To ease credit union regulatory burdens, advance credit union efforts to promote economic growth, and modernize credit union capital standards.

Summary: Credit Union Regulatory Improvements Act of 2003 - Amends the Federal Credit Union Act to (FCUA) to authorize real estate lease extensions at minimal charge to credit unions that finance the construction of credit union facilities on Federal land.

Permits a credit union to make investments in securities for its own account.

Increases the maturity date on credit union loans from 12 years to 15 years, or longer as the National Credit Union Administration Board may allow.

Increases from up to one percent to up to three percent of the total paid in and unimpaired capital and surplus the limit on an individual credit union's aggregate investment in credit union service organizations.

Exempts loans to nonprofit religious organizations from restrictions placed upon member business loans relating to credit union net worth or capitalization standards.

Permits a credit union to offer money transfer instruments, including electronic fund transfers, to persons in the field of membership as well as to actual members.

Exempts multiple common-bond credit union mergers and conversions from certain numerical limitations on field of membership.

Requires the Board to prescribe criteria for the voluntary conversion of a common-bond credit union into a community credit union.

Authorizes the board of directors of a Federal credit union to expel a member for just cause, including disruption of credit union operations.

States that reimbursement for lost wages owing to voluntary service on a credit union board of directors shall not be treated as prohibited compensation.

Revises the criteria for increasing the interest rate ceiling on the unpaid loan balance.

Authorizes a credit union to lease specified office space in buildings in underserved areas to any business enterprise if the space is separate and clearly distinct from any office or operation of the credit union.

 Amends credit union conversion voting requirements.

Amends the Clayton Act to exempt from its premerger notification and waiting period requirements mergers among certain insured credit unions.

Amends the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940 to treat credit unions as depository institutions for certain purposes.

Revises the credit union net worth limitations placed upon member business loans to twenty percent of credit union total assets.

Repeals the requirement that an undercapitalized insured credit union become adequately capitalized before it may increase the total amount of member business loans outstanding at any one time. Allows an undercapitalized insured credit union to increase the total amount of such outstanding loans if the Board approves.

Redefines: (1) credit union "net worth ratio"; and (2) "critically undercapitalized" credit union.

Repeals the mandate that regulations for complex credit unions include a risk-based net worth requirement.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Credit Union Regulatory Improvements 
Act of 2003''.

                    TITLE I--REGULATORY FLEXIBILITY

SEC. 102. LEASES OF LAND ON FEDERAL FACILITIES FOR CREDIT UNIONS.

    (a) In General.--Section 124 of the Federal Credit Union Act (12 
U.S.C. 1770) is amended--
            (1) by striking ``Upon application by any credit union'' 
        and inserting ``Notwithstanding any other provision of law, 
        upon application by any credit union'';
            (2) by inserting ``on lands reserved for the use of, and 
        under the exclusive or concurrent jurisdiction of, the United 
        States or'' after ``officer or agency of the United States 
        charged with the allotment of space'';
            (3) by inserting ``lease land or'' after ``such officer or 
        agency may in his or its discretion''; and
            (4) by inserting ``or the facility built on the leased 
        land'' after ``credit union to be served by the allotment of 
        space''.
    (b) Clerical Amendment.--The heading for section 124 is amended by 
inserting ``or federal land'' after ``buildings''.

SEC. 103. INVESTMENTS IN SECURITIES BY FEDERAL CREDIT UNIONS.

    Section 107 of the Federal Credit Union Act (12 U.S.C. 1757) is 
amended--
            (1) in the matter preceding paragraph (1) by striking ``A 
        Federal credit union'' and inserting ``(a) In General.--Any 
        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 in the regulations.
            ``(2) Percentage limitations.--
                    ``(A) Single obligor.--In no event may the total 
                amount of investment securities of any single obligor 
                or maker held by a Federal credit union for the credit 
                union's own account exceed at any time an amount equal 
                to 10 percent of the net worth of the credit union.
                    ``(B) Aggregate investments.--In no event may the 
                aggregate amount of investment securities held by a 
                Federal credit union for the credit union's own account 
                exceed at any time an amount equal to 10 percent of the 
                assets of the credit union.
            ``(3) Investment security defined.--
                    ``(A) In general.--For purposes of this subsection, 
                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.
                    ``(B) Further definition by board.--The Board may 
                further define the term `investment security'.
            ``(4) Investment grade defined.--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 is rated in one of the 4 
        highest rating categories by at least 1 nationally recognized 
        statistical rating organization.
            ``(5) 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.''.

