[Congressional Record Volume 143, Number 158 (Monday, November 10, 1997)]
[Extensions of Remarks]
[Pages E2299-E2300]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           RESOLVING THE CREDIT UNION MEMBERSHIP CONTROVERSY:

                                 ______
                                 

                          HON. JOHN J. LaFALCE

                              of new york

                    in the house of representatives

                        Sunday, November 9, 1997

  Mr. LaFALCE. Mr. Speaker, I am inserting for the Record a draft bill 
entitled, the ``Credit Union Growth and Improvement Act.'' As I have 
explained elsewhere in remarks today, I am not introducing this 
legislation at this time. Rather, I am offering it for the 
consideration of my colleagues as a framework for future action, if 
legislation is needed. I also encourage the parties involved in the 
controversy over credit union membership to consider this proposal as a 
basis for possible compromise that can avoid years of continued 
litigation.
  A discussion draft of the bill follows:

                                 H.R.--

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Credit Union Growth and 
     Improvement Act''.

     SEC. 2. DEFINITION OF MEMBERSHIP.

       Section 109 of the Federal Credit Union Act (12 U.S.C. 
     1759) is amended--
       (1) in the 1st sentence--
       (A) by striking ``Federal credit union membership shall 
     consist of'' and inserting ``(a) In General.--Subject to 
     subsection (b), Federal credit union membership shall consist 
     of''; and
       (B) by striking ``, except that'' and all that follows 
     through the period at the end of such sentence and inserting 
     a period; and
       (2) by adding at the end the following new subsection:
       ``(b) Membership Field.--
       ``(1) In general.--Except as otherwise provided in 
     paragraph (2), the membership of any Federal credit union 
     shall be limited to--
       ``(A) 1 or more groups--
       ``(i) each of which has (within such group) a common bond 
     of occupation or association; and
       ``(ii) each of which has the principal location of such 
     group within the same well-defined and limited community or 
     rural district; or
       ``(B) groups within a well-defined community, neighborhood, 
     or rural district.
       ``(2) Exceptions.--In the case of any Federal credit union 
     whose field of membership is determined under paragraph 
     (1)(A), clause (ii) of such paragraph shall not apply with 
     respect to--
       ``(A) any such credit union the field of membership of 
     which is limited to the employees of a single employer, such 
     as a large corporation or a government agency or department, 
     which has places of employment in more than 1 geographical 
     location;
       ``(B) any group described in clause (i) of such paragraph 
     which--
       ``(i) does not meet the requirement of clause (ii) of such 
     paragraph; and
       ``(ii) was admitted to membership in such credit union 
     before October 25, 1996; or
       ``(C) any credit union the membership of which is 
     transferred to another credit union in any merger or 
     consolidation undertaken by the Board, as conservator or 
     liquidating agent, or any appropriate State credit union 
     supervisor.''.

     SEC. 3. GEOGRAPHICAL GUIDELINES FOR FIELD OF MEMBERSHIP 
                   APPROVAL.

       Section 109 of the Federal Credit Union Act (12 U.S.C. 
     1759) is amended by inserting after subsection (b) (as added 
     by section 2 of this Act) the following new subsection:
       ``(c) Regulations Required.--
       ``(1) In general.--The Board shall prescribe regulations to 
     carry out clause (ii) of subsection (b)(1)(A).
       ``(2) Criteria for implementing geographic requirements.--
     The criteria established by the Board for purposes of 
     carrying out the requirements of subsection (b)(1)(A)(ii), 
     and the factors taken into account by the Board in making any 
     determination under such subsection, may differ from the 
     criteria established by the Board for purposes of carrying 
     out the requirements of subsection (b)(1)(B) and the factors 
     taken into account by the Board in making any determination 
     under such subsection.
       ``(3) Limited exception for underserved areas.--
     Notwithstanding clause (ii) of subsection (b)(1)(A), in the 
     case of a Federal credit union described in such subsection 
     the Board may allow the membership of the credit union to 
     include a group the principal location of which is not the 
     principal location of any of the other groups comprising the 
     membership of such credit union if the Board determines that 
     the community or rural district in which group is located--
       ``(A) is not served by other credit unions; and
       ``(B) is underserved, based on data from other Federal 
     banking agencies (as defined in section 3 of the Federal 
     Deposit Insurance Act), by other depository institutions (as 
     defined in such section).''.

