[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3579 Introduced in House (IH)]
108th CONGRESS
1st Session
H. R. 3579
To ease credit union regulatory burdens, advance credit union efforts
to promote economic growth, and modernize credit union capital
standards.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 21, 2003
Mr. Royce (for himself, Mr. Kanjorski, Mr. LaTourette, and Mrs.
Maloney) introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To ease credit union regulatory burdens, advance credit union efforts
to promote economic growth, and modernize credit union capital
standards.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Credit Union Regulatory Improvements
Act of 2003''.
TITLE I--REGULATORY FLEXIBILITY
SEC. 102. LEASES OF LAND ON FEDERAL FACILITIES FOR CREDIT UNIONS.
(a) In General.--Section 124 of the Federal Credit Union Act (12
U.S.C. 1770) is amended--
(1) by striking ``Upon application by any credit union''
and inserting ``Notwithstanding any other provision of law,
upon application by any credit union'';
(2) by inserting ``on lands reserved for the use of, and
under the exclusive or concurrent jurisdiction of, the United
States or'' after ``officer or agency of the United States
charged with the allotment of space'';
(3) by inserting ``lease land or'' after ``such officer or
agency may in his or its discretion''; and
(4) by inserting ``or the facility built on the leased
land'' after ``credit union to be served by the allotment of
space''.
(b) Clerical Amendment.--The heading for section 124 is amended by
inserting ``or federal land'' after ``buildings''.
SEC. 103. INVESTMENTS IN SECURITIES BY FEDERAL CREDIT UNIONS.
Section 107 of the Federal Credit Union Act (12 U.S.C. 1757) is
amended--
(1) in the matter preceding paragraph (1) by striking ``A
Federal credit union'' and inserting ``(a) In General.--Any
Federal credit union''; and
(2) by adding at the end the following new subsection:
``(b) Investment for the Credit Union's Own Account.--
``(1) In general.--A Federal credit union may purchase and
hold for its own account such investment securities of
investment grade as the Board may authorize by regulation,
subject to such limitations and restrictions as the Board may
prescribe in the regulations.
``(2) Percentage limitations.--
``(A) Single obligor.--In no event may the total
amount of investment securities of any single obligor
or maker held by a Federal credit union for the credit
union's own account exceed at any time an amount equal
to 10 percent of the net worth of the credit union.
``(B) Aggregate investments.--In no event may the
aggregate amount of investment securities held by a
Federal credit union for the credit union's own account
exceed at any time an amount equal to 10 percent of the
assets of the credit union.
``(3) Investment security defined.--
``(A) In general.--For purposes of this subsection,
the term `investment security' means marketable
obligations evidencing the indebtedness of any person
in the form of bonds, notes, or debentures and other
instruments commonly referred to as investment
securities.
``(B) Further definition by board.--The Board may
further define the term `investment security'.
``(4) Investment grade defined.--The term `investment
grade' means with respect to an investment security purchased
by a credit union for its own account, an investment security
that at the time of such purchase is rated in one of the 4
highest rating categories by at least 1 nationally recognized
statistical rating organization.
``(5) Clarification of prohibition on stock ownership.--No
provision of this subsection shall be construed as authorizing
a Federal credit union to purchase shares of stock of any
corporation for the credit union's own account, except as
otherwise permitted by law.''.
SEC. 104. INCREASE IN GENERAL 12-YEAR LIMITATION OF TERM OF FEDERAL
CREDIT UNION LOANS TO 15 YEARS.
Section 107(a)(5) of the Federal Credit Union Act (12 U.S.C.
1757(5)) (as so designated by section 103 of this title) is amended--
(1) in the matter preceding subparagraph (A), by striking
``to make loans, the maturities of which shall not exceed
twelve years except as otherwise provided herein'' and
inserting ``to make loans, the maturities of which shall not
exceed 15 years or any longer maturity as the Board may allow,
in regulations, except as otherwise provided in this Act'';
(2) in subparagraph (A)--
(A) by striking clause (ii);
(B) by redesignating clauses (iii) through (x) as
clauses (ii) through (ix), respectively; and
(C) by inserting ``and'' after the semicolon at the
end of clause (viii) (as so redesignated).
SEC. 105. INCREASE IN 1 PERCENT INVESTMENT LIMIT IN CREDIT UNION
SERVICE ORGANIZATIONS.
Section 107(a)(7)(I) of the Federal Credit Union Act (12 U.S.C.
1757(7)(I)) (as so designated by section 103 of this title) is amended
by striking ``up to 1 per centum of the total paid'' and inserting ``up
to 3 percent of the total paid''.
SEC. 106. MEMBER BUSINESS LOAN EXCLUSION FOR LOANS TO NONPROFIT
RELIGIOUS ORGANIZATIONS.
Section 107A(a) of the Federal Credit Union Act (12 U.S.C.
1757a(a)) is amended by inserting ``, excluding loans made to nonprofit
religious organizations,'' after ``total amount of such loans''.
