[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2572 Introduced in House (IH)]
113th CONGRESS
1st Session
H. R. 2572
To improve the regulation of credit unions and depository institutions
and to provide regulatory relief, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 28, 2013
Mr. Gary G. Miller of California introduced the following bill; which
was referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To improve the regulation of credit unions and depository institutions
and to provide regulatory relief, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Regulatory Relief for Credit Unions
Act of 2013''.
SEC. 2. ENHANCING THE AUTHORITY OF THE NATIONAL CREDIT UNION
ADMINISTRATION.
(a) Review of Bureau Regulations.--
(1) In general.--Section 120 of the Federal Credit Union
Act (12 U.S.C. 1766) is amended by adding at the end the
following:
``(k) Review of Bureau Regulations.--If the Board determines that a
regulation issued by the Bureau would create an undue hardship when
applied to credit unions, the Board may--
``(1) delay the application of the regulation to credit
unions until such time as the Board determines such application
would not create an undue hardship; and
``(2) modify such regulation, as applied to credit unions,
so long as the Board determines that such modification still
meets the Bureau's objective in issuing the regulation.''.
(2) Bureau defined.--Section 101 of the Federal Credit
Union Act (12 U.S.C. 1752) is amended by adding at the end the
following new paragraph:
``(10) The term `Bureau' means the Bureau of Consumer
Financial Protection.''.
(b) Use of State Regulations by Federal Credit Unions.--Section 120
of the Federal Credit Union Act (12 U.S.C. 1766), as amended by
subsection (a), is further amended by adding at the end the following:
``(l) Use of State Regulations.--
``(1) Application.--With respect to a State law applicable
to a State credit union, a Federal credit union may apply to
the Board for permission to comply with such regulation in lieu
of the applicable Federal regulation (if any), for purposes of
the credit union's branches located in such State. Such
permission shall only apply to the State for which the
permission is given, and the Federal credit union may not
comply with such regulation in any other State in lieu of the
applicable Federal regulation.
``(2) Determination.--The Board may approve an application
received under paragraph (1) if the Board determines that
having the Federal credit union's branches in such State comply
with the particular State law would--
``(A) improve the credit unions's ability to serve
members and lend in that particular State; and
``(B) not endanger the safety and soundness of the
credit union.
``(3) Exception.--Notwithstanding paragraph (1), a Federal
credit union may not apply to the Board for permission to
comply with any provision of a State law if such law would
conflict with the requirements of section 107A.''.
SEC. 3. IMPROVED CAPITAL STANDARDS AND LEVERAGE RATIOS FOR CREDIT
UNIONS.
(a) In General.--Section 216 of the Federal Credit Union Act (12
U.S.C. 1790d) is amended--
(1) by redesignating subsection (o) as subsection (p);
(2) by inserting after subsection (n) the following:
``(o) Revised Capital Standards.--
``(1) Two-tier system.--The Board shall implement a two-
tier system of net worth ratios for credit unions, consisting
of a risk-based net worth ratio and a net worth capital ratio.
Net worth categories in this section shall take into account
the simplicity or complexity of credit unions in terms of risk
profile.
``(2) Use of leverage ratios.--The Board shall establish
standards under this section with respect to leverage ratios of
a credit union to the same extent as are provided for net worth
ratios of a credit union. Such standards shall take into
account the unique nature of credit unions and, to the extent
practicable, be comparable to, but not necessarily identical
to, the leverage ratio standards under section 38 of the
Federal Deposit Insurance Act.''; and
(3) in subsection (p), as so redesignated, by amending
paragraph (2) to read as follows:
``(2) Net worth.--The term `net worth'--
``(A) with respect to any insured credit union,
means the retained earnings balance of the credit
union, as determined under generally accepted
accounting principles, together with--
``(i) any amounts that were previously
retained earnings of any other credit union
with which the credit union has combined; and
``(ii) components of equity under generally
accepted accounting principles not included in
retained earnings, as determined by the Board;
``(B) with respect to any insured credit union,
includes, at the Board's discretion and subject to
rules and regulations established by the Board,
assistance provided under section 208 of this title to
facilitate a least-cost resolution consistent with the
best interests of the credit union system; and
``(C) with respect to a low income credit union,
includes secondary capital accounts, 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, that are--
``(i) uninsured; and
``(ii) subordinate to all other claims
against the credit union, including the claims
of creditors, shareholders, and the Fund.''.
