Text: H.R.1151 — 105th Congress (1997-1998)All Information (Except Text)

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Public Law No: 105-219 (08/07/1998)

 
[105th Congress Public Law 219]
[From the U.S. Government Printing Office]


<DOC>
[DOCID: f:publ219.105]


[[Page 112 STAT. 913]]

Public Law 105-219
105th Congress

                                 An Act


 
   To amend the Federal Credit Union Act to clarify existing law with 
regard to the field of membership of Federal credit unions, to preserve 
     the integrity and purpose of Federal credit unions, to enhance 
     supervisory oversight of insured credit unions, and for other 
            purposes. <<NOTE: Aug. 7, 1998 -  [H.R. 1151]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Credit Union 
Membership Access Act.>> 

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) <<NOTE: 12 USC 1751 note.>>  Short Title.--This Act may be cited 
as the ``Credit Union Membership Access Act''.

    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Definitions.

                    TITLE I--CREDIT UNION MEMBERSHIP

Sec. 101. Fields of membership.
Sec. 102. Criteria for approval of expansion of membership of multiple 
           common-bond credit unions.
Sec. 103. Geographical guidelines for community credit unions.

                  TITLE II--REGULATION OF CREDIT UNIONS

Sec. 201. Financial statement and audit requirements.
Sec. 202. Conversion of insured credit unions.
Sec. 203. Limitation on member business loans.
Sec. 204. National Credit Union Administration Board membership.
Sec. 205. Report and congressional review requirement for certain 
           regulations.

        TITLE III--CAPITALIZATION AND NET WORTH OF CREDIT UNIONS

Sec. 301. Prompt corrective action.
Sec. 302. National credit union share insurance fund equity ratio, 
           available assets ratio, and standby premium charge.
Sec. 303. Access to liquidity.

                   TITLE IV--MISCELLANEOUS PROVISIONS

Sec. 401. Study and report on differing regulatory treatment.
Sec. 402. Update on review of regulations and paperwork reductions.
Sec. 403. Treasury report on reduced taxation and viability of small 
           banks.

SEC. 2. FINDINGS. <<NOTE: 12 USC 1751 note.>> 

    The Congress finds the following:
            (1) The American credit union movement began as a 
        cooperative effort to serve the productive and provident credit 
        needs of individuals of modest means.
            (2) Credit unions continue to fulfill this public purpose, 
        and current members and membership groups should not face 
        divestiture from the financial services institution of their 
        choice as a result of recent court action.

[[Page 112 STAT. 914]]

            (3) To promote thrift and credit extension, a meaningful 
        affinity and bond among members, manifested by a commonality of 
        routine interaction, shared and related work experiences, 
        interests, or activities, or the maintenance of an otherwise 
        well-understood sense of cohesion or identity is essential to 
        the fulfillment of the public mission of credit unions.
            (4) Credit unions, unlike many other participants in the 
        financial services market, are exempt from Federal and most 
        State taxes because they are member-owned, democratically 
        operated, not-for-profit organizations generally managed by 
        volunteer boards of directors and because they have the 
        specified mission of meeting the credit and savings needs of 
        consumers, especially persons of modest means.
            (5) Improved credit union safety and soundness provisions 
        will enhance the public benefit that citizens receive from these 
        cooperative financial services institutions.

SEC. 3. DEFINITIONS. <<NOTE: 12 USC 1790d note.>> 

    As used in this Act--
            (1) the term ``Administration'' means the National Credit 
        Union Administration;
            (2) the term ``Board'' means the National Credit Union 
        Administration Board;
            (3) the term ``Federal banking agencies'' has the same 
        meaning as in section 3 of the Federal Deposit Insurance Act;
            (4) the terms ``insured credit union'' and ``State-chartered 
        insured credit union'' have the same meanings as in section 101 
        of the Federal Credit Union Act; and
            (5) the term ``Secretary'' means the Secretary of the 
        Treasury.

                     TITLE I--CREDIT UNION MEMBERSHIP

SEC. 101. FIELDS OF MEMBERSHIP.

    Section 109 of the Federal Credit Union Act (12 U.S.C. 1759) is 
amended--
            (1) in the first 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 ``rural district''; and
            (2) by adding at the end the following new subsections:

    ``(b) Membership Field.--Subject to the other provisions of this 
section, the membership of any Federal credit union shall be limited to 
the membership described in one of the following 
categories:
            ``(1) Single common-bond credit union.--One group that has a 
        common bond of occupation or association.
            ``(2) Multiple common-bond credit union.--More than one 
        group--
                    ``(A) each of which has (within the group) a common 
                bond of occupation or association; and

[[Page 112 STAT. 915]]

                    ``(B) the number of members, each of which (at the 
                time the group is first included within the field of 
                membership of a credit union described in this 
                paragraph) does not exceed any numerical limitation 
                applicable under subsection (d).
            ``(3) Community credit union.--Persons or organizations 
        within a well-defined local community, neighborhood, or rural 
        district.

    ``(c) Exceptions.--
            ``(1) Grandfathered members and groups.--
                    ``(A) In general.--Notwithstanding subsection (b)--
                          ``(i) any person or organization that is a 
                      member of any Federal credit union as of the date 
                      of enactment of the Credit Union Membership Access 
                      Act may remain a member of the credit union after 
                      that date of enactment; and
                          ``(ii) a member of any group whose members 
                      constituted a portion of the membership of any 
                      Federal credit union as of that date of enactment 
                      shall continue to be eligible to become a member 
                      of that credit union, by virtue of membership in 
                      that group, after that date of enactment.
                    ``(B) Successors.--If the common bond of any group 
                referred to in subparagraph (A) is defined by any 
                particular organization or business entity, subparagraph 
                (A) shall continue to apply with respect to any 
                successor to the organization or entity.
            ``(2) Exception for underserved areas.--Notwithstanding 
        subsection (b), in the case of a Federal credit union, the field 
        of membership category of which is described in subsection 
        (b)(2), the Board may allow the membership of the credit union 
        to include any person or organization within a local community, 
        neighborhood, or rural district if--
                    ``(A) the Board determines that the local community, 
                neighborhood, or rural district--
                          ``(i) is an `investment area', as defined in 
                      section 103(16) of the Community Development 
                      Banking and Financial Institutions Act of 1994 (12 
                      U.S.C. 4703(16)), and meets such additional 
                      requirements as the Board may impose; and
                          ``(ii) is underserved, based on data of the 
                      Board and the Federal banking agencies (as defined 
                      in section 3 of the Federal Deposit Insurance 
                      Act), by other depository institutions (as defined 
                      in section 19(b)(1)(A) of the Federal Reserve 
                      Act); and
                    ``(B) the credit union establishes and maintains an 
                office or facility in the local community, neighborhood, 
                or rural district at which credit union services are 
                available.

    ``(d) Multiple Common-Bond Credit Union Group 
Requirements.--
            ``(1) Numerical limitation.--Except as provided in paragraph 
        (2), only a group with fewer than 3,000 members shall be 
        eligible to be included in the field of membership category of a 
        credit union described in subsection (b)(2).

