping requirements.''.</DELETED>
<DELETED>    (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).</DELETED>

<DELETED>SEC. 205. NATIONAL CREDIT UNION ADMINISTRATION BOARD 
              MEMBERSHIP.</DELETED>

<DELETED>    Section 102(b) of the Federal Credit Union Act (12 
1752a(b)) is amended--</DELETED>
        <DELETED>    (1) by striking ``(b) The Board'' and inserting 
        ``(b) Membership and Appointment of Board.--</DELETED>
        <DELETED>    ``(1) In general.--The Board''; and</DELETED>
        <DELETED>    (2) by adding at the end the following new 
        paragraph:</DELETED>
        <DELETED>    ``(2) Appointment criteria.--</DELETED>
                <DELETED>    ``(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.</DELETED>
                <DELETED>    ``(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.''.</DELETED>

<DELETED>SEC. 206. REPORT AND CONGRESSIONAL REVIEW REQUIREMENT FOR 
              CERTAIN REGULATIONS.</DELETED>

<DELETED>    Any regulation prescribed by the National Credit Union 
Administration Board defining, or amending the definition of--
</DELETED>
        <DELETED>    (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</DELETED>
        <DELETED>    (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),</DELETED>
<DELETED>shall be treated as a major rule for purposes of chapter 8 of 
title 5, United States Code.</DELETED>

      <DELETED>TITLE III--CAPITALIZATION AND NET WORTH OF CREDIT 
                            UNIONS</DELETED>

<DELETED>SEC. 301. PROMPT CORRECTIVE ACTION.</DELETED>

<DELETED>    (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:</DELETED>

<DELETED>``SEC. 216. PROMPT CORRECTIVE ACTION</DELETED>

<DELETED>    ``(a) Resolving Problems to Protect Fund.--</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(b) Regulations.--The Board shall implement subsection 
(a) of this section by prescribing regulations, after public notice and 
opportunity for comment, which--</DELETED>
        <DELETED>    ``(1) establish criteria and procedures for 
        classifying credit unions as `well capitalized', `adequately 
        capitalized', `undercapitalized', `significantly 
        undercapitalized', or `critically undercapitalized';</DELETED>
        <DELETED>    ``(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--</DELETED>
                <DELETED>    ``(A) the submission of net worth 
                restoration plans;</DELETED>
                <DELETED>    ``(B) earnings retention 
                requirements;</DELETED>
                <DELETED>    ``(C) prior written approval by the Board 
                for certain activities such as branching and entry into 
                new lines of business; and</DELETED>
                <DELETED>    ``(D) the appointment of a conservator or 
                liquidating agent in appropriate 
                circumstances;</DELETED>
        <DELETED>    ``(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;</DELETED>
        <DELETED>    ``(4) establish criteria for reclassifying the 
        capital classifications of credit unions that engage in unsafe 
        or unsound practices; and</DELETED>
        <DELETED>    ``(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.''.</DELETED>
<DELETED>    (b) Effective Date of Regulations.--</DELETED>
        <DELETED>    (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.</DELETED>
        <DELETED>    (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.</DELETED>
<DELETED>    (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.</DELETED>

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

<DELETED>    (a) In General.--Section 202 of the Federal Credit Union 
Act (12 U.S.C. 1782) is amended--</DELETED>
        <DELETED>    (1) by amending subsection (b) to read as 
        follows:</DELETED>
<DELETED>    ``(b) Certified Statement.--</DELETED>
        <DELETED>    ``(1) Statement required.--</DELETED>
                <DELETED>    ``(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).</DELETED>
                <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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.'';</DELETED>
        <DELETED>    (2) by amending clause (iii) of subsection 
        (c)(1)(A) to read as follows:</DELETED>
                        <DELETED>    ``(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:</DELETED>
                                <DELETED>    ``(I) annually, in the 
                                case of an insured credit union with 
                                total assets of not more than 
                                $50,000,000; and</DELETED>
                                <DELETED>    ``(II) semi-annually, in 
                                the case of an insured credit union 
                                with total assets of $50,000,000 or 
                                more.'';</DELETED>
        <DELETED>    (3) by amending paragraphs (2) and (3) of 
        subsection (c) to read as follows:</DELETED>
        <DELETED>    ``(2) Insurance premium charges.--</DELETED>
                <DELETED>    ``(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).</DELETED>
                <DELETED>    ``(B) Relation of premium charge to equity 
                ratio of fund.--The Board may assess a premium charge 
                only if--</DELETED>
                        <DELETED>    ``(i) the fund's equity ratio is 
                        less than 1.3 percent; and</DELETED>
                        <DELETED>    ``(ii) the premium charge does not 
                        exceed the amount necessary to restore the 
                        equity ratio to 1.3 percent.</DELETED>
                <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(3) Distributions from fund required.--
        </DELETED>
                <DELETED>    ``(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--</DELETED>
                        <DELETED>    ``(i) any loans to the fund from 
                        the Federal Government, and any interest on 
                        those loans, have been repaid;</DELETED>
                        <DELETED>    ``(ii) the fund's equity ratio 
                        exceeds the normal operating level; 
                        and</DELETED>
                        <DELETED>    ``(iii) the fund's available 
                        assets ratio exceeds 1.0 percent.</DELETED>
                <DELETED>    ``(B) Amount of distribution.--The Board 
                shall distribute under subparagraph (A) the maximum 
                possible amount that--</DELETED>
                        <DELETED>    ``(i) does not reduce the fund's 
                        equity ratio below the normal operating level; 
                        and</DELETED>
                        <DELETED>    ``(ii) does not reduce the fund's 
                        available assets ratio below 1.0 
                        percent.</DELETED>
                <DELETED>    ``(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).'';</DELETED>
        <DELETED>    (4) by adding at the end of subsection (c) the 
        following new paragraph:</DELETED>
        <DELETED>    ``(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</DELETED>
        <DELETED>    (5) by amending subsection (h) to read as 
        follows:</DELETED>
<DELETED>    ``(h) Definitions.--For purposes of this section, the 
following definitions shall apply:</DELETED>
        <DELETED>    ``(1) Available assets ratio.--The term `available 
        assets ratio', when applied to the fund, means the ratio of--
        </DELETED>
                <DELETED>    ``(A) the amount determined by 
                subtracting--</DELETED>
                        <DELETED>    ``(i) direct liabilities of the 
                        fund and contingent liabilities for which no 
                        provision for losses has been made, 
                        from</DELETED>
                        <DELETED>    ``(ii) the sum of cash and the 
                        market value of unencumbered investments 
                        authorized under section 203(c), to</DELETED>
                <DELETED>    ``(B) the aggregate amount of the insured 
                shares in all insured credit unions.</DELETED>
        <DELETED>    ``(2) Equity ratio.--The term `equity ratio', when 
        applied to the fund, means the ratio of--</DELETED>
                <DELETED>    ``(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</DELETED>
                <DELETED>    ``(B) the aggregate amount of the insured 
                shares in all insured credit unions.</DELETED>
        <DELETED>    ``(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).</DELETED>
<DELETED>    ``(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.''.</DELETED>
<DELETED>    (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.</DELETED>