     SEC. 4. CRITERIA FOR APPROVAL OF EXPANSION OF MEMBERSHIP.

       Section 109 of the Federal Credit Union Act (12 U.S.C. 
     1759) is amended by inserting after subsection (c) (as added 
     by section 3 of this Act) the following new subsection:
       ``(d) Criteria for Approval Process.--The Board may not 
     approve any application by a Federal credit union to include 
     any additional group within the field of membership of such 
     credit union unless the Board determines that--
       ``(1) such credit union has not engaged in any unsafe or 
     unsound practice (as defined in section 206(b)) during the 1-
     year period preceding the filing of the application;
       ``(2) the credit union has adequate reserves against losses 
     on current loans and potential losses associated with the 
     expansion of the membership;
       ``(3) the credit union has the administrative capability to 
     serve the proposed membership group and the financial 
     resources to meet the need for additional employees and fixed 
     assets to serve the new membership group;
       ``(4) the credit union is meeting the need for credit and 
     services of the current membership of the credit union 
     according to standards established, by regulation, by the 
     Board that take into account--
       ``(A) the number and types of groups already included 
     within the membership of the credit union;
       ``(B) the penetration rates for such groups;
       ``(C) the type and number of services provided by the 
     credit union to members;
       ``(D) the average loan-to-share ratio of the credit union;
       ``(E) the adequacy of the marketing strategy of the credit 
     union; and
       ``(F) such other factors as the Board determines to be 
     appropriate;
       ``(5) the expansion of the field of membership of the 
     credit union to include the proposed group will not result 
     in--
       ``(A) serious competitive injury to another insured credit 
     union serving the same community or rural district in which 
     group is located; or
       ``(B) unreasonable competition for other depository 
     institutions (as defined in section 3 of the Federal Deposit 
     Insurance Act) serving the same community or rural district; 
     and
       ``(6) the credit union has met any additional requirements 
     as the Board may prescribe in regulations.''.

     SEC. 5. CRITERIA FOR APPROVAL OF EXPANSION OF MEMBERSHIP.

       Section 109 of the Federal Credit Union Act (12 U.S.C. 
     1759) is amended by inserting after subsection (d) (as added 
     by section 4 of this Act) the following new subsection:
       ``(e) Indirect Membership Restrictions.--
       ``(1) Employee-based groups.--The Board may not approve any 
     application by any existing Federal credit union described in 
     subsection (b)(1)(A) to expand the membership of such credit 
     union to include a group consisting of more than 1,000 
     employees of any business or group of related business.
       ``(2) Occupation-based groups.--The Board may not approve 
     any application by any existing Federal credit union 
     described in subsection (b)(1)(A) to expand the membership of 
     such credit union to include a group consisting of more than 
     2,000 persons who have a common bond of occupation.
       ``(3) Association-based groups.--The Board may not approve 
     any application by any existing Federal credit union 
     described in subsection (b)(1)(A) to expand the membership of 
     such credit union to include a group consisting of more than 
     5,000 members of a nonoccupation-based association or 
     nonprofit organization.
       ``(4) New credit union.--Any group described in paragraph 
     (1), (2), or (3) may be included in the field of membership 
     of a Federal credit union at the time the credit union 
     organization certificate of such credit union is submitted 
     for approval to the Board under section 104.
       ``(5) Exceptions.--Paragraphs (1), (2), and (3) shall not 
     apply to--
       ``(A) any group which was admitted to the membership of a 
     Federal credit union before October 25, 1996;
       ``(B) the merger of 2 or more credit unions; and

[[Page E2300]]

       ``(C) the transfer of the membership of any credit union to 
     another credit union in any merger or consolidation 
     undertaken by the Board, as conservator or liquidating agent, 
     or any appropriate State credit union supervisor.
       ``(6) No limit on growth of groups.--No provision of 
     paragraph (1), (2), or (3) shall be construed as imposing any 
     restriction on the number of members which comprise a group 
     described in any such paragraph after such group has been 
     included within the field of membership of any Federal credit 
     union.''.

     SEC. 6. COMMUNITY REINVESTMENT REQUIREMENTS FOR CERTAIN LARGE 
                   CREDIT UNIONS.