(b) Amendments to Net Worth Categories.--
(1) Section 216(c)(1) of the Federal Credit Union Act is
amended as follows:
(A) Well capitalized.--In subparagraph (A), by
striking clauses (i) and (ii) and inserting the
following:
``(i) it has a risk-based net worth ratio
of not less than 10 percent; or
``(ii) is considered to be well capitalized
by any other standard, as determined by the
Board.''.
(B) Adequately capitalized.--In subparagraph (B),
by striking clauses (i) and (ii) and inserting the
following:
``(i) it has a risk-based net worth ratio
of not less than 8 percent; or
``(ii) is considered to be adequately
capitalized by any other standard, as
determined by the Board.''.
(C) Undercapitalized.--In subparagraph (C), by
striking clauses (i) and (ii) and inserting the
following:
``(i) it has a risk-based net worth ratio
of not less than 6 percent; or
``(ii) is considered to be undercapitalized
by any other standard, as determined by the
Board.''.
(D) Significantly undercapitalized.--Subparagraph
(D) is amended to read as follows:
``(D) Significantly undercapitalized.--An insured
credit union is `significantly undercapitalized' if--
``(i) it has a net worth ratio of less than
3.25 percent;
``(ii) it has a net worth ratio of less
than 4.25 percent, and either--
``(I) fails to submit an acceptable
net worth restoration plan within the
time allowed under subsection (f); or
``(II) materially fails to
implement a net worth restoration plan
approved by the Board; or
``(iii) it has a risk-based net worth ratio
of less than 6 percent.''.
(2) Relevant capital measures.--Section 216(c)(2) of the
Federal Credit Union Act is amended--
(A) by striking ``, for purposes of section 38(c)
of the Federal Deposit Insurance Act,'';
(B) by striking ``(as those terms are used in
section 38),''; and
(C) by inserting ``or relevant capital measures as
defined by the Board'' after ``leverage limit'' each
place such term appears.
(3) Adjustment of levels.--Section 216(c)(2)(A) of the
Federal Credit Union Act is amended--
(A) by striking ``Federal banking agencies increase
or decrease'' and inserting ``Federal Deposit Insurance
Corporation increases or decreases''; and
(B) by striking ``level for'' and inserting
``levels for''.
(4) Adjusting net worth levels.--Section 216(c)(2)(A) of
the Federal Credit Union Act is amended by striking ``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)'' and inserting ``the increase or decrease
made by the Federal Deposit Insurance Corporation''.
(5) Consultation with federal deposit insurance
corporation.--Section 216(c)(2)(B)(i) of the Federal Credit
Union Act is amended by striking ``Federal banking agencies''
and inserting ``Federal Deposit Insurance Corporation''.
(c) Amendments Relating to Risk-Based Net Worth Requirements.--
Section 216(d) of the Federal Credit Union Act is amended--
(1) in paragraph (1)--
(A) by striking ``that are complex, as defined by
the Board''; and
(B) by inserting ``, as defined by the Board''
before the period at the end;
(2) by amending paragraph (2) to read as follows:
``(2) Standard.--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.''; and
(3) in the heading for such subsection, by striking ``for
Complex Credit Unions''.
(d) Treatment Based on Other Criteria.--Section 216(h)(1) of the
Federal Credit Union Act is amended to read as follows:
``(1) the Board may not reclassify an insured credit union
into a lower net worth category due solely to interest rate
risk, or treat an insured credit union as if it were in a lower
net worth category, for reasons not pertaining to the safety
and soundness of that credit union; and''.
(e) Definitions Relating to Net Worth.--
(1) Net worth ratio.--Section 216(p) of the Federal Credit
Union Act, as redesignated by subsection (a), is amended in
paragraph (3)--
(A) by inserting ``minus its deposit in the Fund,''
after ``net worth of credit union''; and
(B) by inserting ``minus its deposit in the Fund''
after ``total assets of the credit union''.
