[House Report 117-517]
[From the U.S. Government Publishing Office]


117th Congress     }                                 {      Report
                        HOUSE OF REPRESENTATIVES
 2d Session        }                                 {      117-517

======================================================================

 
                  CREDIT UNION BOARD MODERNIZATION ACT

                                _______
                                

 September 28, 2022.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Ms. Waters, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 6889]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 6889) to amend the Federal Credit Union Act to 
modify the frequency of board of directors meetings, and for 
other purposes, having considered the same, reports favorably 
thereon with amendments and recommends that the bill as amended 
do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Section-by-Section Analysis of the Legislation...................     3
Hearings.........................................................     3
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     3
Statement of Performance Goals and Objectives....................     3
New Budget Authority and C.B.O. Cost Estimate....................     3
Committee Cost Estimate..........................................     4
Federal Mandates Statement.......................................     4
Advisory Committee Statement.....................................     4
Applicability to Legislative Branch..............................     4
Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
  Benefits.......................................................     4
Duplicative Federal Programs.....................................     4

    The amendments are as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Credit Union Board Modernization 
Act''.

SEC. 2. FREQUENCY OF BOARD OF DIRECTORS MEETINGS.

  Section 113 of the Federal Credit Union Act (12 U.S.C. 1761b) is 
amended--
          (1) by striking ``monthly'' each place such term appears;
          (2) in the matter preceding paragraph (1), by striking ``The 
        board of directors'' and inserting the following:
  ``(a) In General.--The board of directors'';
          (3) in subsection (a) (as so designated), by striking ``shall 
        meet at least once a month and''; and
          (4) by adding at the end the following:
  ``(b) Meetings.--The board of directors of a Federal credit union 
shall meet as follows:
          ``(1) With respect to a de novo Federal credit union, not 
        less frequently than monthly during each of the first five 
        years of the existence of such Federal credit union.
          ``(2) Not less than six times annually, with at least one 
        meeting held during each fiscal quarter, with respect to a 
        Federal credit union--
                  ``(A) with composite rating of either 1 or 2 under 
                the Uniform Financial Institutions Rating System (or an 
                equivalent rating under a comparable rating system); 
                and
                  ``(B) with a capability of management rating under 
                such composite rating of either 1 or 2.
          ``(3) Not less frequently than once a month, with respect to 
        a Federal credit union--
                  ``(A) with composite rating of either 3, 4, or 5 
                under the Uniform Financial Institutions Rating System 
                (or an equivalent rating under a comparable rating 
                system); or
                  ``(B) with a capability of management rating under 
                such composite rating of either 3, 4, or 5.''.

    Amend the title so as to read:
    A bill to amend the Federal Credit Union Act to modify the 
frequency of board of directors meetings, and for other 
purposes.

                          Purpose and Summary

    On July 27, 2022, Representative Juan Vargas introduced 
H.R. 6889, the ``Credit Union Board Modernization Act'', which 
would reduce the required amount of meetings for the board of 
directors of highly rated federal credit unions.

                  Background and Need for Legislation

    H.R. 6889 would revise federal credit union board meeting 
requirements to bring highly rated federal credit unions in 
line with state credit union charter requirements in 17 states 
(Alabama, California, Colorado, Delaware, Idaho, Iowa, Kansas, 
Louisiana, Maryland, Michigan, Minnesota, Missouri, New 
Hampshire, Ohio, Pennsylvania, Washington, and Wyoming), which 
currently allow their state-chartered credit union boards to 
meet less frequently than every month, or even allow meetings 
on an as-needed basis. Specifically, federal credit unions with 
a composite rating of either 1 or 2 and a capability management 
rating of 1 or 2 under the Uniform Financial Institutions 
Rating System would be required to meet at least six times 
annually, with at least one meeting held during each fiscal 
quarter. De novo federal credit unions would be required to 
meet at least monthly during the first five years of their 
charter, as well as Federal credit unions with composite 
ratings of either 3, 4, or 5 or with a capability of management 
rating of either 3, 4, or 5.
    To mitigate the risk of institutional failure, newer 
institutions and credit unions with lower ratings would still 
be required to meet monthly. Additionally, if emergencies or 
issues arise requiring a board meeting, credit unions would 
still be able to meet as frequently as needed.

