110 HR 1537 IH: Credit Union Regulatory Improvements Act of 2007
U.S. House of Representatives
2007-03-15
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.This Act may be cited as the Credit Union Regulatory Improvements Act of 2007
.
<enum>I</enum><header>Capital Modernization</header>
<section id="H270BC51225624DAAACE2A7AC4CA5B2C3"><enum>101.</enum><header>Amendments to net worth categories</header><text display-inline="no-display-inline">Section 216(c)(1) of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1790d">12 U.S.C. 1790d(c)(1)</external-xref>) is amended as follows:</text>
<paragraph id="HD972150A46A84D298E945DA7D8E19BE"><enum>(1)</enum><header>Well capitalized</header>
<subparagraph id="HEBCFCB92F09F4891BB5145A29535FF8B"><enum>(A)</enum><text display-inline="yes-display-inline">In subparagraph (A)(i), by striking <quote>7 percent</quote> and inserting <quote>5.25 percent</quote>.</text></subparagraph>
<subparagraph id="H25C36D9DEAC742E9A439FFFCB7F8CFE5"><enum>(B)</enum><text display-inline="yes-display-inline">In subparagraph (A)(ii), by striking <quote>it meets any applicable risk-based net worth requirement under subsection (d) of this section</quote> and inserting <quote>it has a risk-based net worth ratio of not less than 10 percent</quote>.</text></subparagraph></paragraph>
<paragraph id="H6C7541D002E5445CB2D3058C90868256"><enum>(2)</enum><header>Adequately capitalized</header>
<subparagraph id="H01E5725AFDAC4614A9CC5F2B54DF1D58"><enum>(A)</enum><text>In subparagraph (B)(i), by striking <quote>6 percent</quote> and inserting <quote>4.25 percent</quote>.</text></subparagraph>
<subparagraph id="H3DFB3FC245244C6C95F000FF3B60479F"><enum>(B)</enum><text display-inline="yes-display-inline">In subparagraph (B)(ii), by striking <quote>it meets any applicable risk-based net worth requirement under subsection (d) of this section</quote> and inserting <quote>it has a risk-based net worth ratio of not less than 8 percent</quote>.</text></subparagraph></paragraph>
<paragraph id="H09711B6E8FFE4DC682AAAC31C3DE909B"><enum>(3)</enum><header>Undercapitalized</header>
<subparagraph id="H74299E55BF604EE4A2C03E005858B62B"><enum>(A)</enum><text display-inline="yes-display-inline">In subparagraph (C)(i), by striking <quote>6 percent</quote> and inserting <quote>4.25 percent</quote>.</text></subparagraph>
<subparagraph id="HA58B8CCD26604CB794A400B4CE841093"><enum>(B)</enum><text>In subparagraph (C)(ii), by striking <quote>it fails to meet any applicable risk-based net worth requirement under subsection (d)</quote> and inserting <quote>it has a risk-based net worth ratio of less than 8 percent</quote>.</text></subparagraph></paragraph>
<paragraph id="H4E4B18E33DA94AB1AA4EA47CF18ED930"><enum>(4)</enum><header>Significantly undercapitalized</header><text>By striking subparagraph (D) and inserting the following new subparagraph:</text>
<quoted-block style="OLC" display-inline="no-display-inline" id="H1685FD86C15A4C81AE30092967572B80">
<subparagraph id="HCB3B0805B8864F5591684E89394B5EBB"><enum>(D) </enum><header>Significantly undercapitalized</header><text>An insured credit union is <quote>significantly undercapitalized</quote> if—</text>
<clause id="H77D04795BC4A4369BD58E80336F7FB8B"><enum>(i)</enum><text display-inline="yes-display-inline">the credit union has a net worth ratio of less than 3.25 percent;</text></clause>
<clause id="H86C10281835A4E3F9F30F8008C834B1F"><enum>(ii)</enum><text display-inline="yes-display-inline">the credit union has a net worth ratio of less than 4.25 percent and either—</text>
<subclause id="HC7FA0FC05AB644C9B6AF591D03C985E7"><enum>(I)</enum><text display-inline="yes-display-inline">fails to submit an acceptable net worth restoration plan within the time allowed under subsection (f); or</text></subclause>
<subclause id="HFEF759BAE7AE4CC99E82B63BC1AE90B7"><enum>(II)</enum><text display-inline="yes-display-inline">materially fails to implement a net worth restoration plan approved by the Board; or</text></subclause></clause>
<clause id="H0BDD459ABB6C44E800B400AFC419E669"><enum>(iii)</enum><text display-inline="yes-display-inline">the credit union has a risk-based net worth ratio of less than 6 percent.</text></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block> </paragraph>