[[Page 112 STAT. 916]]

            ``(2) Exceptions.--In the case of any Federal credit union, 
        the field of membership category of which is described in 
        subsection (b)(2), the numerical limitation in paragraph (1) of 
        this subsection shall not apply with respect to--
                    ``(A) any group that the Board determines, in 
                writing and in accordance with the guidelines and 
                regulations issued under paragraph (3), could not 
                feasibly or reasonably establish a new single common-
                bond credit union, the field of membership category of 
                which is described in subsection (b)(1) because--
                          ``(i) the group lacks sufficient volunteer and 
                      other resources to support the efficient and 
                      effective operation of a credit union;
                          ``(ii) the group does not meet the criteria 
                      that the Board has determined to be important for 
                      the likelihood of success in establishing and 
                      managing a new credit union, including demographic 
                      characteristics such as geographical location of 
                      members, diversity of ages and income levels, and 
                      other factors that may affect the financial 
                      viability and stability of a credit union; or
                          ``(iii) the group would be unlikely to operate 
                      a safe and sound credit union;
                    ``(B) any group transferred from another credit 
                union--
                          ``(i) in connection with a merger or 
                      consolidation recommended by the Board or any 
                      appropriate State credit union supervisor based on 
                      safety and soundness concerns with respect to that 
                      other credit union; or
                          ``(ii) by the Board in the Board's capacity as 

                      conservator or liquidating agent with respect to 
                      that other credit union; or
                    ``(C) any group transferred in connection with a 
                voluntary merger, having received conditional approval 
                by the Administration of the merger application prior to 
                October 25, 1996, but not having consummated the merger 
                prior to October 25, 1996, if the merger is consummated 
                not later than 180 days after the date of enactment of 
                the Credit Union Membership Access Act.
            ``(3) Regulations and guidelines.--The Board shall issue 
        guidelines or regulations, after notice and opportunity for 
        comment, setting forth the criteria that the Board will apply in 
        determining under this subsection whether or not an additional 
        group may be included within the field of membership category of 
        an existing credit union described in subsection (b)(2).

    ``(e) Additional Membership Eligibility Provisions.--
            ``(1) Membership eligibility limited to immediate family or 
        household members.--No individual shall be eligible for 
        membership in a credit union on the basis of the relationship of 
        the individual to another person who is eligible for membership 
        in the credit union, unless the individual is a member of the 
        immediate family or household (as those terms are defined by the 
        Board, by regulation) of the other person.
            ``(2) Retention of membership.--Except as provided in 
        section 118, once a person becomes a member of a credit union in 
        accordance with this title, that person or organization may 
        remain a member of that credit union until the person or

[[Page 112 STAT. 917]]

        organization chooses to withdraw from the membership of the 
        credit union.''.

SEC. 102. CRITERIA FOR APPROVAL OF EXPANSION OF MEMBERSHIP OF MULTIPLE 
            COMMON-BOND CREDIT UNIONS.

    Section 109 of the Federal Credit Union Act (12 U.S.C. 1759) is 
amended by adding at the end the following new subsection:
    ``(f ) Criteria for Approval of Expansion of Multiple 
Common-Bond Credit Unions.--
            ``(1) In general.--The Board shall--
                    ``(A) encourage the formation of separately 
                chartered credit unions instead of approving an 
                application to include an additional group within the 
                field of membership of an existing credit union whenever 
                practicable and consistent with reasonable standards for 
                the safe and sound operation of the credit union; and
                    ``(B) if the formation of a separate credit union by 
                the group is not practicable or consistent with the 
                standards referred to in subparagraph (A), require the 
                inclusion of the group in the field of membership of a 
                credit union that is within reasonable proximity to the 
                location of the group whenever practicable and 
                consistent with reasonable standards for the safe and 
                sound operation of the credit union.
            ``(2) Approval criteria.--The Board may not approve any 
        application by a Federal credit union, the field of membership 
        category of which is described in subsection (b)(2) to include 
        any additional group within the field of membership of the 
        credit union (or an application by a Federal credit union 
        described in subsection (b)(1) to include an additional group 
        and become a credit union described in subsection (b)(2)), 
        unless the Board determines, in writing, that--
                    ``(A) the credit union has not engaged in any unsafe 
                or unsound practice (as defined in section 206(b)) that 
                is material during the 1-year period preceding the date 
                of filing of the application;
                    ``(B) the credit union is adequately capitalized;
                    ``(C) the credit union has the administrative 
                capability to serve the proposed membership group and 
                the financial resources to meet the need for additional 
                staff and assets to serve the new membership group;
                    ``(D) any potential harm that the expansion of the 
                field of membership of the credit union may have on any 
                other insured credit union and its members is clearly 
                outweighed in the public interest by the probable 
                beneficial effect of the expansion in meeting the 
                convenience and needs of the members of the group 
                proposed to be included in the field of membership; and
                    ``(E) the credit union has met such additional 
                requirements as the Board may prescribe, by 
                regulation.''.

SEC. 103. GEOGRAPHICAL GUIDELINES FOR COMMUNITY CREDIT UNIONS.

    Section 109 of the Federal Credit Union Act (12 U.S.C. 1759) is 
amended by adding at the end the following new subsection:
    ``(g) Regulations Required for Community Credit Unions.--

[[Page 112 STAT. 918]]

            ``(1) Definition of well-defined local community, 
        neighborhood, or rural district.--The Board shall prescribe, by 
        regulation, a definition for the term `well-defined local 
        community, neighborhood, or rural district' for purposes of--
                    ``(A) making any determination with regard to the 
                field of membership of a credit union described in 
                subsection (b)(3); and
                    ``(B) establishing the criteria applicable with 
                respect to any such determination.
            ``(2) Scope of application.--The definition prescribed by 
        the Board under paragraph (1) shall apply with respect to any 
        application to form a new credit union, or to alter or expand 
        the field of membership of an existing credit union, that is 
        filed with the Board after the date of enactment of the Credit 
        Union Membership Access Act.''.

                  TITLE II--REGULATION OF CREDIT UNIONS

SEC. 201. FINANCIAL STATEMENT AND AUDIT REQUIREMENTS.

    (a) In General.--Section 202(a)(6) of the Federal Credit Union Act 
(12 U.S.C. 1782(a)(6)) is amended by adding at the end the following new 
subparagraphs:
                    ``(C) Accounting principles.--
                          ``(i) In general.--Accounting principles 
                      applicable to reports or statements required to be 
                      filed with the Board by each insured credit union 
                      shall be uniform and consistent with generally 
                      accepted accounting principles.
                          ``(ii) Board determination.--If the Board 
                      determines that the application of any generally 
                      accepted accounting principle to any insured 
                      credit union is not appropriate, the Board may 
                      prescribe an accounting principle for application 
                      to the credit union that is no less stringent than 
                      generally accepted accounting principles.
                          ``(iii) De minimus exception.--This 
                      subparagraph shall not apply to any insured credit 
                      union, the total assets of which are less than 
                      $10,000,000, unless prescribed by the Board or an 
                      appropriate State credit union supervisor.
                    ``(D) Large credit union audit requirement.--
                          ``(i) In general.--Each insured credit union 
                      having total assets of $500,000,000 or more shall 
                      have an annual independent audit of the financial 
                      statements of the credit union, performed in 
                      accordance with generally accepted auditing 
                      standards by an independent certified public 
                      accountant or public accountant licensed by the 
                      appropriate State or jurisdiction to perform those 
                      services.
                          ``(ii) Voluntary audits.--If a Federal credit 
                      union that is not required to conduct an audit 
                      under clause (i), and that has total assets of 
                      more than $10,000,000 conducts such an audit for 
                      any purpose, using an independent auditor who is 
                      compensated for his or

[[Page 112 STAT. 919]]

                      her audit services with respect to that audit, the 
                      audit shall be performed consistent with the 
                      accountancy laws of the appropriate State or 
                      jurisdiction, including licensing requirements.''.