       (a) Standards for Meeting the Credit and Service Needs of 
     Credit Union Members.--Section 206 of the Federal Credit 
     Union Act (12 U.S.C. 1786) is amended by adding at the end 
     the following new subsection:
       ``(w) Standards for Meeting the Credit and Service Needs of 
     Credit Union Members.--
       ``(1) In general.--The Board shall establish, by 
     regulation, standards for meeting the credit and service 
     needs of members of any insured credit union that take into 
     account--
       ``(A) the number and types of groups included within the 
     membership of the insured credit union;
       ``(B) the penetration rates for such groups;
       ``(C) the type and number of services provided by the 
     credit union to members;
       ``(D) the average loan-to-share ratio of the credit union;
       ``(E) the adequacy of the marketing strategy of the credit 
     union; and
       ``(F) such other factors as the Board determines to be 
     appropriate;
       ``(2) Compliance with the community reinvestment act of 
     1977.--The Board prescribe regulations, in consultation the 
     Federal banking agencies (as defined in section 3(z) of the 
     Federal Deposit Insurance Act), establishing--
       ``(A) standards for compliance with the requirements of the 
     Community Reinvestment Act of 1977 by insured credit unions 
     described in section 804(c); and
       ``(B) the sanctions for violating such requirements, 
     including disapproval of an application, by any credit union 
     which violates such requirements for the inclusion of a new 
     group, for the inclusion of a new group within the field of 
     membership of such credit union.
       ``(3) Annual review.--The Board shall conduct an annual 
     review of the extent to which any credit union described in 
     section 804(c) of the Community Reinvestment Act of 1977 is 
     in compliance with the requirements of the Community 
     Reinvestment Act of 1977 to determine whether continued 
     compliance is necessary.''.
       (b) Amendments to Community Reinvestment Act of 1977.--
     Section 804 of the Community Reinvestment Act of 1977 (12 
     U.S.C. 2903) is amended by adding at the end the following 
     new subsection:
       ``(c) Applicability to Certain Large Credit Unions.--
       ``(1) In general.--Any insured credit union (as defined in 
     section 101(7) of the Federal Credit Union Act)--
       ``(A) the field of membership of which includes 2 or more 
     groups each of which has (within such group) a common bond of 
     occupation or association;
       ``(B) which has total assets of $25,000,000 or more; and
       ``(C) which fails to meet the standards established by the 
     National Credit Union Administration Board (hereafter in this 
     subsection referred to as the `Board') under section 
     206(w)(1) of the Federal Credit Union Act, as determined by 
     the Board,

     shall be treated as a regulated financial institution for 
     purposes of this title.
       ``(2) Treatment of national credit union administration 
     board.--For purposes of this title, the Board shall be 
     treated as an appropriate Federal financial supervisory 
     agency with respect to any insured credit union described in 
     paragraph (1).
       ``(3) Strategic plan option.--The regulations prescribed by 
     the Board for governing compliance with this title by insured 
     credit unions described in paragraph (1) shall include an 
     option to allow any such credit union to develop a strategic 
     plan for meeting the obligations of the credit union under 
     this title--
       ``(A) in consultation with members of the credit union and 
     local officials and community organization in the communities 
     served by such credit union: and
       ``(B) subject to the approval of the plan by the Board.''.

     SEC. 7. NATIONAL CREDIT UNION ADMINISTRATION BOARD 
                   MEMBERSHIP.

       Section 102(b) of the Federal Credit Union Act (12 
     1752a(b)) is amended--
       (1) by striking ``(b) The Board'' and inserting ``(b) 
     Membership and Appointment of Board.--
       ``(1) In general.--The Board''; and
       (2) by adding at the end the following new paragraph:
       ``(2) Appointment criteria.--
       ``(A) Experience in financial services.--In considering 
     appointments to the Board under paragraph (1), the President 
     shall give consideration to--
       ``(i) individuals with experience in financial services and 
     institutions other than credit unions; or
       ``(ii) individuals with experience in State regulation of 
     credit unions or other financial institutions.
       ``(B) Limit on appointment of credit union officers.--Not 
     more than 1 member of the Board may be appointed to the Board 
     from among individuals who, at the time of such appointment, 
     are, or have recently been, involved with any insured credit 
     union as a committee member, director, officer, employee, or 
     other institution-affiliated party.

     

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