<paragraph id="HBE108EACB8E74337AF30AA053C399296"><enum>(5)</enum><header>Relevant capital measures</header><text>Section 216(c)(2) is amended by striking <quote>leverage limit</quote> each place such term appears and inserting <quote>relevant capital measures</quote>. </text></paragraph>
<paragraph id="H8305EFF5E11F47FD006BA10167BC34D2"><enum>(6)</enum><header>Adjustment by federal deposit insurance corporation</header><text>Section 216(c)(2)(A) is amended—</text>
<subparagraph id="H1D82A7A375834DDD006FDD45DE5100A4"><enum>(A)</enum><text>by striking <quote>Federal banking agencies increase or decrease</quote> and inserting <quote>Federal Deposit Insurance Corporation increases or decreases one of </quote>; and</text></subparagraph>
<subparagraph id="H0D0BB39B6AA449A58DF63DF7000854BA"><enum>(B)</enum><text>by striking <quote>level</quote> each place such term appears and inserting <quote>levels</quote>.</text></subparagraph></paragraph>
<paragraph id="HEBE5A9A9064B4DBBA1EB0000F8E37855"><enum>(7)</enum><header>Adjusting net worth levels</header><text>Section 216(c)(2)(A) is amended by striking <quote>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)</quote> and inserting <quote>the increase or decrease made by the Federal Deposit Insurance Corporation</quote>.</text></paragraph>
<paragraph id="HF3D41F32E52B4EB18F3D248E8427F0D8"><enum>(8)</enum><header>Consultation with federal deposit insurance corporation</header><text>Section 216(c)(2)(B)(i) is amended by striking <quote>Federal banking agencies</quote> and inserting <quote>Federal Deposit Insurance Corporation</quote>.</text></paragraph></section>
<section id="HE799236FBA614106BA0023C837105E9"><enum>102.</enum><header>Amendments relating to risk-based net worth requirements</header>
<subsection id="HCF6F8F26DFA54D6BB47CE4B0BC99B7C8"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Section 216(d) of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1790d">12 U.S.C. 1790d(d)</external-xref>) is amended—</text>
<paragraph id="H6AF26A1EA05E4FDDA34CF24CDA0DAB0"><enum>(1)</enum><text>in paragraph (1)—</text>
<subparagraph id="HAE2A1B8E034D449BAD6C6256EA6F144B"><enum>(A)</enum><text>by striking <quote>that are complex, as defined by the Board</quote>; and</text></subparagraph>
<subparagraph id="H79294F1A704348E7B86900AEF716FE8E"><enum>(B)</enum><text>by inserting <quote>, as defined by the Board</quote> before the period at the end; and</text></subparagraph></paragraph>
<paragraph id="H4BA707C74CFE41788F93DFF005081083"><enum>(2)</enum><text>by striking paragraph (2) and inserting the following new paragraph:</text>
<quoted-block style="OLC" id="HFFBE3AD3D09949879C8C820062003BC4" display-inline="no-display-inline">
<paragraph id="HD6402E3B1AE14839914E8273C3F326D7"><enum>(2)</enum><header>Standard</header><text display-inline="yes-display-inline">The Board shall design the risk-based net worth requirement to take account of any material risks as defined by the Board applicable to insured credit unions that are taken account of by comparable standards applicable to institutions insured by the Federal Deposit Insurance Corporation.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection>
<subsection id="HFC144AC713F245D696F0FE87AB25E5EC"><enum>(b)</enum><header>Technical and conforming amendment</header><text display-inline="yes-display-inline">The heading for subsection (d) of section 216 of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1790d">12 U.S.C. 1790d(d)</external-xref>) is amended by striking <quote><header-in-text level="subsection" style="OLC">for Complex Credit Unions</header-in-text></quote>.</text></subsection></section>
<section id="HB982B79001AB4417B13D008576EEE369"><enum>103.</enum><header>Treatment based on other criteria</header><text display-inline="no-display-inline">Section 216(h)(2) of the Federal Credit Union Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1790d">12 U.S.C. 1790d(h)(2)</external-xref>) is amended by inserting <quote>, except to reclassify an insured credit union into the next lower net worth category, based on interest rate risk, to the extent any such reclassification by a delegatee may be reviewed by the Board,</quote> after <quote>to reclassify an insured credit union into a lower net worth category</quote>.</text></section>