<DELETED>SEC. 303. ACCESS TO LIQUIDITY.</DELETED>

<DELETED>    Section 204 of the Federal Credit Union Act (12 U.S.C. 
1784) is amended by adding at the end the following new 
subsections:</DELETED>
<DELETED>    ``(f) Access to Liquidity.--The Board shall--</DELETED>
        <DELETED>    ``(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</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(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.''.</DELETED>

         <DELETED>TITLE IV--MISCELLANEOUS PROVISIONS</DELETED>

<DELETED>SEC. 401. ASSURING INDEPENDENT DECISION MAKING IN CONNECTION 
              WITH CERTAIN CONVERSIONS.</DELETED>

<DELETED>    Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 
1828) is amended by adding at the end the following new 
subsection:</DELETED>
<DELETED>    ``(t) Conversions Involving Former Credit Unions.--
</DELETED>
        <DELETED>    ``(1) In general.--Notwithstanding any other 
        provision of law--</DELETED>
                <DELETED>    ``(A) an insured credit union may not 
                convert into an insured depository institution; 
                and</DELETED>
                <DELETED>    ``(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,</DELETED>
        <DELETED>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.</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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--
        </DELETED>
                <DELETED>    ``(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</DELETED>
                <DELETED>    ``(B) an attestation that the conversion 
                under review will not result in a violation of such 
                prohibition.</DELETED>
        <DELETED>    ``(4) Definitions.--For purposes of this 
        subsection, the following definitions shall apply:</DELETED>
                <DELETED>    ``(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.</DELETED>
                <DELETED>    ``(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)).''.</DELETED>

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. Serving persons of modest means within the field of 
                            membership of credit unions.
Sec. 205. National Credit Union Administration Board membership.
Sec. 206. 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. Review of regulations and paperwork reduction.
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 1 of the following categories:
            ``(1) Single common-bond credit union.--1 group that has a 
        common bond of occupation or association.
            ``(2) Multiple common-bond credit union.--More than 1 
        group--
                    ``(A) each of which has (within the 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) 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) 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 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) pursuant to the most recent evaluation of the 
                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 the credit union;
                    ``(E) 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
                    ``(F) 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.

    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).''.

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 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 the credit union; and
            ``(2) provide for making the results of the reviews 
        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 that 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 the 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 paragraph (1), including the 
        disapproval of any application by the credit union to expand 
        the field of membership of the credit union.
    ``(d) Emphasis on Performance, Not Paperwork.--In evaluating any 
insured credit union under this section, the Board--
            ``(1) shall focus on the actual performance of the insured 
        credit union; and
            ``(2) may not impose burdensome paperwork or recordkeeping 
        requirements.''.
    (b) Annual Reports.--With respect to each of the first 5 years that 
begin after the date of enactment of this Act, the 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 that 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 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 1 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. 206. 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 that 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 Undercapitalized 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 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 that 
                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 that 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. REVIEW OF REGULATIONS AND PAPERWORK REDUCTION.

    Section 303 of the Riegle Community Development and Regulatory 
Improvement Act of 1994 (12 U.S.C. 4803) is amended to read as follows:

``SEC. 303. REGULAR REVIEW OF REGULATIONS AND PAPERWORK REDUCTION.

    ``(a) Review.--During the 1-year period following the date of 
enactment of the Credit Union Membership Access Act, each Federal 
banking agency and the National Credit Union Administration shall, to 
the maximum extent possible and consistent with the principles of 
safety and soundness, statutory law and policy, and the public 
interest--
            ``(1) conduct a review of the regulations and written 
        policies of each such agency--
                    ``(A) to streamline and modify those regulations 
                and policies in order to improve efficiency, reduce 
                unnecessary costs, and reduce the paperwork burden for 
                insured depository institutions; and
                    ``(B) to remove inconsistencies and outmoded and 
                duplicative requirements; and
            ``(2) work jointly to make uniform all regulations and 
        guidelines implementing common statutory or supervisory 
        policies.
    ``(b) Report to Congress.--Not later than 1 year after the date of 
enactment of the Credit Union Membership Access Act, each agency 
referred to in subsection (a) shall submit a report to Congress 
detailing the progress of the agency in carrying out this section and 
making recommendations to the Congress on the need for statutory 
changes, if any, that would assist in the effort to reduce the 
paperwork burden for insured institutions.''.

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.