    (b) Technical and Conforming Amendment.--Section 202(a)(6)(B) of the 
Federal Credit Union Act (12 U.S.C. 1782(a)(6)(B)) is amended by 
striking ``subparagraph (A)'' and inserting ``subparagraph (A) or (D)''.

SEC. 202. CONVERSION OF INSURED CREDIT UNIONS.

    Section 205(b) of the Federal Credit Union Act (12 U.S.C. 1785(b)) 
is amended--
            (1) in paragraph (1), by striking ``Except with the prior 
        written approval of the Board, no insured credit union shall'' 
        and inserting ``Except as provided in paragraph (2), no insured 
        credit union shall, without the prior approval of the Board'';
            (2) by redesignating paragraph (2) as paragraph (3); and
            (3) by inserting after paragraph (1) the following new 
        paragraph:
            ``(2) Conversion of insured credit unions to mutual savings 
        banks.--
                    ``(A) In general.--Notwithstanding paragraph (1), an 
                insured credit union may convert to a mutual savings 
                bank or savings association (if the savings association 
                is in mutual form), as those terms are defined in 
                section 3 of the Federal Deposit Insurance Act, without 
                the prior approval of the Board, subject to the 
                requirements and procedures set forth in the laws and 
                regulations governing mutual savings banks and savings 
                associations.
                    ``(B) Conversion proposal.--A proposal for a 
                conversion described in subparagraph (A) shall first be 
                approved, and a date set for a vote thereon by the 
                members (either at a meeting to be held on that date or 
                by written ballot to be filed on or before that date), 
                by a majority of the directors of the insured credit 
                union. Approval of the proposal for conversion shall be 
                by the affirmative vote of a majority of the members of 
                the insured credit union who vote on the proposal.
                    ``(C) Notice of proposal to members.--An insured 
                credit union that proposes to convert to a mutual 
                savings bank or savings association under subparagraph 
                (A) shall submit notice to each of its members who is 
                eligible to vote on the matter of its intent to 
                convert--
                          ``(i) 90 days before the date of the member 
                      vote on the conversion;
                          ``(ii) 60 days before the date of the member 
                      vote on the conversion; and
                          ``(iii) 30 days before the date of the member 
                      vote on the conversion.
                    ``(D) Notice of proposal to board.--The Board may 
                require an insured credit union that proposes to convert 
                to a mutual savings bank or savings association under 
                subparagraph (A) to submit a notice to the Board of its 
                intent to convert during the 90-day period preceding the 
                date of the completion of the conversion.
                    ``(E) Inapplicability of act upon conversion.--Upon 
                completion of a conversion described in subparagraph 
                (A),

[[Page 112 STAT. 920]]

                the credit union shall no longer be subject to any of 
                the provisions of this Act.
                    ``(F) Limit on compensation of officials.--
                          ``(i) In general.--No director or senior 
                      management official of an insured credit union may 
                      receive any economic benefit in connection with a 
                      conversion of the credit union as described in 
                      subparagraph (A), other than--
                                    ``(I) director fees; and
                                    ``(II) compensation and other 
                                benefits paid to directors or senior 
                                management officials of the 
                                converted institution in the ordinary 
                                course of business.
                          ``(ii) Senior management official.--For 
                      purposes of this subparagraph, the term `senior 
                      management official' means a chief executive 
                      officer, an assistant chief executive officer, a 
                      chief financial officer, and any other senior 
                      executive officer (as defined by the appropriate 
                      Federal banking agency pursuant to section 32 (f ) 
                      of the Federal Deposit Insurance Act).
                    ``(G) Consistent rules.--
                          ``(i) <<NOTE: Deadline.>>  In general.--Not 
                      later than 6 months after the date of enactment of 
                      the Credit Union Membership Access Act, the 
                      Administration shall promulgate final rules 
                      applicable to charter conversions described in 
                      this paragraph that are consistent with rules 
                      promulgated by other financial regulators, 
                      including the Office of Thrift Supervision and the 
                      Office of the Comptroller of the Currency. The 
                      rules required by this clause shall provide that 
                      charter conversion by an insured credit union 
                      shall be subject to regulation that is no more or 
                      less restrictive than that applicable to charter 
                      conversions by other financial institutions.
                          ``(ii) Oversight of member vote.--The member 
                      vote concerning charter conversion under this 
                      paragraph shall be administered by the 
                      Administration, and shall be verified by the 
                      Federal or State regulatory agency that would have 
                      jurisdiction over the institution after the 
                      conversion. If either the Administration or that 
                      regulatory agency disapproves of the methods by 
                      which the member vote was taken or procedures 
                      applicable to the member vote, the member vote 
                      shall be taken again, as directed by the 
                      Administration or the agency.''.

SEC. 203. LIMITATION ON MEMBER BUSINESS LOANS.

    (a) In General.--The Federal Credit Union Act (12 U.S.C. 1701 et 
seq.) is amended by inserting after section 107 the following new 
section:

``SEC. 107A. LIMITATION ON MEMBER BUSINESS LOANS. <<NOTE: 12 USC 
            1757a.>> 

    ``(a) In General.--On and after the date of enactment of this 
section, no insured credit union may make any member business loan that 
would result in a total amount of such loans outstanding at that credit 
union at any one time equal to more than the lesser of--
            ``(1) 1.75 times the actual net worth of the credit union; 
        or

[[Page 112 STAT. 921]]

            ``(2) 1.75 times the minimum net worth required under 
        section 216(c)(1)(A) for a credit union to be well capitalized.

    ``(b) Exceptions.--Subsection (a) does not apply in the 
case of--
            ``(1) an insured credit union chartered for the purpose of 
        making, or that has a history of primarily making, member 
        business loans to its members, as determined by the Board; or
            ``(2) an insured credit union that--
                    ``(A) serves predominantly low-income members, as 
                defined by the Board; or
                    ``(B) is a community development financial 
                institution, as defined in section 103 of the Community 
                Development Banking and Financial Institutions Act of 
                1994.

    ``(c) Definitions.--As used in this section--
            ``(1) the term `member business loan'--
                    ``(A) means any loan, line of credit, or letter of 
                credit, the proceeds of which will be used for a 
                commercial, corporate or other business investment 
                property or venture, or agricultural purpose; and
                    ``(B) does not include an extension of credit--
                          ``(i) that is fully secured by a lien on a 1- 
                      to 4-family dwelling that is the primary residence 
                      of a member;
                          ``(ii) that is fully secured by shares in the 
                      credit union making the extension of credit or 
                      deposits in other financial institutions;
                          ``(iii) that is described in subparagraph (A), 
                      if it was made to a borrower or an associated 
                      member that has a total of all such extensions of 
                      credit in an amount equal to less than $50,000;
                          ``(iv) the repayment of which is fully insured 
                      or fully guaranteed by, or where there is an 
                      advance commitment to purchase in full by, any 
                      agency of the Federal Government or of a State, or 
                      any political subdivision thereof; or
                          ``(v) that is granted by a corporate credit 
                      union (as that term is defined by the Board) to 
                      another credit union.
            ``(2) the term `net worth'--
                    ``(A) with respect to any insured credit union, 
                means the credit union's retained earnings balance, as 
                determined under generally accepted accounting 
                principles; and
                    ``(B) with respect to a credit union that serves 
                predominantly low-income members, as defined by the 
                Board, includes secondary capital accounts that are--
                          ``(i) uninsured; and
                          ``(ii) subordinate to all other claims against 
                      the credit union, including the claims of 
                      creditors, shareholders, and the Fund; and
            ``(3) the term `associated member' means any member 
        having a shared ownership, investment, or other pecuniary 
        interest in a business or commercial endeavor with the borrower.