<section id="H37D06C050B984DE2B9D3D6EA911FEE89"><enum>104.</enum><header>Definitions relating to net worth</header>
<subsection id="HC08BE636B8334349A8E35B9948B6D51"><enum>(a)</enum><header>Secondary capital accounts for purposes of determining net worth</header><text display-inline="yes-display-inline">Section 216(o)(2)(B) of the Federal Credit Union Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1790d">12 U.S.C. 1790d(o)(2)(B)</external-xref>) is amended by inserting <quote>, subject to limitations set by the Board to address the safe and sound use of secondary capital to carry out the purpose of this section,</quote> after <quote>secondary capital accounts</quote>.</text> </subsection>
<subsection id="HBA0A9F22979242ADB5FAC67400BA19E5"><enum>(b)</enum><header>Net worth ratio</header><text>Paragraph (3) of section 216(o) of the Federal Credit Union Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1790d">12 U.S.C. 1790d(o)(3)</external-xref>) is amended—</text>
<paragraph id="HB66E2BFDD155453C845F004C004C419C"><enum>(1)</enum><text>by inserting <quote>minus its deposit in the Fund,</quote> after <quote>net worth of the credit union</quote>; and</text></paragraph>
<paragraph id="H0901CBC6115146F2B8109FBADBFCD2A4"><enum>(2)</enum><text display-inline="yes-display-inline">by inserting <quote>minus its deposit in the Fund</quote> after <quote>total assets of the credit union</quote>.</text></paragraph></subsection>
<subsection id="HBE1F7609DBD6482EB1446BEFB731BC6"><enum>(c)</enum><header>Risk-based net worth ratio</header><text>Section 216(o) of the Federal Credit Union Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1790d">12 U.S.C. 1790d</external-xref>)(o)) is amended by inserting after paragraph (4) the following new paragraph:</text>
<quoted-block style="OLC" id="HFF82A2CFAA0A46A3BEFF6D189B53EE6C" display-inline="no-display-inline">
<paragraph id="H41F97103D0CA4A2F864E7DC2BA730067"><enum>(5)</enum><header>Risk-based net worth ratio</header><text display-inline="yes-display-inline">The term <quote>risk-based net worth ratio</quote> means, with respect to any credit union, the ratio of the net worth of the credit union, plus any loan loss reserves (subject to limitations established by the Board) and minus the credit union’s deposit in the Fund, to the risk assets of the credit union, as defined by the Board.</text> </paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection></section>
<section id="HAC64923878E74E10AE200065EBF498C"><enum>105.</enum><header>Amendments relating to net worth restoration plans</header>
<subsection id="H1B5F50293BAD471695510021E8AD119"><enum>(a)</enum><header>Temporary waiver of net worth restoration plan requirement in response to disasters</header><text display-inline="yes-display-inline">Subsection 216(f)(1) of the Federal Credit Union Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1790d">12 U.S.C. 1790d(f)(1)</external-xref>) is amended by striking <quote>Each insured credit union</quote> and inserting <quote>Except as determined by the Board in the case of a credit union that becomes or remains no less than undercapitalized due to the impact of a major natural or man-made disaster, each insured credit union</quote>.</text></subsection>
<subsection id="H3E119031193348E984D9CFF4738F5B00"><enum>(b)</enum><header>Net worth restoration requirement for credit unions that are not well capitalized</header><text display-inline="yes-display-inline">Section 216(e) of the Federal Credit Union Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1790d">12 U.S.C. 1790d(e)</external-xref> is amended to read as follows:</text>
<quoted-block style="OLC" id="HE6C616F3717440DD87D2B9E8CD0012E7" display-inline="no-display-inline">
<subsection id="H18E2AD6C7AB74D399B57077EF3D61435"><enum>(e)</enum><header>Net worth restoration plan requirement applicable to credit unions that are not well capitalized</header><text display-inline="yes-display-inline">The Board may require an insured credit union that is not well capitalized to submit a net worth restoration plan, as required under subsection (f), if—</text>
<paragraph id="H28FD052A2DEC4EFD81A68DE0025D7D98"><enum>(1)</enum><text display-inline="yes-display-inline">material safety and soundness concerns caused the credit union to become less than well capitalized; and </text></paragraph>
