I 111th CONGRESS 1st Session H. R. 2351 IN THE HOUSE OF REPRESENTATIVES May 12, 2009 Mr. Kanjorski (for himself, Mr. Gutierrez, Mr. Royce, Mr. Scott of Georgia, and Mr. LaTourette) introduced the following bill; which was referred to the Committee on Financial Services A BILL To amend the Federal Credit Union Act to increase the borrowing authority of the National Credit Union Administration, establish a National Credit Union Share Insurance Fund restoration plan period, assess insured credit unions for the costs associated with the corporate credit union stabilization effort on an anticyclical basis, and for other purposes.

1.

Short title

This Act may be cited as the Credit Union Share Insurance Stabilization Act.

2.

NCUA borrowing authority

(a)

NCUA borrowing authority

Section 203(d)(1) of the Federal Credit Union Act (12 U.S.C. 1783(d)(1)) is amended to read as follows: (1)If, in the judgment of the Board, a loan to the insurance fund, or to the stabilization fund described in section 217, is required at any time for purposes of this title, the Secretary of the Treasury shall make the loan, but loans under this paragraph shall not exceed in the aggregate $6,000,000,000 outstanding at any one time. Except as otherwise provided in this subsection, section 217, and in subsection (e) of this section, each loan under this paragraph shall be made on such terms as may be fixed by agreement between the Board and the Secretary of the Treasury. . (b)

Temporary increases of borrowing authority for NCUA

Section 203(d) of the Federal Credit Union Act (12 U.S.C. 1783(d)) is amended by adding at the end the following: (4)

Temporary increases authorized

(A)

Recommendations for increase

During the period beginning on the date of enactment of this paragraph and ending on December 31, 2010, if, upon the written recommendation of the Board (upon a vote of not less than two-thirds of the members of the Board) and the Board of Governors of the Federal Reserve System (upon a vote of not less than two-thirds of the members of such Board), the Secretary of the Treasury (in consultation with the President) determines that additional amounts above the $6,000,000,000 amount specified in paragraph (1) are necessary, such amount shall be increased to the amount so determined to be necessary, not to exceed $30,000,000,000. (B)

Report required

If the borrowing authority of the Board is increased above $6,000,000,000 pursuant to subparagraph (A), the Board shall promptly submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives describing the reasons and need for the additional borrowing authority and its intended uses. .

3.

Establishment of a national credit union share insurance fund restoration plan period

Section 202(c)(2) of the Federal Credit Union Act (12 U.S.C. 1782(c)(2)) is amended by adding at the end the following new subparagraph: (D)

Fund restoration plans

(i)

In general

Whenever— (I)the Board projects that the equity ratio of the Fund will, within 6 months of such determination, fall below the minimum amount specified in subparagraph (C); or (II)the equity ratio of the Fund actually falls below the minimum amount specified in subparagraph (C) without any determination under subclause (I) having been made, the Board shall establish and implement a restoration plan within 90 days that meets the requirements of clause (ii) and such other conditions as the Board determines to be appropriate.(ii)

Requirements of restoration plan

A restoration plan meets the requirements of this clause if the plan provides that the equity ratio of the Fund will meet or exceed the minimum amount specified in subparagraph (C) before the end of the 8-year period beginning upon the implementation of the plan (or such longer period as the Board may determine to be necessary due to extraordinary circumstances). (iii)

Transparency

Not more than 30 days after the Board establishes and implements a restoration plan under clause (i), the Board shall publish in the Federal Register a detailed analysis of the factors considered and the basis for the actions taken with regard to the plan. .

4.

Temporary corporate credit union stabilization fund

(a)

Establishment of temporary corporate credit union stabilization fund

Title II of the Federal Credit Union Act (12 U.S.C. 1781 et seq.) is amended by adding at the end the following new section:

217.