SEC. 107. CHECK CASHING AND MONEY TRANSFER SERVICES OFFERED WITHIN THE
FIELD OF MEMBERSHIP.
Paragraph (12) of section 107(a) of the Federal Credit Union Act
(12 U.S.C. 1757(12)) (as so designated by section 103 of this title) is
amended to read as follows:
``(12) in accordance with regulations prescribed by the
Board--
``(A) to sell, to persons in the field of
membership, negotiable checks (including travelers
checks), money orders, and other similar money transfer
instruments (including electronic fund transfers); and
``(B) to cash checks and money orders and provide
electronic fund transfer services for persons in the
field of membership for a fee;''.
SEC. 108. VOLUNTARY MERGERS INVOLVING MULTIPLE COMMON-BOND CREDIT
UNIONS.
Section 109(d)(2) of the Federal Credit Union Act (12 U.S.C.
1759(d)(2)) is amended--
(1) by striking ``or'' at the end of clause (ii) of
subparagraph (B);
(2) by striking the period at the end of subparagraph (C)
and inserting ``; or''; and
(3) by adding at the end the following new subparagraph:
``(D) a merger involving any such Federal credit
union approved by the Board on or after August 7,
1998.''.
SEC. 109. CONVERSIONS INVOLVING COMMON-BOND CREDIT UNIONS.
Section 109(g) of the Federal Credit Union Act (12 U.S.C. 1759(g))
is amended by inserting after paragraph (2) the following new
paragraph:
``(3) Criteria for continued membership of certain member
groups in community charter conversions.--In the case of a
voluntary conversion of a common-bond credit union described in
paragraph (1) or (2) of subsection (b) into a community credit
union described in subsection (b)(3), the Board shall
prescribe, by regulation, the criteria under which the Board
may determine that a member group or other portion of a credit
union's existing membership, that is located outside the well-
defined local community, neighborhood, or rural district that
shall constitute the community charter, can be satisfactorily
served by the credit union and remain within the community
credit union's field of membership.''.
SEC. 110. CREDIT UNION GOVERNANCE.
(a) Expulsion of Members for Just Cause.--Subsection (b) of section
118 of the Federal Credit Union Act (12 U.S.C. 1764(b)) is amended to
read as follows:
``(b) Policy and Actions of Boards of Directors of Federal Credit
Unions.--
``(1) Expulsion of members for nonparticipation or for just
cause.--The board of directors of a Federal credit union may,
by majority vote of a quorum of directors, adopt and enforce a
policy with respect to expulsion from membership, by a majority
vote of such board of directors, based on just cause, including
disruption of credit union operations, or on nonparticipation
by a member in the affairs of the credit union.
``(2) Written notice of policy to members.--If a policy
described in paragraph (1) is adopted, written notice of the
policy as adopted and the effective date of such policy shall
be provided to--
``(A) each existing member of the credit union not
less than 30 days prior to the effective date of such
policy; and
``(B) each new member prior to or upon applying for
membership.''.
(b) Term Limits Authorized for Board Members of Federal Credit
Unions.--Section 111(a) of the Federal Credit Union Act (12 U.S.C.
1761(a)) is amended by adding at the end the following new sentence:
``The bylaws of a Federal credit union may limit the number of
consecutive terms any person may serve on the board of directors of
such credit union.''.
(c) Reimbursement for Lost Wages Due to Service on Credit Union
Board Not Treated as Compensation.--Section 111(c) of the Federal
Credit Union Act (12 U.S.C. 1761(c)) is amended by inserting ``,
including lost wages,'' after ``the reimbursement of reasonable
expenses''.
SEC. 111. PROVIDING THE NATIONAL CREDIT UNION ADMINISTRATION WITH
GREATER FLEXIBILITY IN RESPONDING TO MARKET CONDITIONS.
Section 107(a)(5)(A)(v)(I) of the Federal Credit Union Act (12
U.S.C. 1757(5)(A)(v)(I)) (as so designated by sections 103 and 104 of
this title) is amended by striking ``six-month period and that
prevailing interest rate levels'' and inserting ``6-month period or
that prevailing interest rate levels''.
SEC. 112. CREDIT UNIONS AUTHORIZED TO LEASE SPACE IN BUILDINGS IN
CREDIT UNION OFFICES IN UNDERSERVED AREAS.
(a) In General.--Section 107(a) of the Federal Credit Union Act (12
U.S.C. 1757) (as so designated by section 103 of this title) is
amended--
(1) by striking ``and'' at the end of paragraph (16);
(2) by redesignating paragraph (17) as paragraph (18); and
(3) by inserting after paragraph (16) the following new
paragraph:
``(17) with regard to any building purchased or constructed
by the credit union for a credit union office or credit union
operations in an underserved area, to lease office space in
such building that is separate and clearly distinct from any
office or operation of the credit union to any business
enterprise, subject to such regulations the Board may
prescribe, taking into account the safety and soundness of the
credit union; and''.