<paragraph id="H949F80F1062F44E392A794006B885B55"><enum>(2)</enum><text>the safety and soundness concerns remain unresolved.</text></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </subsection>
<subsection id="H16DB67ECFED54D91B400007456E2EAE0"><enum>(c)</enum><header>Board action may include order to credit union</header><text display-inline="yes-display-inline">Subparagraph (B) of section 216(i)(1) of the Federal Credit Union Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1790d">12 U.S.C. 1790d(i)(1)(B)</external-xref>) is amended—</text>
<paragraph id="HDFD027EB11904E3BBCE42DC298D3600"><enum>(1)</enum><text display-inline="yes-display-inline">by inserting <quote>order the credit union to</quote> before <quote>take such other action</quote>; and </text></paragraph>
<paragraph id="H367FB3F16B684018ACA799621200AB70"><enum>(2)</enum><text>by inserting <quote>, in the discretion of the Board,</quote> after <quote>as the Board</quote>.</text></paragraph></subsection>
<subsection id="H510EE3E4E2E449E496FCC46E8E650094"><enum>(d)</enum><header>Substitution of 90 calendar days</header><text display-inline="yes-display-inline">Subparagraph (A) of section 216(i)(3) of the Federal Credit Union Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1790d">12 U.S.C. 1790d(i)(3)(A)</external-xref>) is amended—</text>
<paragraph id="H5F65C02D66844D18AE992834053C077B"><enum>(1)</enum><text>by striking <quote>calendar quarter</quote> and inserting <quote>90 calendar days</quote>; and</text></paragraph>
<paragraph id="H108B5168A70441E782755239F31FADE5"><enum>(2)</enum><text>by inserting <quote>first</quote> after <quote>the date on which the credit union</quote>.</text></paragraph></subsection>
<subsection id="H09B36EB7A0504FA98F0035AA9DDB9B2"><enum>(e)</enum><header>Clarification of coordination requirement</header><text display-inline="yes-display-inline">Clause (ii) of section 216(l)(3)(A) of the Federal Credit Union Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1790d">12 U.S.C. 1790d(l)(3)(A)</external-xref>) is amended by inserting <quote>if the Board determines that such action by the official will carry out the purpose of this section</quote>.</text></subsection></section>
<enum>II</enum><header>Economic Growth</header>
<section id="HAD2BCBA634E7471C960932B6998B9C65"><enum>201.</enum><header>Limits on member business loans</header><text display-inline="no-display-inline">Section 107A(a) of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1757a">12 U.S.C. 1757a(a)</external-xref>) is amended by striking <quote>the lesser of—</quote> and all that follows and inserting <quote>20 percent of the total assets of the credit union.</quote>.</text></section>
<section id="HB15320BCE40841FBA2A71CAD5022884C"><enum>202.</enum><header>Definition of member business loan</header><text display-inline="no-display-inline">Section 107A(c)(1)(B)(iii) of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1757a">12 U.S.C. 1757a(c)(1)(B)(iii)</external-xref>) is amended by striking <quote>$50,000</quote> and inserting <quote>an amount, not to exceed $100,000, that the Board shall prescribe by regulation</quote>.</text></section>
<section id="H000A7DBBD31B4FB9A4193CCD9B56B6D4"><enum>203.</enum><header>Restriction on member business loans</header><text display-inline="no-display-inline">Section 216(g)(2) of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1790d">12 U.S.C. 1790d(g)(2)</external-xref>) is amended by striking <quote>until such time as the credit union becomes adequately capitalized</quote> and inserting <quote>unless otherwise approved by the Board</quote>.</text></section>
<section id="H671A573AD82D4CF4A8BDF2B99F563400" display-inline="no-display-inline"><enum>204.</enum><header>Member business loan exclusion for loans to nonprofit religious organizations</header><text display-inline="no-display-inline">Section 107A(a) of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1757a">12 U.S.C. 1757a(a)</external-xref>) is amended by inserting <quote>, excluding loans made to nonprofit religious organizations,</quote> after <quote>total amount of such loans</quote>.</text></section>