SEC. 104. INCREASE IN GENERAL 12-YEAR LIMITATION OF TERM OF FEDERAL 
              CREDIT UNION LOANS TO 15 YEARS.

    Section 107(a)(5) of the Federal Credit Union Act (12 U.S.C. 
1757(5)) (as so designated by section 103 of this title) is amended--
            (1) in the matter preceding subparagraph (A), by striking 
        ``to make loans, the maturities of which shall not exceed 
        twelve years except as otherwise provided herein'' and 
        inserting ``to make loans, the maturities of which shall not 
        exceed 15 years or any longer maturity as the Board may allow, 
        in regulations, except as otherwise provided in this Act'';
            (2) in subparagraph (A)--
                    (A) by striking clause (ii);
                    (B) by redesignating clauses (iii) through (x) as 
                clauses (ii) through (ix), respectively; and
                    (C) by inserting ``and'' after the semicolon at the 
                end of clause (viii) (as so redesignated).

SEC. 105. INCREASE IN 1 PERCENT INVESTMENT LIMIT IN CREDIT UNION 
              SERVICE ORGANIZATIONS.

    Section 107(a)(7)(I) of the Federal Credit Union Act (12 U.S.C. 
1757(7)(I)) (as so designated by section 103 of this title) is amended 
by striking ``up to 1 per centum of the total paid'' and inserting ``up 
to 3 percent of the total paid''.

SEC. 106. MEMBER BUSINESS LOAN EXCLUSION FOR LOANS TO NONPROFIT 
              RELIGIOUS ORGANIZATIONS.

    Section 107A(a) of the Federal Credit Union Act (12 U.S.C. 
1757a(a)) is amended by inserting ``, excluding loans made to nonprofit 
religious organizations,'' after ``total amount of such loans''.

SEC. 107. CHECK CASHING AND MONEY TRANSFER SERVICES OFFERED WITHIN THE 
              FIELD OF MEMBERSHIP.

    Paragraph (12) of section 107(a) of the Federal Credit Union Act 
(12 U.S.C. 1757(12)) (as so designated by section 103 of this title) is 
amended to read as follows:
            ``(12) in accordance with regulations prescribed by the 
        Board--
                    ``(A) to sell, to persons in the field of 
                membership, negotiable checks (including travelers 
                checks), money orders, and other similar money transfer 
                instruments (including electronic fund transfers); and
                    ``(B) to cash checks and money orders and provide 
                electronic fund transfer services for persons in the 
                field of membership for a fee;''.

SEC. 108. VOLUNTARY MERGERS INVOLVING MULTIPLE COMMON-BOND CREDIT 
              UNIONS.

    Section 109(d)(2) of the Federal Credit Union Act (12 U.S.C. 
1759(d)(2)) is amended--
            (1) by striking ``or'' at the end of clause (ii) of 
        subparagraph (B);
            (2) by striking the period at the end of subparagraph (C) 
        and inserting ``; or''; and
            (3) by adding at the end the following new subparagraph:
                    ``(D) a merger involving any such Federal credit 
                union approved by the Board on or after August 7, 
                1998.''.

SEC. 109. CONVERSIONS INVOLVING COMMON-BOND CREDIT UNIONS.

    Section 109(g) of the Federal Credit Union Act (12 U.S.C. 1759(g)) 
is amended by inserting after paragraph (2) the following new 
paragraph:
            ``(3) Criteria for continued membership of certain member 
        groups in community charter conversions.--In the case of a 
        voluntary conversion of a common-bond credit union described in 
        paragraph (1) or (2) of subsection (b) into a community credit 
        union described in subsection (b)(3), the Board shall 
        prescribe, by regulation, the criteria under which the Board 
        may determine that a member group or other portion of a credit 
        union's existing membership, that is located outside the well-
        defined local community, neighborhood, or rural district that 
        shall constitute the community charter, can be satisfactorily 
        served by the credit union and remain within the community 
        credit union's field of membership.''.