    ``(d) <<NOTE: Deadline.>>  Effect on Existing Loans.--An insured 
credit union that has, on the date of enactment of this section, a total 
amount of outstanding member business loans that exceeds the amount

[[Page 112 STAT. 922]]

permitted under subsection (a) shall, not later than 3 years after that 
date of enactment, reduce the total amount of outstanding member 
business loans to an amount that is not greater than the amount 
permitted under subsection (a).

    ``(e) Consultation and Cooperation With State Credit Union 
Supervisors.--In implementing this section, the Board shall consult and 
seek to work cooperatively with State officials having jurisdiction over 
State-chartered insured credit unions.''.
    (b) Study and Report.-- <<NOTE: 12 USC 1757a note.>> 
            (1) Study.--The Secretary shall conduct a study of member 
        business lending by insured credit unions, including--
                    (A) an examination of member business lending over 
                $500,000 and under $50,000, and a breakdown of the types 
                and sizes of businesses that receive member business 
                loans;
                    (B) a review of the effectiveness and enforcement of 
                regulations applicable to insured credit union member 
                business lending;
                    (C) whether member business lending by insured 
                credit unions could affect the safety and soundness of 
                insured credit unions or the National Credit Union Share 
                Insurance Fund;
                    (D) the extent to which member business lending by 
                insured credit unions helps to meet financial services 
                needs of low- and moderate-income individuals within the 
                field of membership of insured credit unions;
                    (E) whether insured credit unions that engage in 
                member business lending have a competitive advantage 
                over other insured depository institutions, and if any 
                such advantage could affect the viability and 
                profitability of such other insured depository 
                institutions; and
                    (F) the effect of enactment of this Act on the 
                number of insured credit unions involved in member 
                business lending and the overall amount of commercial 
                lending.
            (2) NCUA cooperation.--The National Credit Union 
        Administration shall, upon request, provide such information as 
        the Secretary may require to conduct the study required under 
        paragraph (1).
            (3) <<NOTE: Deadline.>>  Report.--Not later than 12 months 
        after the date of enactment of this Act, the Secretary shall 
        submit a report to the Congress on the results of the study 
        conducted under paragraph (1).

SEC. 204. NATIONAL CREDIT UNION ADMINISTRATION BOARD 
            MEMBERSHIP.

    Section 102(b) of the Federal Credit Union Act (12 U.S.C. 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) <<NOTE: President.>>  Experience in financial 
                services.--In considering appointments to the Board 
                under paragraph (1), the President shall give 
                consideration to individuals who, by virtue of their 
                education, training, or experience relating to a broad 
                range of financial services, financial services

[[Page 112 STAT. 923]]

                regulation, or financial policy, are especially 
                qualified to serve on the Board.
                    ``(B) Limit on appointment of credit union 
                officers.--Not more than one member of the Board may be 
                appointed to the Board from among individuals who, at 
                the time of the appointment, are, or have recently been, 
                involved with any insured credit union as a committee 
                member, director, officer, employee, or other 
                institution-affiliated party.''.

SEC. 205. <<NOTE: 12 USC 1759 note.>>  REPORT AND CONGRESSIONAL REVIEW 
            REQUIREMENT FOR CERTAIN REGULATIONS.

    A regulation prescribed by the Board shall be treated as a major 
rule for purposes of chapter 8 of title 5, United States Code, if the 
regulation defines, or amends the definition of--
            (1) the term ``immediate family or household'' for purposes 
        of section 109(e)(1) of the Federal Credit Union Act (as added 
        by section 101 of this Act); or
            (2) the term ``well-defined local community, neighborhood, 
        or rural district'' for purposes of section 109(g) of the 
        Federal Credit Union Act (as added by section 103 of this Act).

        TITLE III--CAPITALIZATION AND NET WORTH OF CREDIT UNIONS

SEC. 301. PROMPT CORRECTIVE ACTION.

    (a) In General.--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:

``SEC. 216. PROMPT CORRECTIVE ACTION. <<NOTE: 12 USC 1790d.>> 

    ``(a) Resolving Problems To Protect Fund.--
            ``(1) Purpose.--The purpose of this section is to resolve 
        the problems of insured credit unions at the least possible 
        long-term loss to the Fund.
            ``(2) Prompt corrective action required.--The Board shall 
        carry out the purpose of this section by taking prompt 
        corrective action to resolve the problems of insured credit 
        unions.

    ``(b) Regulations Required.--
            ``(1) Insured credit unions.--
                    ``(A) In general.--The Board shall, by regulation, 
                prescribe a system of prompt corrective action for 
                insured credit unions that is--
                          ``(i) consistent with this section; and
                          ``(ii) comparable to section 38 of the Federal 
                      Deposit Insurance Act.
                    ``(B) Cooperative character of credit unions.--The 
                Board shall design the system required under 
                subparagraph (A) to take into account that credit unions 
                are not-for-profit cooperatives that--
                          ``(i) do not issue capital stock;
                          ``(ii) must rely on retained earnings to build 
                      net worth; and
                          ``(iii) have boards of directors that consist 
                      primarily of volunteers.

[[Page 112 STAT. 924]]

            ``(2) New credit unions.--
                    ``(A) In general.--In addition to regulations under 
                paragraph (1), the Board shall, by regulation, prescribe 
                a system of prompt corrective action that shall apply to 
                new credit unions in lieu of this section and the 
                regulations prescribed under paragraph (1).
                    ``(B) Criteria for alternative system.--The Board 
                shall design the system prescribed under subparagraph 
                (A)--
                          ``(i) to carry out the purpose of this 
                      section;
                          ``(ii) to recognize that credit unions (as 
                      cooperatives that do not issue capital stock) 
                      initially have no net worth, and give new credit 
                      unions reasonable time to accumulate net worth;
                          ``(iii) to create adequate incentives for new 
                      credit unions to become adequately capitalized by 
                      the time that they either--
                                    ``(I) have been in operation for 
                                more than 10 years; or
                                    ``(II) have more than $10,000,000 in 
                                total assets;
                          ``(iv) to impose appropriate restrictions and 
                      requirements on new credit unions that do not make 
                      sufficient progress toward becoming adequately 
                      capitalized; and
                          ``(v) to prevent evasion of the purpose of 
                      this 
                      section.