(2) Risk-based net worth ratio.--Section 216(p) of the
Federal Credit Union Act, as redesignated by subsection (a), is
amended by inserting after paragraph (4) the following new
paragraph:
``(5) Risk-based net worth ratio.--The term `risk-based net
worth ratio' means, with respect to any credit union--
``(A) 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
``(B) the risk assets of the credit union, as
defined by the Board.''.
(3) Amendments relating to net worth restoration plans.--
(A) Temporary waiver of net worth restoration plan
requirement in response to disasters.--Subsection
216(f)(1) of the Federal Credit Union Act is amended by
striking ``Each insured credit union'' and inserting
``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''.
(B) Net worth restoration requirement for credit
unions that are not well capitalized.--Section 216(e)
of the Federal Credit Union Act is amended to read as
follows:
``(e) Net Worth Restoration Plan Requirement Applicable to Credit
Unions That Are Not Well Capitalized.--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--
``(1) material safety and soundness concerns caused the
credit union to become less than well capitalized; and
``(2) the safety and soundness concerns remain
unresolved.''.
(C) Board action may include order to credit
union.--Section 216(i)(1)(B) of the Federal Credit
Union Act is amended--
(i) by inserting ``order the credit union
to'' before ``take such other action''; and
(ii) by inserting ``, in the discretion of
the Board,'' after ``as the Board''.
(D) Substitution of 90 calendar days.--Section
216(i)(3)(A) of the Federal Credit Union Act is
amended--
(i) by striking ``calendar quarter'' and
inserting ``90 calendar days''; and
(ii) by inserting ``first'' after ``the
date on which the credit union''.
(E) Clarification of coordination requirement.--
Section 216(l)(3)(A)(ii) of the Federal Credit Union
Act is amended by inserting before the semicolon the
following: ``, if the Board determines that such action
by the official will carry out the purpose of this
section''.
(f) Study on Reform of Prompt Corrective Action.--
(1) Study.--The National Credit Union Administration Board
shall carry out a study of problems associated with the current
prompt corrective action regime. In carrying out such study,
the Board shall consult with qualified industry and National
Credit Union Administration representatives.
(2) Report.--Not later than the end of the 1-year period
beginning on the date of the enactment of this Act, the Board
shall issue a report to the Congress containing all findings
and determinations made in carrying out the study required
under paragraph (1), including any specific legislative
recommendations recommended by the Board.
SEC. 4. REVIEW OF CREDIT UNION REGULATIONS.
(a) Cost-Benefit Analysis.--
(1) National credit union administration.--Section 120 of
the Federal Credit Union Act (12 U.S.C. 1766), as amended by
section 2, is further amended by adding at the end the
following:
``(m) Cost-Benefit Analyses.--
``(1) Pre-issuance.--Each regulation issued by the Board
shall include a thorough cost-benefit analysis that details the
estimated cost to a credit union of complying with such
regulation compared to the measurable benefit the regulation
may have. Any information provided to the Board from credit
unions for purposes of the Board's analysis shall be on a
voluntary basis.
``(2) 3-year review.--At the end of the 3-year period
following the date on which the Board issues a final
regulation, the Board shall--
``(A) carry out a review of the actual cost to a
credit union of complying with the regulation; and
``(B) issue a report to the Congress containing the
results of such review.
``(3) Rule revision.--If, in carrying out a review under
paragraph (2), the Board determines that the actual cost of
complying with a regulation is more than 20 percent higher than
the Board initially estimated, the Board shall revise the
rule.''.
(2) Bureau of consumer financial protection.--Section 1022
of the Consumer Financial Protection Act of 2010 (12 U.S.C.
5512) is amended by adding at the end the following:
``(e) Regulations Applicable to Credit Unions.--
``(1) Cost-benefit analyses.--
``(A) Pre-issuance.--Each regulation issued by the
Bureau shall, to the extent the rule applies to a
credit union, include a thorough cost-benefit analysis
that details the estimated cost to a credit union of
complying with such regulation compared to the
measurable benefit the regulation may have. Any
information provided to the Bureau from credit unions
for purposes of its analysis shall be on a voluntary
basis.
``(B) 3-year review.--At the end of the 3-year
period following the date on which the Bureau issues a
final regulation that applies to a credit union, the
Bureau shall--
``(i) carry out a review of the actual cost
to a credit union of complying with the
regulation; and
``(ii) issue a report to the Congress
containing the results of such review.