<section id="H27118704BD084C20810087FE3042FE83" display-inline="no-display-inline"><enum>205.</enum><header>Credit unions authorized to lease space in buildings in credit union offices in underserved areas</header><text display-inline="no-display-inline">Section 107 of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1757">12 U.S.C. 1757</external-xref>) is amended—</text>
<paragraph id="HDE707ED1EC3B461D9CF07C0041AF91CC"><enum>(1)</enum><text>by striking <quote>and</quote> at the end of paragraph (16);</text></paragraph>
<paragraph id="HA493E84FCDFA4E39927573088F4CCD1B"><enum>(2)</enum><text>by redesignating paragraph (17) as paragraph (18); and</text></paragraph>
<paragraph id="H513D65292E62461B91356F37B882006F"><enum>(3)</enum><text>by inserting after paragraph (16) the following new paragraph:</text>
<quoted-block id="H0E5AB5734F064C06A16180CE94C57DAD">
<paragraph id="H2BE209D84CBC45EBAB5525186CB5E838"><enum>(17)</enum><text display-inline="yes-display-inline">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</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></section>
<section id="H46E1A8E5C56240B7B540A9FBB544A5A4"><enum>206.</enum><header>Amendments relating to credit union service to underserved areas</header><text display-inline="no-display-inline">Paragraph (2) of section 109(c) of the Federal Credit Union Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1759">12 U.S.C. 1759(c)(2)</external-xref>) is amended—</text>
<paragraph id="H62DE32FB4E3048BAA6A7688C003754D1"><enum>(1)</enum><text>in that portion of the paragraph that precedes subparagraph (A), by striking <quote>the field of membership category of which is described in subsection (b)(2),</quote>;</text></paragraph>
<paragraph id="HDB3F990B2FD44A53B6E54D949A60089"><enum>(2)</enum><text>by striking subparagraph (A) and inserting the following new subparagraph:</text>
<quoted-block style="OLC" id="H7CC59B08BBA64B9F815928CBBAB3CFF9" display-inline="no-display-inline">
<subparagraph id="H2A8D350DEC0F46569CCF1C623B6B194F"><enum>(A)</enum><text display-inline="yes-display-inline">the Board determines, at any time after August 7, 1998, that the local community, neighborhood, or rural district is an underserved area; and</text></subparagraph><after-quoted-block>; and</after-quoted-block></quoted-block></paragraph>
<paragraph id="HE824B4F5638147498807A432BE94C366"><enum>(3)</enum><text display-inline="yes-display-inline">in subparagraph (B), by inserting <quote>not later than 2 years of having an underserved area added to the credit union’s charter</quote> before <quote>the credit union</quote>. </text></paragraph></section>
<section id="H6BD240F133214AEAACD8F3ECF67FE5B7"><enum>207.</enum><header>Underserved area defined</header><text display-inline="no-display-inline">Section 101 of the Federal Credit Union Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1752">12 U.S.C. 1752</external-xref>) is amended—</text>
<paragraph id="H0FD58FE93E744A878D3DAFF7BE8C7D7"><enum>(1)</enum><text>by striking <quote>and</quote> at the end of paragraph (8);</text></paragraph>
<paragraph id="HFF0852D979F545D895CE44C8E395EF26"><enum>(2)</enum><text>by striking the period at the end of paragraph (9) and inserting <quote>; and</quote>; and</text></paragraph>
<paragraph id="HF1CC866AB28740AD88B321F8DA2C5349"><enum>(3)</enum><text>by adding at the end the following new paragraph:</text>
<quoted-block style="OLC" id="H1E7AD16164D64A019D2059ED71F0ECFF" display-inline="no-display-inline">
<paragraph id="H05B950BBCFCD45EEBC57A294F5CF88E5"><enum>(10)</enum><text display-inline="yes-display-inline">the term <quote>underserved area</quote> means a geographic area consisting of one or more population census tracts, that encompass or are located within—</text>
<subparagraph id="HA78FF3119F3D48758EA89503AC51BF2C"><enum>(A)</enum><text display-inline="yes-display-inline">an investment area designated under section 103(16) of the Community Development or Banking and Financial Institutions Act of 1994; or</text></subparagraph>
<subparagraph id="H0A86255C5C084A2FB857393777579F80"><enum>(B)</enum><text display-inline="yes-display-inline">a low income community, as defined in <external-xref legal-doc="usc" parsable-cite="usc/26/45D">section 45D(e)</external-xref> of the Internal Revenue Code of 1986. </text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></section>
<enum>III</enum><header>Regulatory Modifications</header>