                      Section-by-Section Analysis


Section 1. Short title

           This section establishes the short title of 
        the bill as the ``Credit Union Board Modernization 
        Act''.

Section 2. Frequency of board of directors meetings

           This section requires that the board of 
        directors of a de novo Federal credit union meet not 
        less frequently than monthly during each of the first 
        five years of its existence.
           The section requires that the board of 
        directors of a Federal credit union with a composite 
        rating of either 1 or 2 under the Uniform Financial 
        Institutions Rating System and with a capability 
        management rating of either 1 or 2 meet not less than 
        six times annually, with at least one meeting held 
        during each fiscal quarter.
           This section requires that the board of 
        directors of a Federal credit union with a composite 
        rating of either 3, 4, or 5 under the Uniform Financial 
        Institutions Rating System or with a capability 
        management rating of either 3, 4, or 5 meet not less 
        frequently than once a month.

                                Hearings

    The Committee on Financial Services did not hold a hearing 
to consider H.R. 6889 entitled.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
July 27, 2022, and ordered H.R. 6889 to be reported favorably 
to the House with an amendment in the nature of a substitute by 
a voice vote, a quorum being present.

                  Committee Votes and Roll Call Votes

    No role call votes occurred on H.R. 6889.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the descriptive portions of this report.

             Statement of Performance Goals and Objectives

    Pursuant to clause (3)(c) of rule XIII of the Rules of the 
House of Representatives, the goals of H.R. 6889 are to reduce 
the required amount of meetings for the board of directors of 
highly rated federal credit unions.

               New Budget Authority and CBO Cost Estimate

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives and section 308(a) of the 
Congressional Budget Act of 1974, and pursuant to clause 
3(c)(3) of rule XIII of the Rules of the House of 
Representatives and section 402 of the Congressional Budget Act 
of 1974, the Committee has requested an estimate from the 
Director of the Congressional Budget Office. CBO was unable to 
provide an estimate in a timely manner.

                        Committee Cost Estimate

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison of the 
costs that would be incurred in carrying out H.R. 6889. After 
careful review, including discussions with the Congressional 
Budget Office, the Committee estimates that H.R. 6889 would 
have an insignificant impact on spending.

                       Unfunded Mandate Statement

    Pursuant to Section 423 of the Congressional Budget and 
Impoundment Control Act (as amended by Section 101(a)(2) of the 
Unfunded Mandates Reform Act, Pub. L. 104-4), the Committee 
adopts its own the estimate of federal mandates regarding H.R. 
6889, as amended.

                           Advisory Committee

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

              Application of Law to the Legislative Branch

    Pursuant to section 102(b)(3) of the Congressional 
Accountability Act, Pub. L. No. 104-1, H.R. 6889, as amended, 
does not apply to terms and conditions of employment or to 
access to public services or accommodations within the 
legislative branch.

                           Earmark Statement

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 6889 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as described in clauses 9(e), 9(f), and 9(g) of rule 
XXI.

                    Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee states that no 
provision of H.R. 6889 establishes or reauthorizes a program of 
the Federal Government known to be duplicative of another 
federal program, a program that was included in any report from 
the Government Accountability Office to Congress pursuant to 
section 21 of Public Law 111-139, or a program related to a 
program identified in the most recent Catalog of Federal 
Domestic Assistance.