``(C) Rule revision.--If, in carrying out a review
under subparagraph (B), the Bureau determines that the
actual cost of complying with a regulation is more than
20 percent higher than the Bureau initially estimated,
the Bureau shall revise the rule.
``(2) Additional considerations.--In proposing any
regulation that applies to credit unions, the Bureau shall--
``(A) consider the impact of such regulation on--
``(i) all federally insured credit unions;
and
``(ii) consumers in rural areas; and
``(B) consult with the National Credit Union
Administration and other appropriate Federal agencies,
both prior to proposing such regulation and during the
comment process for such regulation, regarding
consistency with prudential, market, and systemic
objectives of such Administration and other agencies.
``(3) Objections.--
``(A) In general.--If, during the consultation
process described in paragraph (2)(B), the National
Credit Union Administration or another agency provides
the Bureau with a written objection to the proposed
regulation, or a portion thereof, the Bureau shall
include with the final regulation a description of the
objection and the basis for the Bureau's decision, if
any, regarding such objection.
``(B) Construction.--Nothing in this subsection
shall be construed as altering or limiting the
procedures under section 1023 that may apply to any
regulation prescribed by the Bureau.''.
SEC. 5. MODERNIZING THE CENTRAL LIQUIDITY FACILITY.
(a) Study.--The Comptroller General of the United States shall, in
consultation with the National Credit Union Administration, carry out a
study of the Central Liquidity Facility that examines the need for any
improvements or modernizing needed of such Facility.
(b) Report.--Not later than the end of the 180-day period beginning
on the date of the enactment of this Act, the Comptroller General shall
issue a report to the Congress containing all of the findings and
determinations made in carrying out the study required under subsection
(a), including any legislative recommendations the Comptroller General
may have for modernizing the Central Liquidity Facility.
SEC. 6. MODERNIZING CREDIT UNION INVESTMENT OPTIONS.
(a) Investments in Securities by Federal Credit Unions.--Section
107 of the Federal Credit Union Act (12 U.S.C. 1757) is amended--
(1) by striking ``A Federal credit union'' and inserting
the following:
``(a) In General.--A Federal credit union''; and
(2) by adding at the end the following new subsection:
``(b) Investment for the Credit Union's Own Account.--
``(1) In general.--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.
``(2) Percentage limitations.--
``(A) Single person.--The total amount of
investment securities of any single person held by a
Federal credit union for the credit union's own account
may not exceed 10 percent of the net worth of the
credit union.
``(B) Aggregate investments.--The aggregate amount
of investment securities held by a Federal credit union
for the credit union's own account may not exceed 10
percent of the total assets of the credit union.
``(3) Definitions.--For purposes of this subsection:
``(A) Investment grade.--The term `investment
grade' 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
meets the credit criteria established by the Board and
reflects the applicable market standards.
``(B) Investment security.--
``(i) In general.--The term `investment
security' 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.
``(ii) Further definition by board.--The
Board may further define the term `investment
security'.
``(4) Clarification of prohibition on stock ownership.--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.''.
(b) Mortgage Servicing Rights.--Section 107(a) of the Federal
Credit Union Act, as amended by this section, is further amended by
adding at the end the following:
``(18) Federal credit unions may purchase mortgage
servicing rights as an investment, including purchases of
mortgage servicing rights from other credit unions subject to
limits established by the Board.''.
SEC. 7. NATIONAL CREDIT UNION SHARE INSURANCE FUND PARITY WITH FEDERAL
DEPOSIT INSURANCE CORPORATION.
Section 207(k)(1) of the Federal Credit Union Act (12 U.S.C.
1787(k)(1)) is amended--
(1) in subparagraph (A)--
(A) by inserting after ``deposits in the name of
the member'' the following: ``or held in the member's
account on behalf of another person''; and
(B) by striking ``the member'' and inserting ``the
person''; and
(2) in subparagraph (C), by striking ``or in joint
tenancy.'' and inserting the following: ``in joint tenancy, or
where a member holds funds for the use of a nonmember. Coverage
for an account established by a member shall be consistent with
that of the Federal Deposit Insurance Corporation, regardless
of the membership status of the owner of the funds that are
deposited in an account established by a member.''.