<section id="H9E1E5EFE8A6E41EF89F75F881FF9B59"><enum>301.</enum><header>Investments in securities by Federal credit unions</header><text display-inline="no-display-inline">Section 107 of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1757">12 U.S.C. 1757</external-xref>) (as amended by section 205 of this Act) is amended by inserting after subsection (a) the following new subsection:</text>
<quoted-block id="H9E89D70913EE4D058EC11BFECEA92FD5">
<subsection id="HA5955726EEC04D34988C05ADC383AD4E"><enum>(b)</enum><header>Investment for the credit union’s own account</header>
<paragraph id="H53C47A2650CB4F71A335BE33009192C9"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">In addition to the investments authorized in subsection (a), 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.</text></paragraph>
<paragraph id="H80430CD3247A433DA2ED522E3DE82347"><enum>(2)</enum><header>Percentage limitations</header>
<subparagraph id="HC8A8D860E2EA45CB8500CE354B17A788"><enum>(A)</enum><header>Single obligor</header><text>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.</text></subparagraph>
<subparagraph id="HAA22FA563CD0484DBBCE6B33A8EFA8FF"><enum>(B)</enum><header>Aggregate investments</header><text>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.</text></subparagraph></paragraph>
<paragraph id="HB1FC32871A7A4033A8FA7D61ACDDFB74"><enum>(3)</enum><header>Investment security defined</header>
<subparagraph id="HE93C1503E7F0427284198E729C9EF96B"><enum>(A)</enum><header>In general</header><text>For purposes of this subsection, the term <term>investment security</term> 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.</text></subparagraph>
<subparagraph id="H53D8D3C7761E4E3BB9F689CFBD7EA7FA"><enum>(B)</enum><header>Further definition by Board</header><text>The Board may further define the term <term>investment security</term>.</text></subparagraph></paragraph>
<paragraph id="H469C631EFA5D43CB9134355378E86008"><enum>(4)</enum><header>Investment grade defined</header><text>The term <term>investment grade</term> 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.</text></paragraph>
<paragraph id="H3CB2E1360C794E4586C99C289EB8D90"><enum>(5)</enum><header>Clarification of prohibition on stock ownership</header><text>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.</text></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></section>
<section id="H0528E39EFA394D80AFB3267710BE8285"><enum>302.</enum><header>Authority of NCUA to establish longer maturities for certain credit union loans</header><text display-inline="no-display-inline">Section 107(5) of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1757">12 U.S.C. 1757(5)</external-xref>) is amended in the matter preceding subparagraph (A), by striking <quote>except as otherwise provided herein</quote> and inserting <quote>or any longer maturity as the Board may allow, in regulations</quote>.</text> </section>
<section id="H4B112525F78740B081B65E4F97000618"><enum>303.</enum><header>Increase in lending and investment limits in credit union service organizations</header>
<subsection id="HB16BACFFEF0C4BC6A55780CE86F98920"><enum>(a)</enum><header>Lending</header><text display-inline="yes-display-inline">The 1st sentence of section 107(5)(D) of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1757">12 U.S.C. 1757(5)(D)</external-xref>) is amended—</text>
<paragraph id="H9B3F2C80335D4BDA84AC00BBB088902D"><enum>(1)</enum><text>by striking <quote>up to 1 per centum of the total paid-in</quote> and inserting <quote>up to 2 percent of the total paid-in</quote>; and</text></paragraph>
<paragraph id="H0D2911D67B4E48C4BD69E10000700004"><enum>(2)</enum><text>by inserting <quote>, except that the percentage limitation on any such loans by any credit union may be reduced by order of the Board when the Board determines such reduction is appropriate to preserve the safety and soundness of the credit union</quote> before the period at the end.</text></paragraph></subsection>
<subsection id="H29C0291044364BBC81E2E79F2FCF109"><enum>(b)</enum><header>Investing</header><text display-inline="yes-display-inline">Section 107(7)(I) of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1757">12 U.S.C. 1757(7)(I)</external-xref>) is amended—</text>