    ``(c) Net Worth Categories.--
            ``(1) In general.--For purposes of this section the 
        following definitions shall apply:
                    ``(A) Well capitalized.--An insured credit union is 
                `well capitalized' if--
                          ``(i) it has a net worth ratio of not less 
                      than 7 percent; and
                          ``(ii) it meets any applicable risk-based net 
                      worth requirement under subsection (d).
                    ``(B) Adequately capitalized.--An insured credit 
                union is `adequately capitalized' if--
                          ``(i) it has a net worth ratio of not less 
                      than 6 percent; and
                          ``(ii) it meets any applicable risk-based net 
                      worth requirement under subsection (d).
                    ``(C) Undercapitalized.--An insured credit union is 
                `undercapitalized' if--
                          ``(i) it has a net worth ratio of less than 6 
                      percent; or
                          ``(ii) it fails to meet any applicable risk-
                      based net worth requirement under subsection (d).
                    ``(D) Significantly undercapitalized.--An insured 
                credit union is `significantly undercapitalized'--
                          ``(i) if it has a net worth ratio of less than 
                      4 percent; or
                          ``(ii) if--
                                    ``(I) it has a net worth ratio of 
                                less than 5 percent; and
                                    ``(II) it--

[[Page 112 STAT. 925]]

                                            ``(aa) fails to submit an 
                                        acceptable net worth restoration 
                                        plan within the time allowed 
                                        under subsection (f ); or
                                            ``(bb) materially fails to 
                                        implement a net worth 
                                        restoration plan accepted by the 
                                        Board.
                    ``(E) Critically undercapitalized.--An insured 
                credit union is `critically undercapitalized' if it has 
                a net worth ratio of less than 2 percent (or such higher 
                net worth ratio, not to exceed 3 percent, as the Board 
                may specify by regulation).
            ``(2) Adjusting net worth levels.--
                    ``(A) In general.--If, for purposes of section 38(c) 
                of the Federal Deposit Insurance Act, the Federal 
                banking agencies increase or decrease the required 
                minimum level for the leverage limit (as those terms are 
                used in section 38), the Board may, by regulation, and 
                subject to subparagraph (B) of this paragraph, 
                correspondingly increase or decrease 1 or more of the 
                net worth ratios specified in subparagraphs (A) through 
                (D) of paragraph (1) of this subsection in an amount 
                that is equal to 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).
                    ``(B) Determinations required.--The Board may 
                increase or decrease net worth ratios under subparagraph 
                (A) only if the Board--
                          ``(i) determines, in consultation with the 
                      Federal banking agencies, that the reason for the 
                      increase or decrease in the required minimum level 
                      for the leverage limit also justifies the 
                      adjustment in net worth ratios; and
                          ``(ii) determines that the resulting net worth 
                      ratios are sufficient to carry out the purpose of 
                      this section.
                    ``(C) Transition period required.--If the Board 
                increases any net worth ratio under this paragraph, the 
                Board shall give insured credit unions a reasonable 
                period of time to meet the increased ratio.

    ``(d) Risk-Based Net Worth Requirement for Complex Credit Unions.--
            ``(1) In general.--The regulations required under subsection 
        (b)(1) shall include a risk-based net worth requirement for 
        insured credit unions that are complex, as defined by the Board 
        based on the portfolios of assets and liabilities of credit 
        unions.
            ``(2) Standard.--The Board shall design the risk-based net 
        worth requirement to take account of any material risks against 
        which the net worth ratio required for an insured credit union 
        to be adequately capitalized may not provide adequate 
        protection.

    ``(e) Earnings-Retention Requirement Applicable to Credit Unions 
That Are Not Well Capitalized.--
            ``(1) In general.--An insured credit union that is not well 
        capitalized shall annually set aside as net worth an amount 
        equal to not less than 0.4 percent of its total assets.
            ``(2) Board's authority to decrease earnings-retention 
        requirement.--

[[Page 112 STAT. 926]]

                    ``(A) In general.--The Board may, by order, decrease 
                the 0.4 percent requirement in paragraph (1) with 
                respect to a credit union to the extent that the Board 
                determines that the decrease--
                          ``(i) is necessary to avoid a significant 
                      redemption of shares; and
                          ``(ii) would further the purpose of this 
                      section.
                    ``(B) Periodic review required.--The Board shall 
                periodically review any order issued under subparagraph 
                (A).

    ``(f ) Net Worth Restoration Plan Required.--
            ``(1) In general.--Each insured credit union that is 
        undercapitalized shall submit an acceptable net worth 
        restoration plan to the Board within the time allowed under this 
        subsection.
            ``(2) Assistance to small credit unions.--The Board (or the 
        staff of the Board) shall, upon timely request by an insured 
        credit union with total assets of less than $10,000,000, and 
        subject to such regulations or guidelines as the Board may 
        prescribe, assist that credit union in preparing a net worth 
        restoration plan.
            ``(3) <<NOTE: Regulations.>>  Deadlines for submission and 
        review of plans.--The Board shall, by regulation, establish 
        deadlines for submission of net worth restoration plans under 
        this subsection that--
                    ``(A) provide insured credit unions with reasonable 
                time to submit net worth restoration plans; and
                    ``(B) require the Board to act on net worth 
                restoration plans expeditiously.
            ``(4) Failure to submit acceptable plan within time 
        allowed.--
                    ``(A) <<NOTE: Notification.>>  Failure to submit any 
                plan.--If an insured credit union fails to submit a net 
                worth restoration plan within the time allowed under 
                paragraph (3), the Board shall--
                          ``(i) promptly notify the credit union of that 
                      failure; and
                          ``(ii) give the credit union a reasonable 
                      opportunity to submit a net worth restoration 
                      plan.
                    ``(B) Submission of unacceptable plan.--If an 
                insured credit union submits a net worth restoration 
                plan within the time allowed under paragraph (3), and 
                the Board determines that the plan is not acceptable, 
                the Board shall--
                          ``(i) promptly notify the credit union of why 
                      the plan is not acceptable; and
                          ``(ii) give the credit union a reasonable 
                      opportunity to submit a revised plan.
            ``(5) Accepting plan.--The Board may accept a net worth 
        restoration plan only if the Board determines that the plan is 
        based on realistic assumptions and is likely to succeed in 
        restoring the net worth of the credit union.

    ``(g) Restrictions on Undercapitalized Credit Unions.--
            ``(1) Restriction on asset growth.--An insured credit union 
        that is undercapitalized shall not generally permit its average 
        total assets to increase, unless--
                    ``(A) the Board has accepted the net worth 
                restoration plan of the credit union for that action;

[[Page 112 STAT. 927]]

                    ``(B) any increase in total assets is consistent 
                with the net worth restoration plan; and
                    ``(C) the net worth ratio of the credit union 
                increases at a rate that is consistent with the net 
                worth restoration plan.
            ``(2) Restriction on member business loans.--Notwithstanding 
        section 107A(a), an insured credit union that is 
        undercapitalized may not make any increase in the total amount 
        of member business loans (as defined in section 107A(c)) 
        outstanding at that credit union at any one time, until such 
        time as the credit union becomes adequately capitalized.

    ``(h) More Stringent Treatment Based on Other Supervisory 
Criteria.--With respect to the exercise of authority by the Board under 
regulations comparable to section 38(g) of the Federal Deposit Insurance 
Act--
            ``(1) the Board may not reclassify an insured credit union 
        into a lower net worth category, 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
            ``(2) the Board may not delegate its authority to reclassify 
        an insured credit union into a lower net worth category or to 
        treat an insured credit union as if it were in a lower net worth 
        category.

