1.This Act may be cited as the
Credit Union Regulatory Improvements
Act of 2008
.
<enum>I</enum><header>Capital
Modernization</header>
<section id="H270BC51225624DAAACE2A7AC4CA5B2C3"><enum>101.</enum><header>Amendments to
net worth categories</header>
<subsection id="id06249C06B34F49B58EE7F14B6BD52F13"><enum>(a)</enum><header>In
general</header><text display-inline="yes-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—</text>
<paragraph id="HD972150A46A84D298E945DA7D8E19BE"><enum>(1)</enum><text>in
subparagraph (A)—</text>
<subparagraph id="HEBCFCB92F09F4891BB5145A29535FF8B"><enum>(A)</enum><text display-inline="yes-display-inline">in clause (i), by striking <quote>7
percent</quote> and inserting <quote>5.25 percent</quote>; and</text>
</subparagraph><subparagraph id="H25C36D9DEAC742E9A439FFFCB7F8CFE5"><enum>(B)</enum><text display-inline="yes-display-inline">by striking clause (ii) and inserting the
following:</text>
<quoted-block display-inline="no-display-inline" id="id87DAA0F2A179400FB5BD2FB8D49118F3" style="OLC">
<clause id="id56D54CFD944A4944AD7E9DA6D1D48219"><enum>(ii)</enum><text display-inline="yes-display-inline">it has a risk-based net worth ratio of not
less than 10
percent.</text>
</clause><after-quoted-block>;</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="H6C7541D002E5445CB2D3058C90868256"><enum>(2)</enum><text>in subparagraph
(B)—</text>
<subparagraph id="H01E5725AFDAC4614A9CC5F2B54DF1D58"><enum>(A)</enum><text>in clause (i), by
striking <quote>6 percent</quote> and inserting <quote>4.25 percent</quote>;
and</text>
</subparagraph><subparagraph id="idF295E0B1761442EBAF0848A8D6794711"><enum>(B)</enum><text display-inline="yes-display-inline">by striking clause (ii) and inserting the
following:</text>
<quoted-block display-inline="no-display-inline" id="idEE4ECA9DDEDC43F790D7A82285E2B06C" style="OLC">
<clause id="id674240716BAD469DB2ECD25D3FE69E1E"><enum>(ii)</enum><text display-inline="yes-display-inline">it has a risk-based net worth ratio of not
less than 8
percent.</text>
</clause><after-quoted-block>;</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="H09711B6E8FFE4DC682AAAC31C3DE909B"><enum>(3)</enum><text>in subparagraph
(C)—</text>
<subparagraph id="id0F6C547D3C234445A27586FD69272297"><enum>(A)</enum><text>in clause (i), by
striking <quote>6 percent</quote> and inserting <quote>4.25 percent</quote>;
and</text>
</subparagraph><subparagraph id="idC3C704FD4A02479496E3E35EFD4D5043"><enum>(B)</enum><text display-inline="yes-display-inline">by striking clause (ii) and inserting the
following:</text>
<quoted-block display-inline="no-display-inline" id="id2FCB3229EFC24A779CF06ACC70F4777F" style="OLC">
<clause id="id566ACF00E69F4F3F94ACE79702FC8E8F"><enum>(ii)</enum><text display-inline="yes-display-inline">it has a risk-based net worth ratio of less
than 8 percent.</text>
</clause><after-quoted-block>;
and</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="H4E4B18E33DA94AB1AA4EA47CF18ED930"><enum>(4)</enum><text>by striking
subparagraph (D) and inserting the following:</text>
<quoted-block display-inline="no-display-inline" id="H1685FD86C15A4C81AE30092967572B80" style="OLC">
<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></subsection><subsection id="HBE108EACB8E74337AF30AA053C399296"><enum>(b)</enum><header>Relevant capital
measures</header><text>Section 216(c)(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(c)(2)</external-xref>) is amended by striking <quote>leverage
limit</quote> each place such term appears and inserting <quote>relevant
capital measures</quote>.</text>
</subsection><subsection id="H8305EFF5E11F47FD006BA10167BC34D2"><enum>(c)</enum><header>Adjustment by
Federal Deposit Insurance Corporation</header><text>Section 216(c)(2)(A) 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)(2)</external-xref>(A)) is amended—</text>
<paragraph id="H1D82A7A375834DDD006FDD45DE5100A4"><enum>(1)</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>
</paragraph><paragraph id="H0D0BB39B6AA449A58DF63DF7000854BA"><enum>(2)</enum><text>by striking
<quote>level</quote> the first place such term appears and inserting
<quote>levels</quote>.</text>
</paragraph></subsection><subsection id="HEBE5A9A9064B4DBBA1EB0000F8E37855"><enum>(d)</enum><header>Adjusting net
worth levels</header><text>Section 216(c)(2)(A) 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)(2)(A)</external-xref>) 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>
</subsection><subsection id="HF3D41F32E52B4EB18F3D248E8427F0D8"><enum>(e)</enum><header>Consultation
with Federal Deposit Insurance Corporation</header><text>Section
216(c)(2)(B)(i) 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)(2)(B)(i)</external-xref>) is amended by striking <quote>Federal
banking agencies</quote> and inserting <quote>Federal Deposit Insurance
Corporation</quote>.</text>
</subsection></section><section id="HE799236FBA614106BA0023C837105E9"><enum>102.</enum><header>Amendments
relating to risk-based net worth requirements</header><text display-inline="no-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;</text>
</subparagraph></paragraph><paragraph id="H4BA707C74CFE41788F93DFF005081083"><enum>(2)</enum><text>by striking
paragraph (2) and inserting the following:</text>
<quoted-block display-inline="no-display-inline" id="HFFBE3AD3D09949879C8C820062003BC4" style="OLC">
<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>;
and</after-quoted-block></quoted-block>
</paragraph><paragraph id="HFC144AC713F245D696F0FE87AB25E5EC"><enum>(3)</enum><text display-inline="yes-display-inline">in the subsection heading, by striking
<quote><header-in-text level="subsection" style="OLC">for Complex Credit
Unions</header-in-text></quote>.</text>
</paragraph></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 that
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>Section 216(o)(3) 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 adding at the end the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="HFF82A2CFAA0A46A3BEFF6D189B53EE6C" style="OLC">
<paragraph id="H41F97103D0CA4A2F864E7DC2BA730067"><enum>(5)</enum><header>Risk-based net
worth ratio</header><text display-inline="yes-display-inline">The term