(b) Underserved area defined.--Section 101 of the Federal Credit
Union Act (12 U.S.C. 1752) is amended by adding at the end the
following new paragraph:
``(10) Underserved area.--The term `underserved area' means
an area consisting of 1 or more census tracts that have--
``(A) a poverty rate of 20 percent or greater,
based on the most recent census data; or
``(B) a median family income that does not exceed
80 percent of the greater of--
``(i) the median family income for the
metropolitan area in which such census tract or
tracts are located; or
``(ii) the median family income for the
State in which such census tract or tracts are
located.''.
SEC. 113. CREDIT UNION CONVERSION VOTING REQUIREMENTS.
Section 205(b)(2)(B) of the Federal Credit Union Act (12 U.S.C.
1785(b)(2)(B)) is amended by inserting ``, in a vote in which at least
20 percent of the credit union membership participates'' before the
period at the end.
SEC. 114. EXEMPTION FROM PRE-MERGER NOTIFICATION REQUIREMENT OF THE
CLAYTON ACT.
Section 7A(c)(7) of the Clayton Act (15 U.S.C. 18a(c)(7)) is
amended by inserting ``section 205(b)(3) of the Federal Credit Union
Act (12 U.S.C. 1785(b)(3)),'' before ``or section 3''.
SEC. 115. TREATMENT OF CREDIT UNIONS AS DEPOSITORY INSTITUTIONS UNDER
SECURITIES LAWS.
(a) Definition of Bank Under the Securities Exchange Act of 1934.--
Section 3(a)(6) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(6)) (as amended by section 201(a)(1) of this Act) is amended--
(1) by striking ``this title, and (D) a receiver'' and
inserting ``this title, (D) an insured credit union (as defined
in section 101(7) of the Federal Credit Union Act) but only for
purposes of paragraphs (4) and (5) of this subsection and only
for activities otherwise authorized by applicable laws to which
such credit unions are subject, and (E) a receiver''; and
(2) in subparagraph (E) (as so redesignated by paragraph
(1) of this subsection) by striking ``(A), (B), or (C)'' and
inserting ``(A), (B), (C), or (D)''.
(b) Definition of Bank Under the Investment Advisers Act of 1940.--
Section 202(a)(2) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-2(a)(2)) (as amended by section 201(b)(1) of this Act) is amended--
(1) by striking ``this title, and (D) a receiver'' and
inserting ``this title, (D) an insured credit union (as defined
in section 101(7) of the Federal Credit Union Act) but only for
activities otherwise authorized by applicable laws to which
such credit unions are subject, and (E) a receiver''; and
(2) in subparagraph (E) (as so redesignated by paragraph
(1) of this subsection) by striking ``(A), (B), or (C)'' and
inserting ``(A), (B), (C), or (D)''.
(c) Definition of Appropriate Federal Banking Agency.--Section
210A(c) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-10a(c))
is amended by inserting ``and includes the National Credit Union
Administration Board, in the case of an insured credit union (as
defined in section 101(7) of the Federal Credit Union Act)'' before the
period at the end.
TITLE II--MEMBER BUSINESS LENDING
SEC. 201. LIMITS ON MEMBER BUSINESS LOANS.
Section 107A(a) of the Federal Credit Union Act (12 U.S.C.
1757a(a)) is amended by striking `` the lesser
of--'' and all that follows and inserting ``20 percent of the total
assets of the credit union.''.
SEC. 202. DEFINITION OF MEMBER BUSINESS LOAN.
Section 107A(c)(1)(B)(iii) of the Federal Credit Union Act (12
U.S.C. 1757a(c)(1)(B)(iii)) is amended by striking ``$50,000'' and
inserting ``an amount, not to exceed $100,000, which the Board shall
prescribe by regulation''.
SEC. 203. RESTRICTION ON MEMBER BUSINESS LOANS.
Section 216(g)(2) of the Federal Credit Union Act (12 U.S.C.
1790d(g)(2)) is amended by striking ``until such time as the credit
union becomes adequately capitalized'' and inserting ``unless otherwise
approved by the Board''.
TITLE III--CAPITAL LEVELS
SEC. 301. AMENDMENTS TO NET WORTH CATEGORIES.
Section 216 of the Federal Credit Union Act (12 U.S.C. 1790d) is
amended--
(1) by striking subsection (o)(3) and inserting the
following new paragraph:
``(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 risk assets of the credit union as
defined by the Board.'';
(2) by striking subsection (d) and inserting the following
new subsection
``(d) [Repealed]''; and
(3) by striking subparagraph (E) of subsection (c)(1) and
inserting the following new subparagraph:
``(E) Critically undercapitalized.--An insured
credit union is `critically undercapitalized' if the
credit union has--
``(i) a net worth of less than 2 percent of
actual assets; or
``(ii) a net worth ratio of less than a
minimum net worth ratio prescribed by the Board
in excess of 2 percent but not more than 3
percent.''.
<all>