    ``(i) Action Required Regarding Critically Under-
capitalized   Credit   Unions.--
            ``(1) <<NOTE: Deadline.>>  In general.--The Board shall, not 
        later than 90 days after the date on which an insured credit 
        union becomes 
        critically undercapitalized--
                    ``(A) appoint a conservator or liquidating agent for 
                the credit union; or
                    ``(B) take such other action as the Board determines 
                would better achieve the purpose of this section, after 
                documenting why the action would better achieve that 
                purpose.
            ``(2) <<NOTE: Termination date.>>  Periodic redeterminations 
        required.--Any determination by the Board under paragraph (1)(B) 
        to take any action with respect to an insured credit union in 
        lieu of appointing a conservator or liquidating agent shall 
        cease to be effective not later than the end of the 180-day 
        period beginning on the date on which the determination is made, 
        and a conservator or liquidating agent shall be appointed for 
        that credit union under paragraph (1)(A), unless the Board makes 
        a new determination under paragraph (1)(B) before the end of the 
        effective period of the prior determination.
            ``(3) Appointment of liquidating agent required if other 
        action fails to restore net worth.--
                    ``(A) In general.--Notwithstanding paragraphs (1) 
                and (2), the Board shall appoint a liquidating agent for 
                an insured credit union if the credit union is 
                critically undercapitalized on average during the 
                calendar quarter beginning 18 months after the date on 
                which the credit union became critically 
                undercapitalized.
                    ``(B) Exception.--Notwithstanding subparagraph (A), 
                the Board may continue to take such other action as the 
                Board determines to be appropriate in lieu of 
                appointment of a liquidating agent if--
                          ``(i) the Board determines that--

[[Page 112 STAT. 928]]

                                    ``(I) the insured credit union has 
                                been in substantial compliance with an 
                                approved net worth restoration plan that 
                                requires consistent improvement in the 
                                net worth of the credit union since the 
                                date of the approval of the plan; and
                                    ``(II) the insured credit union has 
                                positive net income or has an upward 
                                trend in earnings that the Board 
                                projects as sustainable; and
                          ``(ii) the Board certifies that the credit 
                      union is viable and not expected to fail.
            ``(4) Nondelegation.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the Board may not delegate the 
                authority of the Board under this subsection.
                    ``(B) Exception.--The Board may delegate the 
                authority of the Board under this subsection with 
                respect to an insured credit union that has less than 
                $5,000,000 in total assets, if the Board permits the 
                credit union to appeal any adverse action to the Board.

    ``( j) Review Required When Fund Incurs Material Loss.--For purposes 
of determining whether the Fund has incurred a material loss with 
respect to an insured credit union (such that the inspector general of 
the Board must make a report), a loss is material if it exceeds the sum 
of--
            ``(1) $10,000,000; and
            ``(2) an amount equal to 10 percent of the total assets of 
        the credit union at the time at which the Board initiated 
        assistance under section 208 or was appointed liquidating agent.

    ``(k) <<NOTE: Regulations.>>  Appeals Process.--Material supervisory 
determinations, including decisions to require prompt corrective action, 
made pursuant to this section by Administration officials other than the 
Board may be appealed to the Board pursuant to the independent appellate 
process required by section 309 of the Riegle Community Development and 
Regulatory Improvement Act of 1994 (or, if the Board so specifies, 
pursuant to separate procedures prescribed by regulation).

    ``(l) Consultation and Cooperation With State Credit Union 
Supervisors.--
            ``(1) In general.--In implementing this section, the Board 
        shall consult and seek to work cooperatively with State 
        officials having jurisdiction over State-chartered insured 
        credit unions.
            ``(2) Evaluating net worth restoration plan.--In evaluating 
        any net worth restoration plan submitted by a State-chartered 
        insured credit union, the Board shall seek the views of the 
        State official having jurisdiction over the credit union.
            ``(3) Deciding whether to appoint conservator or 
        liquidating agent.--With respect to any decision by the Board on 
        whether to appoint a conservator or liquidating agent for a 
        State-chartered insured credit union--
                    ``(A) the Board shall--
                          ``(i) seek the views of the State official 
                      having jurisdiction over the credit union; and
                          ``(ii) give that official an opportunity to 
                      take the proposed action;

[[Page 112 STAT. 929]]

                    ``(B) the Board shall, upon timely request of an 
                official referred to in subparagraph (A), promptly 
                provide the official with--
                          ``(i) a written statement of the reasons for 
                      the proposed action; and
                          ``(ii) reasonable time to respond to that 
                      statement;
                    ``(C) if the official referred to in subparagraph 
                (A) makes a timely written response that disagrees with 
                the proposed action and gives reasons for that 
                disagreement, the Board shall not appoint a conservator 
                or liquidating agent for the credit union, unless the 
                Board, after considering the views of the official, has 
                determined that--
                          ``(i) the Fund faces a significant risk of 
                      loss with respect to the credit union if a 
                      conservator or liquidating agent is not appointed; 
                      and
                          ``(ii) the appointment is necessary to 
                      reduce--
                                    ``(I) the risk that the Fund would 
                                incur a loss with respect to the credit 
                                union; or
                                    (II) any loss that the Fund is 
                                expected to incur with respect to the 
                                credit union; and
                    ``(D) the Board may not delegate any determination 
                under subparagraph (C).

    ``(m) Corporate Credit Unions Exempted.--This section does not apply 
to any insured credit union that--
            ``(1) operates primarily for the purpose of serving credit 
        unions; and
            ``(2) permits individuals to be members of the credit union 
        only to the extent that applicable law requires that such 
        persons own shares.

    ``(n) Other Authority Not Affected.--This section does not limit any 
authority of the Board or a State to take action in addition to (but not 
in derogation of ) that is required under this section.
    ``(o) Definitions.--For purposes of this section the following 
definitions shall apply:
            ``(1) Federal banking agency.--The term `Federal 
        banking agency ' has the same meaning as in section 3 of the 
        Federal Deposit Insurance Act.
            ``(2) Net worth.--The term `net worth'--
                    ``(A) with respect to any insured credit union, 
                means retained earnings balance of the credit union, as 
                determined under generally accepted accounting 
                principles; and
                    ``(B) with respect to a low-income credit union, 
                includes secondary capital accounts that are--
                          ``(i) uninsured; and
                          ``(ii) subordinate to all other claims against 
                      the credit union, including the claims of 
                      creditors, shareholders, and the Fund.
            ``(3) Net worth ratio.--The term `net worth ratio' means, 
        with respect to a credit union, the ratio of the net worth of 
        the credit union to the total assets of the credit union.
            ``(4) New credit union.--The term `new credit union' means 
        an insured credit union that--
                    ``(A) has been in operation for less than 10 years; 
                and
                    ``(B) has not more than $10,000,000 in total 
                assets.''.