                        Changes to Existing Law

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, H.R. 6889, as reported, are shown as follows:

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                        FEDERAL CREDIT UNION ACT




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TITLE I--FEDERAL CREDIT UNIONS

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 board of directors; meetings; powers and duties executive committee; 
              membership officers; membership applications

  Sec. 113. [The board of directors] (a)  In General._The board 
of directors  [shall meet at least once a month and] shall have 
the general direction and control of the affairs of the Federal 
credit union. Minutes of all meetings shall be kept. Among 
other things, the board of directors shall--
          (1) act upon applications for membership or appoint 
        membership officers from among the members of the 
        credit union, other than the board member paid as an 
        officer, the financial board officer, any assistant to 
        the paid officer of the board or to the financial 
        officer, or any loan officer;
          (2) provide adequate fidelity coverage for officers 
        and employees having custody of or handling funds 
        according to regulations issued by the Board;
          (3) fill vacancies on the board of directors until 
        successors elected at the next annual meeting have 
        qualified;
          (4) if the bylaws provide for an elected credit 
        committee, fill vacancies on the credit committee until 
        successors elected at the next annual meeting have 
        qualified;
          (5) appoint the members of the supervisory committee 
        and, if the bylaws so provide, appoint the members of 
        the credit committee;
          (6) have charge of investments including the right to 
        designate an investment committee of not less than two 
        to act on its behalf;
          (7) determine the maximum number of shares, share 
        certificates, and share draft accounts, and the classes 
        of shares, share certificates, and share draft 
        accounts;
          (8) subject to any limitations of this subchapter, 
        determine the interest rates on loans, the security, 
        and the maximum amount which may be loaned and provided 
        in lines of credit;
          (9) authorize interest refunds to members of record 
        at the close of business on the last day of any 
        dividend period from income earned and received in 
        proportion to the interest paid by them during that 
        dividend period;
          (10) if the bylaws so provide, appoint one or more 
        loan officers and delegate to these officers the power 
        to approve or disapprove loans, lines of credit, or 
        advances from lines of credit;
          (11) establish the par value of the share;
          (12) subject to the limitations of this title and the 
        bylaws of the credit union, provide for the hiring and 
        compensation of officers and employees;
          (13) if the bylaws so provide, appoint an executive 
        committee of not less than three directors to act on 
        its behalf and any other committees to which it can 
        delegate specific functions;
          (14) prescribe conditions and limitations for any 
        committee which it appoints;
          (15) review at each [monthly] meeting a list of 
        approved or pending applications for membership 
        received since the previous [monthly] meeting together 
        with such other related information as it or the bylaws 
        require;
          (16) provide for the furnishing of the written 
        reasons for any denial of a membership application to 
        the applicant upon the written request of the 
        applicant;
          (17) in the absence of a credit committee, and upon 
        the written request of a member, review a loan 
        application denied by a loan officer;
          (18) declare the dividend rate to be paid on shares, 
        share certificates, and share draft accounts pursuant 
        to the terms and conditions of section 117;
          (19) establish and maintain a system of internal 
        controls consistent with the regulations of the Board;
          (20) establish lending policies; and
          (21) do all other things that are necessary and 
        proper to carry out all the purposes and powers of the 
        Federal credit union, subject to regulations issued by 
        the Board.
  (b) Meetings.--The board of directors of a Federal credit 
union shall meet as follows:
          (1) With respect to a de novo Federal credit union, 
        not less frequently than monthly during each of the 
        first five years of the existence of such Federal 
        credit union.
          (2) Not less than six times annually, with at least 
        one meeting held during each fiscal quarter, with 
        respect to a Federal credit union--
                  (A) with composite rating of either 1 or 2 
                under the Uniform Financial Institutions Rating 
                System (or an equivalent rating under a 
                comparable rating system); and
                  (B) with a capability of management rating 
                under such composite rating of either 1 or 2.
          (3) Not less frequently than once a month, with 
        respect to a Federal credit union--
                  (A) with composite rating of either 3, 4, or 
                5 under the Uniform Financial Institutions 
                Rating System (or an equivalent rating under a 
                comparable rating system); or
                  (B) with a capability of management rating 
                under such composite rating of either 3, 4, or 
                5.

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