SEC. 8. ENHANCING THE AUTHORITY OF THE APPROPRIATE FEDERAL BANKING
AGENCIES.
(a) In General.--The Consumer Financial Protection Act of 2010 (12
U.S.C. 5481 et seq.) is amended by inserting after section 1023 the
following:
``SEC. 1023A. REVIEW OF BUREAU REGULATIONS ON DEPOSITORY INSTITUTIONS.
``If the appropriate Federal banking agency determines that a
regulation issued by the Bureau would create an undue hardship when
applied to a class of depository institutions regulated by such agency,
the agency may--
``(1) delay the application of the regulation to the class
of depository institutions until such time as the agency
determines such application would not create an undue hardship;
and
``(2) modify such regulation, as applied to the class of
depository institutions, so long as the agency determines that
such modification still meets the Bureau's objective in issuing
the regulation.''.
(b) Technical Amendment.--The table of contents for the Dodd-Frank
Wall Street Reform and Consumer Protection Act is amended by inserting
after the item relating to section 1023 the following new item:
``1023A. Review of Bureau regulations on depository institutions.''.
SEC. 9. REVIEW OF DEPOSITORY INSTITUTION REGULATIONS.
(a) Cost-Benefit Analysis.--
(1) Pre-issuance.--Each regulation issued by an appropriate
Federal banking agency shall include a thorough cost-benefit
analysis that details the estimated cost to a depository
institution of complying with such regulation compared to the
measurable benefit the regulation may have. Any information
provided to an agency from a depository institution for
purposes of the agency's analysis shall be on a voluntary
basis.
(2) 3-year review.--At the end of the 3-year period
following the date on which the agency issues a final
regulation, the agency shall--
(A) carry out a review of the actual cost to a
depository institution of complying with the
regulation; and
(B) issue a report to the Congress containing the
results of such review.
(3) Rule revision.--If, in carrying out a review under
paragraph (2), the agency determines that the actual cost of
complying with a regulation is more than 20 percent higher than
the agency initially estimated, the agency shall revise the
rule.
(4) Definitions.--For purposes of this subsection, the
terms ``appropriate Federal banking agency'' and ``depository
institution'' have the meaning given such terms, respectively,
under section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813).
(b) Bureau of Consumer Financial Protection.--Section 1022 of the
Consumer Financial Protection Act of 2010 (12 U.S.C. 5512), as amended
by section 4, is further amended by adding at the end the following:
``(f) Regulations Applicable to Depository Institutions.--
``(1) Cost-benefit analyses.--
``(A) Pre-issuance.--Each regulation issued by the
Bureau shall, to the extent the rule applies to a
depository institution, include a thorough cost-benefit
analysis that details the estimated cost to a
depository institution of complying with such
regulation compared to the measurable benefit the
regulation may have. Any information provided to the
Bureau from depository institutions for purposes of its
analysis shall be on a voluntary basis.
``(B) 3-year review.--At the end of the 3-year
period following the date on which the Bureau issues a
final regulation that applies to a credit union, the
Bureau shall--
``(i) carry out a review of the actual cost
to a depository institution of complying with
the regulation; and
``(ii) issue a report to the Congress
containing the results of such review.
``(C) Rule revision.--If, in carrying out a review
under subparagraph (B), the Bureau determines that the
actual cost of complying with a regulation is more than
20 percent higher than the Bureau initially estimated,
the Bureau shall revise the rule.
``(2) Additional considerations.--In proposing any
regulation that applies to depository institutions, the Bureau
shall--
``(A) consider the impact of such regulation on--
``(i) community-based depository
institutions; and
``(ii) consumers in rural areas; and
``(B) consult with the appropriate Federal banking
agencies, both prior to proposing such regulation and
during the comment process for such regulation,
regarding consistency with prudential, market, and
systemic objectives of such agencies.
``(3) Objections.--
``(A) In general.--If, during the consultation
process described in paragraph (2)(B), an agency
provides the Bureau with a written objection to the
proposed regulation, or a portion thereof, the Bureau
shall include with the final regulation a description
of the objection and the basis for the Bureau's
decision, if any, regarding such objection.
``(B) Construction.--Nothing in this subsection
shall be construed as altering or limiting the
procedures under section 1023 that may apply to any
regulation prescribed by the Bureau.''.
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