SEC. 110. CREDIT UNION GOVERNANCE.

    (a) Expulsion of Members for Just Cause.--Subsection (b) of section 
118 of the Federal Credit Union Act (12 U.S.C. 1764(b)) is amended to 
read as follows:
    ``(b) Policy and Actions of Boards of Directors of Federal Credit 
Unions.--
            ``(1) Expulsion of members for nonparticipation or for just 
        cause.--The board of directors of a Federal credit union may, 
        by majority vote of a quorum of directors, adopt and enforce a 
        policy with respect to expulsion from membership, by a majority 
        vote of such board of directors, based on just cause, including 
        disruption of credit union operations, or on nonparticipation 
        by a member in the affairs of the credit union.
            ``(2) Written notice of policy to members.--If a policy 
        described in paragraph (1) is adopted, written notice of the 
        policy as adopted and the effective date of such policy shall 
        be provided to--
                    ``(A) each existing member of the credit union not 
                less than 30 days prior to the effective date of such 
                policy; and
                    ``(B) each new member prior to or upon applying for 
                membership.''.
    (b) Term Limits Authorized for Board Members of Federal Credit 
Unions.--Section 111(a) of the Federal Credit Union Act (12 U.S.C. 
1761(a)) is amended by adding at the end the following new sentence: 
``The bylaws of a Federal credit union may limit the number of 
consecutive terms any person may serve on the board of directors of 
such credit union.''.
    (c) Reimbursement for Lost Wages Due to Service on Credit Union 
Board Not Treated as Compensation.--Section 111(c) of the Federal 
Credit Union Act (12 U.S.C. 1761(c)) is amended by inserting ``, 
including lost wages,'' after ``the reimbursement of reasonable 
expenses''.

SEC. 111. PROVIDING THE NATIONAL CREDIT UNION ADMINISTRATION WITH 
              GREATER FLEXIBILITY IN RESPONDING TO MARKET CONDITIONS.

    Section 107(a)(5)(A)(v)(I) of the Federal Credit Union Act (12 
U.S.C. 1757(5)(A)(v)(I)) (as so designated by sections 103 and 104 of 
this title) is amended by striking ``six-month period and that 
prevailing interest rate levels'' and inserting ``6-month period or 
that prevailing interest rate levels''.

SEC. 112. CREDIT UNIONS AUTHORIZED TO LEASE SPACE IN BUILDINGS IN 
              CREDIT UNION OFFICES IN UNDERSERVED AREAS.

    (a) In General.--Section 107(a) of the Federal Credit Union Act (12 
U.S.C. 1757) (as so designated by section 103 of this title) is 
amended--
            (1) by striking ``and'' at the end of paragraph (16);
            (2) by redesignating paragraph (17) as paragraph (18); and
            (3) by inserting after paragraph (16) the following new 
        paragraph:
            ``(17) with regard to any building purchased or constructed 
        by the credit union for a credit union office or credit union 
        operations in an underserved area, to lease office space in 
        such building that is separate and clearly distinct from any 
        office or operation of the credit union to any business 
        enterprise, subject to such regulations the Board may 
        prescribe, taking into account the safety and soundness of the 
        credit union; and''.
    (b) Underserved area 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) Underserved area.--The term `underserved area' means 
        an area consisting of 1 or more census tracts that have--
                    ``(A) a poverty rate of 20 percent or greater, 
                based on the most recent census data; or
                    ``(B) a median family income that does not exceed 
                80 percent of the greater of--
                            ``(i) the median family income for the 
                        metropolitan area in which such census tract or 
                        tracts are located; or
                            ``(ii) the median family income for the 
                        State in which such census tract or tracts are 
                        located.''.

SEC. 113. CREDIT UNION CONVERSION VOTING REQUIREMENTS.

    Section 205(b)(2)(B) of the Federal Credit Union Act (12 U.S.C. 
1785(b)(2)(B)) is amended by inserting ``, in a vote in which at least 
20 percent of the credit union membership participates'' before the 
period at the end.

SEC. 114. EXEMPTION FROM PRE-MERGER NOTIFICATION REQUIREMENT OF THE 
              CLAYTON ACT.