[[Page 112 STAT. 930]]

    (b) Conservatorship and Liquidation Amendments To Facilitate Prompt 
Corrective Action.--
            (1) Conservatorship.--Section 206(h) of the Federal Credit 
        Union Act (12 U.S.C. 1786(h)) is amended--
                    (A) in paragraph (1)--
                          (i) in subparagraph (D), by striking ``or'' at 
                      the end;
                          (ii) in subparagraph (E), by striking the 
                      period at the end and inserting a semicolon; and
                          (iii) by adding at the end the following new 
                      subparagraphs:
            ``(F) the credit union is significantly undercapitalized, as 
        defined in section 216, and has no reasonable prospect of 
        becoming adequately capitalized, as defined in section 216; or
            ``(G) the credit union is critically undercapitalized, as 
        defined in section 216.''; and
                    (B) in paragraph (2)--
                          (i) in subparagraph (A), by striking ``In the 
                      case'' and inserting ``Except as provided in 
                      subparagraph (C), in the case''; and
                          (ii) by adding at the end the following new 
                      subparagraph:
            ``(C) In the case of a State-chartered insured credit union, 
        the authority conferred by subparagraphs (F) and (G) of 
        paragraph (1) may not be exercised unless the Board has complied 
        with section 216(l).''.
            (2) Liquidation.--Section 207(a) of the Federal Credit Union 
        Act (12 U.S.C. 1787(a)) is amended--
                    (A) in paragraph (1)(A), by striking ``himself '' 
                and inserting ``itself ''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(3) Liquidation to facilitate prompt corrective action.--
        The Board may close any credit union for liquidation, and 
        appoint itself or another (including, in the case of a State-
        chartered insured credit union, the State official having 
        jurisdiction over the credit union) as liquidating agent of that 
        credit union, if--
                    ``(A) the Board determines that--
                          ``(i) the credit union is significantly 
                      undercapitalized, as defined in section 216, and 
                      has no reasonable prospect of becoming adequately 
                      capitalized, as defined in section 216; or
                          ``(ii) the credit union is critically 
                      undercapitalized, as defined in section 216; and
                    ``(B) in the case of a State-chartered insured 
                credit union, the Board has complied with section 
                216(l).''.

    (c) <<NOTE: 12 USC 1790d note.>>  Consultation Required.--In 
developing regulations to implement section 216 of the Federal Credit 
Union Act (as added by subsection (a) of this section), the Board shall 
consult with the Secretary, the Federal banking agencies, and the State 
officials having jurisdiction over State-chartered insured credit 
unions.

    (d) Deadlines for Regulations.-- <<NOTE: 12 USC 1790d note.>> 
            (1) In general.--Except as provided in paragraph (2), the 
        Board shall--
                    (A) <<NOTE: Federal Register, publication.>>  
                publish in the Federal Register proposed regulations to 
                implement section 216 of the Federal Credit Union Act 
                (as added by subsection (a) of this section) not later

[[Page 112 STAT. 931]]

                than 270 days after the date of enactment of this Act; 
                and
                    (B) promulgate final regulations to implement 
                section 216 not later than 18 months after the date of 
                enactment of this Act.
            (2) Risk-based net worth requirement.--
                    (A) <<NOTE: Federal Register, publication.>>  
                Advance notice of proposed rulemaking.--Not later than 
                180 days after the date of enactment of this Act, the 
                Board shall publish in the Federal Register an advance 
                notice of proposed rulemaking, as required by section 
                216(d) of the Federal Credit Union Act, as added by this 
                Act.
                    (B) Final regulations.--The Board shall promulgate 
                final regulations, as required by section 216(d) not 
                later than 2 years after the date of enactment of this 
                Act.

    (e) Effective Date.-- <<NOTE: 12 USC 1790d note.>> 
            (1) In general.--Except as provided in paragraph (2), 
        section 216 of the Federal Credit Union Act (as added by this 
        section) shall become effective 2 years after the date of 
        enactment of this Act.
            (2) Risk-based net worth requirement.--Section 216(d) of the 
        Federal Credit Union Act (as added by this section) shall become 
        effective on January 1, 2001.

     (f ) <<NOTE: 12 USC 1790d note.>>  Report to Congress Required.--
When the Board publishes proposed regulations pursuant to subsection 
(d)(1)(A), or promulgates final regulations pursuant to subsection 
(d)(1)(B), the Board shall submit to the Congress a report that 
specifically explains--
            (1) how the regulations carry out section 216(b)(1)(B) of 
        the Federal Credit Union Act (as added by this section), 
        relating to the cooperative character of credit unions; and
            (2) how the regulations differ from section 38 of the 
        Federal Deposit Insurance Act, and the reasons for those 
        differences.

    (g) Conforming Amendments.--
            (1) Amendments relating to enforcement of prompt corrective 
        action.--Section 206(k) of the Federal Credit Union Act (12 
        U.S.C. 1786(k)) is amended--
                    (A) in paragraph (1), by inserting ``or section 
                216'' after ``this section'' each place it appears; and
                    (B) in paragraph (2)(A)(ii), by inserting ``, or any 
                final order under section 216'' before the semicolon.
            (2) Conforming amendment regarding appointment of state 
        credit union supervisor as conservator.--Section 206(h)(1) of 
        the Federal Credit Union Act (12 U.S.C. 1786(h)(1)) is amended 
        by inserting ``or another (including, in the case of a State-
        chartered insured credit union, the State official having 
        jurisdiction over the credit union)'' after ``appoint itself ''.
            (3) Amendment repealing superseded provision.--
        Section 116 of the Federal Credit Union Act (12 U.S.C. 1762) is 
        repealed.

SEC. 302. NATIONAL CREDIT UNION SHARE INSURANCE FUND EQUITY RATIO, 
            AVAILABLE ASSETS RATIO, AND STANDBY 
            PREMIUM CHARGE.

    (a) In General.--Section 202 of the Federal Credit Union Act (12 
U.S.C. 1782) is amended--
            (1) by striking subsection (b) and inserting the following:

[[Page 112 STAT. 932]]

    ``(b) Certified Statement.--
            ``(1) Statement required.--
                    ``(A) In general.--For each calendar year, in the 
                case of an insured credit union with total assets of not 
                more than $50,000,000, and for each semi-annual period 
                in the case of an insured credit union with total assets 
                of $50,000,000 or more, an insured credit union shall 
                file with the Board, at such time as the Board 
                prescribes, a certified statement showing the total 
                amount of insured shares in the credit union at the 
                close of the relevant period and both the amount of its 
                deposit or adjustment of deposit and the amount of the 
                insurance charge due to the Fund for that period, both 
                as computed under subsection (c).
                    ``(B) Exception for newly insured credit union.--
                Subparagraph (A) shall not apply with respect to a 
                credit union that became insured during the reporting 
                period.
            ``(2) Form.--The certified statements required to be filed 
        with the Board pursuant to this subsection shall be in such form 
        and shall set forth such supporting information as the Board 
        shall require.
            ``(3) Certification.--The president of the credit union or 
        any officer designated by the board of directors shall certify, 
        with respect to each statement required to be filed with the 
        Board pursuant to this subsection, that to the best of his or 
        her knowledge and belief the statement is true, correct, 
        complete, and in accordance with this title and the regulations 
        issued under this title.'';
            (2) in subsection (c)(1)(A), by striking clause (iii) and 
        inserting the following:
                          ``(iii) Periodic adjustment.--The amount of 
                      each insured credit union's deposit shall be 
                      adjusted as follows, in accordance with procedures 
                      determined by the Board, to reflect changes in the 
                      credit union's insured shares:
                                    ``(I) annually, in the case of an 
                                insured credit union with total assets 
                                of not more than $50,000,000; and
                                    ``(II) semi-annually, in the case of 
                                an insured credit union with total 
                                assets of $50,000,000 or more.'';
            (3) in subsection (c), by striking paragraphs (2) and (3) 
        and inserting the following:
            ``(2) Insurance premium charges.--
                    ``(A) In general.--Each insured credit union shall, 
                at such times as the Board prescribes (but not more than 
                twice in any calendar year), pay to the Fund a premium 
                charge for insurance in an amount stated as a percentage 
                of insured shares (which shall be the same for all 
                insured credit unions).
                    ``(B) Relation of premium charge to equity ratio of 
                fund.--The Board may assess a premium charge only if--
                          ``(i) the Fund's equity ratio is less than 1.3 
                      percent; and