Temporary corporate credit union stabilization fund

(a)

Establishment of stabilization fund

There is hereby created in the Treasury of the United States a fund to be known as the Temporary Corporate Credit Union Stabilization Fund (and referred to hereafter in this section as the Stabilization Fund) to be administered by the Board as prescribed by section 209. (b)

Expenditures from stabilization fund

Money in the Stabilization Fund shall be available upon requisition by the Board, without fiscal year limitation, for making payments for the purposes described in section 203(a), subject to the following additional limitations: (1)All payments other than administrative payments shall be connected to the conservatorship, liquidation, or threatened conservatorship or liquidation of a corporate credit union. (2)Prior to authorizing each payment, the Board shall— (A)certify that, absent the existence of the Stabilization Fund, the Board would have made the identical payment out of the National Credit Union Share Insurance Fund; and (B)report each such certification to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives. (c)

Authority To borrow

(1)

In general

The Stabilization Fund is authorized to borrow from the Secretary of the Treasury from time-to-time as deemed necessary by the Board. The maximum outstanding amount of all borrowings from the Treasury by the Stabilization Fund and the National Credit Union Share Insurance Fund, combined, is limited to the amount provided for in section 203(d)(1), including any authorized increases in that amount. (2)

Repayment of advances

(A)

In general

The advances made under this section shall be repaid by the Stabilization Fund, and interest on such advances shall be paid, to the General Fund of the Treasury. (B)

Variable rate of interest

The Secretary of the Treasury shall make the first rate determination at the time of the first advance under this section and shall reset the rate again for all advances on each anniversary of the first advance. The interest rate shall be equal to the average market yield on outstanding marketable obligations of the United States with remaining periods to maturity equal to 12 months. (3)

Repayment schedule

The Stabilization Fund shall repay the advances on a first-in, first-out basis, with interest on the amount repaid, at times and dates determined by the Board at its discretion. All advances shall be repaid not later than the date of the seventh anniversary of the first advance to the Stabilization Fund, unless the Board extends this final repayment date. The Board shall obtain the concurrence of the Secretary of the Treasury on any proposed extension, including the terms and conditions of the extended repayment. (d)

Assessment To repay advances

At least 90 days prior to each repayment described in subsection (c)(3), the Board shall set the amount of the upcoming repayment and determine if the Stabilization Fund will have sufficient funds to make the repayment. If the Stabilization Fund might not have sufficient funds to make the repayment, the Board shall assess each federally insured credit union a special premium due and payable within 60 days in an aggregate amount calculated to ensure the Stabilization Fund is able to make the repayment. The premium charge for each credit union shall be stated as a percentage of its insured shares as represented on the credit union’s previous call report. The percentage shall be identical for each credit union. Any credit union that fails to make timely payment of the special premium is subject to the procedures and penalties described under subsections (d), (e), and (f) of section 202. (e)

Distributions from insurance fund

At the end of any calendar year in which the Stabilization Fund has an outstanding advance from the Treasury, the Insurance Fund is prohibited from making the distribution to insured credit unions described in section 202(c)(3). In lieu of the distribution described in that section, the Insurance Fund shall make a distribution to the Stabilization Fund of the maximum amount possible that does not reduce the Insurance Fund’s equity ratio below the normal operating level and does not reduce the Insurance Fund’s available assets ratio below 1.0 percent. (f)

Investment of stabilization fund assets

The Board may request the Secretary of the Treasury to invest such portion of the Stabilization Fund as is not, in the Board’s judgment, required to meet the current needs of the Stabilization Fund. Such investments shall be made by the Secretary of the Treasury in public debt securities, with maturities suitable to the needs of the Stabilization Fund, as determined by the Board, and bearing interest at a rate determined by the Secretary of the Treasury, taking into consideration current market yields on outstanding marketable obligations of the United States of comparable maturity. (g)

Reports

The Board shall submit an annual report to Congress on the financial condition and the results of the operation of the Stabilization Fund. The report is due to Congress within 30 days after each anniversary of the first advance made under subsection (c)(1). Because the Stabilization Fund will use advances from the Treasury to meet corporate stabilization costs with full repayment of borrowings to Treasury at the Board’s discretion not due until 7 years from the initial advance, to the extent operating expenses of the Stabilization Fund exceed income, the financial condition of the Stabilization Fund may reflect a deficit. With planned and required future repayments, the Board shall resolve all deficits prior to termination of the Stabilization Fund. (h)

Closing of the stabilization fund

Within 90 days following the seventh anniversary of the initial Stabilization Fund advance, or earlier at the Board's discretion, the Board shall distribute any funds, property, or other assets remaining in the Stabilization Fund to the Insurance Fund and shall close the Stabilization Fund. If the Board extends the final repayment date as permitted under subsection (c)(3), the mandatory date for closing the Stabilization Fund shall be extended by the same number of days.

. (b)

Conforming amendment

Section 202(c)(3)(A) of the Federal Credit Union Act (12 U.S.C. 1782(c)(3)(A)) is amended by inserting , subject to the requirements of section 217(e), after The Board shall.