<paragraph id="HEC87CA72F59D4770BF87BFE934AB06D4"><enum>(1)</enum><text>by striking <quote>up to 1 per centum of the total paid</quote> and inserting <quote>up to 2 percent of the total paid</quote>; and</text></paragraph>
<paragraph id="H63B0B62500C24F4A8B6E1C02147251D1"><enum>(2)</enum><text>by inserting <quote>, and such approval authority includes the authority to reduce the percentage limitation on any such investment by any credit union if the Board determines such reduction is appropriate to preserve the safety and soundness of the credit union</quote> after <quote>with the approval of the Board</quote>.</text></paragraph></subsection></section>
<section id="H9D98FD6AD1994E2190B8C30783993B74"><enum>304.</enum><header>Voluntary mergers involving multiple common-bond credit unions</header><text display-inline="no-display-inline">Section 109(d)(2) of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1759">12 U.S.C. 1759(d)(2)</external-xref>) is amended by striking subparagraph (C) and inserting the following new subparagraph:</text>
<quoted-block style="OLC" id="H6A2BD0E7251342C09CB6A795C7386164" display-inline="no-display-inline">
<subparagraph id="HC5615003ECE141CB96CC4FAADF99F5D"><enum>(C)</enum><text display-inline="yes-display-inline">any group transferred in connection with a voluntary merger of any such Federal credit union with another insured credit union, as approved by the Board on or after August 7, 1998, in accordance with guidelines and regulations issued under section 120.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block> </section>
<section id="H1A4D7B6D80204EC3AB586FA81C006D3B"><enum>305.</enum><header>Conversions of certain credit unions to a community charter</header><text display-inline="no-display-inline">Section 109(g) of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1759">12 U.S.C. 1759(g)</external-xref>) is amended by inserting after paragraph (2) the following new paragraph:</text>
<quoted-block act-name="Federal Credit Union Act" id="H768029892CF9486EAE504C85D43E3108">
<paragraph id="H2633D53D167641D9B4D232AA25F7E0D8"><enum>(3)</enum><header>Criteria for continued membership of certain member groups in community charter conversions</header><text display-inline="yes-display-inline">In the case of a voluntary conversion of a 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 permitting new members to be added from such groups.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></section>
<section id="H528EAB877A7149819FFB946272FDF916"><enum>306.</enum><header>Credit union governance</header>
<subsection id="H685D5D2B9D8548E900FC28B13D1E0072"><enum>(a)</enum><header>Expulsion of members for just cause</header><text>Subsection (b) of section 118 of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1764">12 U.S.C. 1764(b)</external-xref>) is amended to read as follows:</text>
<quoted-block act-name="Federal Credit Union Act" id="H6FB847D0B7DA4CE3AB16A7CC2C33DF81">
<subsection id="H4EB4F9AAE2F74C2DA23C7C984D4951E9"><enum>(b)</enum><header>Policy and actions of boards of directors of Federal credit unions</header>
<paragraph id="H45CE970F991F4C22853C62D3B7028C02"><enum>(1)</enum><header>Expulsion of members for nonparticipation or for just cause</header><text>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.</text></paragraph>
<paragraph id="H42D16FC1EA084929908C4999D08C10F8"><enum>(2)</enum><header>Written notice of policy to members</header><text>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—</text>
<subparagraph id="H62218973812E4BFC89AEA298E4E75309"><enum>(A)</enum><text>each existing member of the credit union not less than 30 days prior to the effective date of such policy; and</text></subparagraph>
<subparagraph id="HAD22E4BABBB74EBA0094CA967277AF82"><enum>(B)</enum><text>each new member prior to or upon applying for membership.</text></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="H5E81669E51CD4BA49152BFAC2E069F49"><enum>(b)</enum><header>Term limits authorized for Board members of Federal credit unions</header><text>Section 111(a) of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1761">12 U.S.C. 1761(a)</external-xref>) is amended by adding at the end the following new sentence: <quote>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.</quote>.</text></subsection> </section>