[[Page 112 STAT. 933]]

                          ``(ii) the premium charge does not exceed the 
                      amount necessary to restore the equity ratio to 
                      1.3 percent.
                    ``(C) Premium charge required if equity ratio falls 
                below 1.2 percent.--If the Fund's equity ratio is less 
                than 1.2 percent, the Board shall, subject to 
                subparagraph (B), assess a premium charge in such an 
                amount as the Board determines to be necessary to 
                restore the equity ratio to, and maintain that ratio at, 
                1.2 percent.
            ``(3) Distributions from fund required.--
                    ``(A) In general.--The Board shall effect a pro rata 
                distribution to insured credit unions after each 
                calendar year if, as of the end of that calendar year--
                          ``(i) any loans to the Fund from the Federal 
                      Government, and any interest on those loans, have 
                      been repaid;
                          ``(ii) the Fund's equity ratio exceeds the 
                      normal operating level; and
                          ``(iii) the Fund's available assets ratio 
                      exceeds 1.0 percent.
                    ``(B) Amount of distribution.--The Board shall 
                distribute under subparagraph (A) the maximum possible 
                amount that--
                          ``(i) does not reduce the Fund's equity ratio 
                      below the normal operating level; and
                          ``(ii) does not reduce the Fund's available 
                      assets ratio below 1.0 percent.
                    ``(C) Calculation based on certified statements.--In 
                calculating the Fund's equity ratio and available assets 
                ratio for purposes of this paragraph, the Board shall 
                determine the aggregate amount of the insured shares in 
                all insured credit unions from insured credit unions 
                certified statements under subsection (b) for the final 
                reporting period of the calendar year referred to in 
                subparagraph (A).'';
            (4) in subsection (c), by adding at the end the following 
        new paragraph:
            ``(4) Timeliness and accuracy of data.--In calculating the 
        available assets ratio and equity ratio of the Fund, the Board 
        shall use the most current and accurate data reasonably 
        available.''; and
            (5) by striking subsection (h) and inserting the following:

    ``(h) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Available assets ratio.--The term `available assets 
        ratio', when applied to the Fund, means the ratio of--
                    ``(A) the amount determined by subtracting--
                          ``(i) direct liabilities of the Fund and 
                      contingent liabilities for which no provision for 
                      losses has been made, from
                          ``(ii) the sum of cash and the market value of 
                      unencumbered investments authorized under section 
                      203(c), to
                    ``(B) the aggregate amount of the insured shares in 
                all insured credit unions.
            ``(2) Equity ratio.--The term `equity ratio', when applied 
        to the Fund, means the ratio of--

[[Page 112 STAT. 934]]

                    ``(A) the amount of Fund capitalization, including 
                insured credit unions' 1 percent capitalization deposits 
                and the retained earnings balance of the Fund (net of 
                direct liabilities of the Fund and contingent 
                liabilities for which no provision for losses has been 
                made); to
                    ``(B) the aggregate amount of the insured shares in 
                all insured credit unions.
            ``(3) Insured shares.--The term `insured shares', when 
        applied to this section, includes share, share draft, share 
        certificate, and other similar accounts as determined by the 
        Board, but does not include amounts exceeding the insured 
        account limit set forth in section 207(c)(1).
            ``(4) Normal operating level.--The term `normal 
        operating level', when applied to the Fund, means an equity 
        ratio specified by the Board, which shall be not less than 1.2 
        percent and not more than 1.5 percent.''.

    (b) <<NOTE: 12 USC 1782 note.>>  Effective Date.--This section and 
the amendments made by this section shall become effective on January 1 
of the first calendar year beginning more than 180 days after the date 
of enactment of this Act.

SEC. 303. ACCESS TO LIQUIDITY.

    Section 204 of the Federal Credit Union Act (12 U.S.C. 1784) is 
amended by adding at the end the following new subsections:
    ``(f ) Access to Liquidity.--The Board shall--
            ``(1) periodically assess the potential liquidity needs of 
        each insured credit union, and the options that the credit union 
        has available for meeting those needs; and
            ``(2) periodically assess the potential liquidity needs of 
        insured credit unions as a group, and the options that insured 
        credit unions have available for meeting those needs.

    ``(g) Sharing Information With Federal Reserve Banks.--The Board 
shall, for the purpose of facilitating insured credit unions' access to 
liquidity, make available to the Federal reserve banks (subject to 
appropriate assurances of confidentiality) information relevant to 
making advances to such credit unions, including the Board's reports of 
examination.''.

                   TITLE IV--MISCELLANEOUS PROVISIONS

SEC. 401. <<NOTE: 12 USC 1752a note.>>  STUDY AND REPORT ON DIFFERING 
            REGULATORY 
            TREATMENT.

    (a) Study.--The Secretary shall conduct a study of--
            (1) the differences between credit unions and other 
        federally insured financial institutions, including regulatory 
        differences with respect to regulations enforced by the Office 
        of Thrift Supervision, the Office of the Comptroller of the 
        Currency, the Federal Deposit Insurance Corporation, and the 
        Administration; and
            (2) the potential effects of the application of Federal 
        laws, including Federal tax laws, on credit unions in the same 
        manner as those laws are applied to other federally insured 
        financial institutions.

[[Page 112 STAT. 935]]

    (b) <<NOTE: Deadline.>>  Report.--Not later than 1 year after the 
date of enactment of this Act, the Secretary shall submit a report to 
the Congress on the results of the study required by subsection (a).

SEC. 402. <<NOTE: Deadline. Reports. 12 USC 4803 note.>>  UPDATE ON 
            REVIEW OF REGULATIONS AND PAPERWORK REDUCTIONS.

    Not later than 1 year after the date of enactment of this Act, the 
Federal banking agencies shall submit a report to the Congress detailing 
their progress in carrying out section 303(a) of the Riegle Community 
Development and Regulatory Improvement Act of 1994, since their 
submission of the report dated September 23, 1996, as required by 
section 303(a)(4) of that Act.

SEC. 403. <<NOTE: Deadline. 12 USC 4801 note.>>  TREASURY REPORT ON 
            REDUCED TAXATION AND VIABILITY OF SMALL BANKS.

    The Secretary shall, not later than 1 year after the date of 
enactment of this Act, submit a report to the Congress containing--
            (1) recommendations for such legislative and administrative 
        action as the Secretary deems appropriate, that would reduce and 
        simplify the tax burden for--
                    (A) insured depository institutions having less than 
                $1,000,000,000 in assets; and
                    (B) banks having total assets of not less than 
                $1,000,000,000 nor more than $10,000,000,000; and
            (2) any other recommendations that the Secretary deems 
        appropriate that would preserve the viability and growth of 
        small banking institutions in the United States.

    Approved August 7, 1998.

LEGISLATIVE HISTORY--H.R. 1151:
---------------------------------------------------------------------------

HOUSE REPORTS: No. 105-472 (Comm. on Banking and Financial Services).
SENATE REPORTS: No. 105-193 (Comm. on Banking, Housing, and Urban 
Affairs).
CONGRESSIONAL RECORD, Vol. 144 (1998):
            Apr. 1, considered and passed House.
            July 24, 27, 28, considered and passed Senate, amended.
            Aug. 4, House concurred in Senate amendment.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 34 (1998):
            Aug. 7, Presidential statement.

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