<term>risk-based net worth ratio</term> 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 display-inline="no-display-inline" id="HE6C616F3717440DD87D2B9E8CD0012E7" style="OLC">
<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">Section 216(i)(1)(B) 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">Section
216(i)(3)(A) 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 day
period</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">Section 216(l)(3)(A)(ii) of the Federal
Credit Union Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1790d">12 U.S.C. 1790d(l)(3)(A)(ii)</external-xref>) is
amended by inserting before the semicolon at the end <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<linebreak></linebreak> of—</quote> and all that follows through the end of the
subsection 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 display-inline="no-display-inline" id="H671A573AD82D4CF4A8BDF2B99F563400"><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 display-inline="no-display-inline" id="H27118704BD084C20810087FE3042FE83"><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>in paragraph (16),
by striking <quote>and</quote> at the end;</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:</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 as 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">Section 109(c)(2) 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 the matter
preceding 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:</text>
<quoted-block display-inline="no-display-inline" id="H7CC59B08BBA64B9F815928CBBAB3CFF9" style="OLC">
<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 after 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>in
paragraph (8), by striking <quote>and</quote> at the end;</text>
</paragraph><paragraph id="HFF0852D979F545D895CE44C8E395EF26"><enum>(2)</enum><text>in paragraph (9),
by striking the period at the end 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 display-inline="no-display-inline" id="H1E7AD16164D64A019D2059ED71F0ECFF" style="OLC">
<paragraph id="H05B950BBCFCD45EEBC57A294F5CF88E5"><enum>(10)</enum><text display-inline="yes-display-inline">the term <term>underserved area</term>
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 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>
<subsection id="idF19E7134D15D4FDBA129AC5E766DFBC7"><enum>(a)</enum><header>In
general</header><text display-inline="yes-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 commented="no" id="idCB19B0C2E6E44EC7942AA21106F9E0B8"><enum>(1)</enum><text display-inline="yes-display-inline">by striking <quote>A Federal credit
union</quote> and inserting the following:</text>
<quoted-block display-inline="no-display-inline" id="id26D3E643EB474A15BF4250E3C373CDE1" style="OLC">
<subsection commented="no" id="id910BD10503054952A5A02450EB4B0A89"><enum>(a)</enum><header>In
general</header><text>A Federal credit
union</text>
</subsection><after-quoted-block>;
and</after-quoted-block></quoted-block>
</paragraph><paragraph id="idC0F4AF4D42304BE3A45CD16609A8D1C1"><enum>(2)</enum><text display-inline="yes-display-inline">by adding at the end the following:</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 by 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 such 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, by regulation, 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>
</paragraph></subsection><subsection id="id40ADB53F02A14184990BFF5A7DDB9D62"><enum>(b)</enum><header>Clerical
amendments</header><text>The Federal Credit Union Act is amended—</text>
<paragraph id="idF0A4705292584B759396AE30DFC97F82"><enum>(1)</enum><text>in section 101(5)
(12 U.S.C. 1751(5)), by striking <quote>section 107(13)</quote> and inserting
<quote>section 107(a)(13)</quote>;</text>
</paragraph><paragraph id="idF8AC11AB75B44937BFD2C54A5B7EB38B"><enum>(2)</enum><text>in section 114(a)
(12 U.S.C. 1764(a)), by striking <quote>section 107(5)</quote> and inserting
<quote>section 107(a)(5)</quote>.</text>
</paragraph></subsection></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(a)(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>), as so designated by this Act, 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, by regulation</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">Section 107(a)(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>), as so designated by this Act, is amended—</text>
<paragraph id="H9B3F2C80335D4BDA84AC00BBB088902D"><enum>(1)</enum><text>by striking
<quote>shall not exceed 1 per centum of the paid-in</quote> and inserting
<quote>shall not exceed 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(a)(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>), as so designated by this Act, 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 that 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:</text>
<quoted-block display-inline="no-display-inline" id="H6A2BD0E7251342C09CB6A795C7386164" style="OLC">
<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 adding at the end the following:</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 of 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>Section 118(b) 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 later 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:
<quote>The bylaws of a Federal credit union may limit the number of consecutive
terms that 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(a)(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>), as so designated by this Act, 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:</text>
<quoted-block display-inline="no-display-inline" id="H6C5315C0AAE94B2BB1B8B883E2ED8326" style="OLC">
<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 commented="no" id="H4B7CA4B5832949B6BC7E34201C962650"><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 commented="no" id="H4D58DFA687994B198BCFED00DFDDDEE2"><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 commented="no" id="HFED2F0BD30744544AF82A25FEB3EA1F"><enum>(II)</enum><text>may make no
mention of any incentive in the notices to members or in other materials that
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>in subparagraph
(B), by striking the ultimate sentence.</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>