    Section 7A(c)(7) of the Clayton Act (15 U.S.C. 18a(c)(7)) is 
amended by inserting ``section 205(b)(3) of the Federal Credit Union 
Act (12 U.S.C. 1785(b)(3)),'' before ``or section 3''.

SEC. 115. TREATMENT OF CREDIT UNIONS AS DEPOSITORY INSTITUTIONS UNDER 
              SECURITIES LAWS.

    (a) Definition of Bank Under the Securities Exchange Act of 1934.--
Section 3(a)(6) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(6)) (as amended by section 201(a)(1) of this Act) is amended--
            (1) by striking ``this title, and (D) a receiver'' and 
        inserting ``this title, (D) an insured credit union (as defined 
        in section 101(7) of the Federal Credit Union Act) but only for 
        purposes of paragraphs (4) and (5) of this subsection and only 
        for activities otherwise authorized by applicable laws to which 
        such credit unions are subject, and (E) a receiver''; and
            (2) in subparagraph (E) (as so redesignated by paragraph 
        (1) of this subsection) by striking ``(A), (B), or (C)'' and 
        inserting ``(A), (B), (C), or (D)''.
    (b) Definition of Bank Under the Investment Advisers Act of 1940.--
Section 202(a)(2) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-2(a)(2)) (as amended by section 201(b)(1) of this Act) is amended--
            (1) by striking ``this title, and (D) a receiver'' and 
        inserting ``this title, (D) an insured credit union (as defined 
        in section 101(7) of the Federal Credit Union Act) but only for 
        activities otherwise authorized by applicable laws to which 
        such credit unions are subject, and (E) a receiver''; and
            (2) in subparagraph (E) (as so redesignated by paragraph 
        (1) of this subsection) by striking ``(A), (B), or (C)'' and 
        inserting ``(A), (B), (C), or (D)''.
    (c) Definition of Appropriate Federal Banking Agency.--Section 
210A(c) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-10a(c)) 
is amended by inserting ``and includes the National Credit Union 
Administration Board, in the case of an insured credit union (as 
defined in section 101(7) of the Federal Credit Union Act)'' before the 
period at the end.

                   TITLE II--MEMBER BUSINESS LENDING

SEC. 201. LIMITS ON MEMBER BUSINESS LOANS.

    Section 107A(a) of the Federal Credit Union Act (12 U.S.C. 
1757a(a)) is amended by striking `` the lesser
of--'' and all that follows and inserting ``20 percent of the total 
assets of the credit union.''.

SEC. 202. DEFINITION OF MEMBER BUSINESS LOAN.

    Section 107A(c)(1)(B)(iii) of the Federal Credit Union Act (12 
U.S.C. 1757a(c)(1)(B)(iii)) is amended by striking ``$50,000'' and 
inserting ``an amount, not to exceed $100,000, which the Board shall 
prescribe by regulation''.

SEC. 203. RESTRICTION ON MEMBER BUSINESS LOANS.

    Section 216(g)(2) of the Federal Credit Union Act (12 U.S.C. 
1790d(g)(2)) is amended by striking ``until such time as the credit 
union becomes adequately capitalized'' and inserting ``unless otherwise 
approved by the Board''.

                       TITLE III--CAPITAL LEVELS

SEC. 301. AMENDMENTS TO NET WORTH CATEGORIES.

    Section 216 of the Federal Credit Union Act (12 U.S.C. 1790d) is 
amended--
            (1) by striking subsection (o)(3) and inserting the 
        following new paragraph:
            ``(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 risk assets of the credit union as 
        defined by the Board.'';
            (2) by striking subsection (d) and inserting the following 
        new subsection
    ``(d) [Repealed]''; and
            (3) by striking subparagraph (E) of subsection (c)(1) and 
        inserting the following new subparagraph:
                    ``(E) Critically undercapitalized.--An insured 
                credit union is `critically undercapitalized' if the 
                credit union has--
                            ``(i) a net worth of less than 2 percent of 
                        actual assets; or
                            ``(ii) a net worth ratio of less than a 
                        minimum net worth ratio prescribed by the Board 
                        in excess of 2 percent but not more than 3 
                        percent.''.