II

104TH CONGRESS

1ST SESSION S. 883

To amend the Federal Credit Union Act to enhance the safety and soundness

of federally insured credit unions, to protect the National Credit Union

Share Insurance Fund, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 6 (legislative day, JUNE 5), 1995

Mr. D’AMATO (for himself and Mr. SARBANES) introduced the following bill;

which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

A BILL

To amend the Federal Credit Union Act to enhance the

safety and soundness of federally insured credit unions,

to protect the National Credit Union Share Insurance

Fund, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Credit Union Reform

5 and Enhancement Act’’.
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1 SEC. 2. INSURED CREDIT UNION INVESTMENTS IN OTHER

2 CREDIT UNIONS.

3 (a) AMENDMENTS TO SECTION 107.—Section 107(7)

4 of the Federal Credit Union Act (12 U.S.C. 1757(7)) is

5 amended—

6 (1) by striking subparagraph (G); and

7 (2) by redesignating subparagraphs (H)

8 through (K) as subparagraphs (G) through (J), re9 spectively.

10 (b) AMENDMENT TO SECTION 205.—Section 205 of

11 the Federal Credit Union Act (12 U.S.C. 1785) is amend12 ed by adding at the end the following new subsection:

13 ‘‘(j) INSURED CREDIT UNION INVESTMENTS IN

14 OTHER CREDIT UNIONS.—An insured credit union may

15 invest in shares, deposits, notes, or other instruments of

16 another credit union only if such other credit union is also

17 insured pursuant to this title.’’.

18 SEC. 3. ACTIVITIES OF INSURED STATE-CHARTERED CRED19 IT UNIONS.

20 Section 205 of the Federal Credit Union Act (12

21 U.S.C. 1785) is amended by adding at the end the follow22 ing new subsection:

23 ‘‘(k) ACTIVITIES OF INSURED STATE-CHARTERED

24 CREDIT UNIONS.—

25 ‘‘(1) IN GENERAL.—A State-chartered insured

26 credit union may not exercise asset powers of a type,
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1 or in an amount, not authorized for Federal credit

2 unions, unless either—

3 ‘‘(A) the asset power was—

4 ‘‘(i) authorized pursuant to the laws

5 of the State in which the credit union is

6 chartered; and

7 ‘‘(ii) being utilized by one or more

8 credit unions in that State on May 1,

9 1995; or

10 ‘‘(B) the Board determines that the exer11 cise of the asset power would pose no signifi12 cant risk to the Fund.

13 ‘‘(2) CONTINUED RULEMAKING AUTHORITY.—

14 Nothing in this subsection shall restrict or limit in

15 any way the general rulemaking authority of the

16 Board.

17 ‘‘(3) DEFINITION.—For purposes of this sub18 section, the term ‘asset powers’ refers to any item

19 or activity properly reflected on the asset side of the

20 financial statements of a credit union, as may be

21 more specifically defined by regulation of the

22 Board.’’.

23 SEC. 4. CORPORATE CREDIT UNIONS.

24 (a) IN GENERAL.—Section 120(a) of the Federal

25 Credit Union Act (12 U.S.C. 1766(a)) is amended—
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1 (1) in the second sentence, by striking ‘‘central

2 credit union’’ and inserting ‘‘corporate credit

3 union’’; and

4 (2) by adding at the end the following: ‘‘The

5 Board shall, by regulation, establish limits on loans

6 and investments by a corporate credit union to a

7 single obligor and minimum capital requirements for

8 corporate credit unions.’’.

9 (b) DEFINITION.—Section 101 of the Federal Credit

10 Union Act (12 U.S.C. 1752) is amended by adding at the

11 end the following new paragraph:

12 ‘‘(10) The term ‘corporate credit union’ has the

13 meaning given to that term under the rules or regu14 lations of the Board.’’.

15 SEC. 5. AUTHORITY OF THE NCUA BOARD TO PLACE FED16 ERALLY INSURED STATE-CHARTERED CRED17 IT UNIONS INTO LIQUIDATION.

18 Section 207(a)(1) of the Federal Credit Union Act

19 (12 U.S.C. 1787(a)(1)) is amended—

20 (1) by redesignating subparagraph (B) as sub21 paragraph (C);

22 (2) in subparagraph (C), as redesignated, by

23 striking ‘‘paragraph (1)’’ and inserting ‘‘subpara24 graph (A) or (B)’’; and
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1 (3) by inserting after subparagraph (A) the fol2 lowing new subparagraph:

3 ‘‘(B) Notwithstanding any other provision of this Act

4 or other law, the Board may, after prior consultation with

5 the appropriate State credit union supervisory authority,

6 appoint itself as a liquidating agent for any State-char7 tered credit union that is insured under this title, and may

8 close such credit union, if the Board determines that the

9 credit union is insolvent or bankrupt. In any such case,

10 the Board shall have all of the rights, privileges, powers,

11 and duties specified in this section as applicable to the

12 liquidation of Federal credit unions.’’.

13 SEC. 6. CONSULTATION FOR CONSERVATORSHIPS OF FED14 ERALLY INSURED STATE-CHARTERED CRED15 IT UNIONS.

16 Section 206(h)(2) of the Federal Credit Union Act

17 (12 U.S.C. 1786(h)(2)) is amended to read as follows:

18 ‘‘(2) In the case of a State-chartered insured

19 credit union, the authority conferred by paragraph

20 (1) shall not be exercised without prior consultation

21 with the appropriate State credit union supervisory

22 authority.’’.

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