<section id="H31D3FA85D3814492B8CB2550E26615E3"><enum>307.</enum><header>Providing the national credit union administration with greater flexibility in responding to market conditions</header><text display-inline="no-display-inline">Section 107(5)(A)(vi)(I) of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1757">12 U.S.C. 1757(5)(A)(vi)(I)</external-xref>) is amended by striking <quote>six-month period and that prevailing interest rate levels</quote> and inserting <quote>6-month period or that prevailing interest rate levels</quote>.</text></section>
<section id="H9B01039D1C304466B75E27FF7B40763"><enum>308.</enum><header>Credit union conversion voting requirements</header><text display-inline="no-display-inline">Section 205(b)(2) of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1785">12 U.S.C. 1785(b)(2)(B)</external-xref>) is amended—</text>
<paragraph id="H7F7ED804EFDB48A2B995218CD0593D6D"><enum>(1)</enum><text>by redesignating subparagraphs (E), (F), and (G) as subparagraphs (F), (G), and (H), respectively;</text></paragraph>
<paragraph id="H278E5C3B35AF4B38944B0073C98C00EA"><enum>(2)</enum><text>by inserting after subparagraph (D) the following new subparagraph:</text>
<quoted-block style="OLC" id="H6C5315C0AAE94B2BB1B8B883E2ED8326" display-inline="no-display-inline">
<subparagraph id="HE7F604BF0F5743CC97EFA6B8DDEEFB4"><enum>(E)</enum><header>Conversion voting requirements</header>
<clause id="HD04B671D09284FB08232157E4B7ECDD9"><enum>(i)</enum><header>In general</header><text display-inline="yes-display-inline">Approval of a proposal for conversion in an election set by a majority of the directors of an insured credit union under subparagraph (B) shall be by the affirmative vote of a majority of the members of the insured credit union who vote on the proposal, in a vote in which at least 30 percent of the credit union membership participates.</text></clause>
<clause id="H7067C8D498FB41BF96541827AF4E0012"><enum>(ii)</enum><header>Special membership meeting</header><text display-inline="yes-display-inline">An insured credit union which provides notices to its members under subparagraph (C) of a proposed conversion shall—</text>
<subclause id="HE0F624200E5849EEB0B0D4F7C941AC36"><enum>(I)</enum><text display-inline="yes-display-inline">hold a special meeting of the membership to provide information regarding the proposal at least 30 days before making any ballots available to its members; and</text></subclause>
<subclause id="H40E5CBE84CEA46859C1D1CF373F80282"><enum>(II)</enum><text>include a notice of such meeting in the notices provided under subparagraph (C).</text></subclause></clause>
<clause id="H4B7CA4B5832949B6BC7E34201C962650" commented="no"><enum>(iii)</enum><header>Prohibition on incentives</header><text display-inline="yes-display-inline">An insured credit union proposing to convert under subparagraph (A)—</text>
<subclause id="H4D58DFA687994B198BCFED00DFDDDEE2" commented="no"><enum>(I)</enum><text>is expressly prohibited from using or providing any incentive in any form of prize raffles, contests, giveaways, or other voting incentives in connection with the member vote on conversion; and</text></subclause>
<subclause id="HFED2F0BD30744544AF82A25FEB3EA1F" commented="no"><enum>(II)</enum><text>may make no mention of any incentive in the notices to members or in other materials it sends or otherwise communicates to members pursuant to subparagraph (C).</text></subclause></clause></subparagraph><after-quoted-block>; and</after-quoted-block></quoted-block></paragraph>
<paragraph id="H295211D1797E441E9DB716BBB2E835E3"><enum>(3)</enum><text>by striking the ultimate sentence of subparagraph (B).</text></paragraph></section>
<section id="HD46C104AB3EF47449C8F13F3DD821400"><enum>309.</enum><header>Exemption from pre-merger notification requirement of the <act-name parsable-cite="CLAY">Clayton Act</act-name></header><text display-inline="no-display-inline">Section 7A(c)(7) of the <act-name parsable-cite="CLAY">Clayton Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/15/18a">15 U.S.C. 18a(c)(7)</external-xref>) is amended by inserting <quote>section 205(b)(3) of the <act-name parsable-cite="FCUA">Federal Credit Union Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1785">12 U.S.C. 1785(b)(3)</external-xref>),</quote> before <quote>or section 3</quote>.</text></section>