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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5519 Introduced in House (IH)]

110th CONGRESS
  2d Session
                                H. R. 5519

  To advance credit union efforts to promote economic growth, modify 
  credit union regulatory standards and reduce burdens, and for other 
                               purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 3, 2008

  Mr. Kanjorski (for himself and Mr. Royce) introduced the following 
    bill; which was referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL

 
  To advance credit union efforts to promote economic growth, modify 
  credit union regulatory standards and reduce burdens, and for other 
                               purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Credit Union 
Regulatory Relief Act of 2008''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Investments in securities by Federal credit unions.
Sec. 3. Increase in investment limit in credit union service 
                            organizations.
Sec. 4. Member business loan exclusion for loans to nonprofit religious 
                            organizations.
Sec. 5. Authority of NCUA to establish longer maturities for certain 
                            credit union loans.
Sec. 6. Providing the National Credit Union Administration with greater 
                            flexibility in responding to market 
                            conditions.
Sec. 7. Conversions of certain credit unions to a community charter.
Sec. 8. Credit union participation in the SBA section 504 program.
Sec. 9. Amendments relating to credit union service to underserved 
                            areas.
Sec. 10. Short-term payday loan alternatives within field of 
                            membership.
Sec. 11. Credit union governance.
Sec. 12. Encouraging small business development in underserved urban 
                            and rural communities.
Sec. 13. Exemption from pre-merger notification requirement of the 
                            Clayton Act.

SEC. 2. INVESTMENTS IN SECURITIES BY FEDERAL CREDIT UNIONS.

    Section 107 of the Federal Credit Union Act (12 U.S.C. 1757) is 
amended--
            (1) by striking ``A Federal credit union'' and inserting 
        ``(a) In General.--A Federal credit union''; and
            (2) by adding at the end the following new subsection:
    ``(b) Investment for the Credit Union's Own Account.--
            ``(1) In general.--In addition to the investments 
        authorized in subsection (a), 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. 3. INCREASE IN 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 redesignated by section 2(1)) is amended by striking 
``up to 1 per centum of the total paid'' and inserting ``up to 3 
percent of the total paid''.

SEC. 4. 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. 5. AUTHORITY OF NCUA TO ESTABLISH LONGER MATURITIES FOR CERTAIN 
              CREDIT UNION LOANS.

    Section 107(a)(5) of the Federal Credit Union Act (12 U.S.C. 
1757(5)) (as so redesignated by section 2(1)) is amended in the matter 
preceding subparagraph (A), by striking ``except as otherwise provided 
herein'' and inserting ``or any longer maturity as the Board may allow, 
in regulations, except as otherwise provided in this Act''.

SEC. 6. PROVIDING THE NATIONAL CREDIT UNION ADMINISTRATION WITH GREATER 
              FLEXIBILITY IN RESPONDING TO MARKET CONDITIONS.

    Section 107(a)(5)(A)(vi)(I) of the Federal Credit Union Act (12 
U.S.C. 1757(5)(A)(vi)(I)) (as so redesignated by section 2(1)) 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. 7. CONVERSIONS OF CERTAIN CREDIT UNIONS TO A COMMUNITY CHARTER.

    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. 8. CREDIT UNION PARTICIPATION IN THE SBA SECTION 504 PROGRAM.

    Section 107(a)(5)(A)(iii) of the Federal Credit Union Act (12 
U.S.C. 1757(5)(A)(iii)) (as so redesignated by section 2(1)) is amended 
by inserting ``, and applicable regulations,'' after ``specified in the 
law''.

SEC. 9. AMENDMENTS RELATING TO CREDIT UNION SERVICE TO UNDERSERVED 
              AREAS.

    (a) In General.--Paragraph (2) of section 109(c) of the Federal 
Credit Union Act (12 U.S.C. 1759(c)(2)) is amended to read as follows:
            ``(2) Exception for underserved areas.--
                    ``(A) In general.--Notwithstanding subsection (b), 
                the Board may approve an application by a Federal 
                credit union to allow the membership of such credit 
                union to include any person or organization whose 
                principal residence or place of business is located 
                within a local community, neighborhood, or rural 
                district if--
                            ``(i) the Board determines--
                                    ``(I) at any time after August 7, 
                                1998, that all of the local community, 
                                neighborhood, or rural district taken 
                                into account for purposes of this 
                                paragraph is an underserved area (as 
                                defined in section 101(10)); and
                                    ``(II) at the time of such 
                                approval, that the credit union is well 
                                capitalized or adequately capitalized 
                                (as defined in section 216(c)(1)); and
                            ``(ii) before the end of the 24-month 
                        period beginning on the date of such approval, 
                        the credit union has established and maintains 
                        an office or facility in the local community, 
                        neighborhood, or rural district at which credit 
                        union services are available.
                    ``(B) Termination of approval.--Any failure of a 
                Federal credit union to meet the requirement of clause 
                (ii) of subparagraph (A) by the end of the 24-month 
                period referred to in such clause shall constitute a 
                termination, as a matter of law, of any approval of an 
                application under this paragraph by the Board with 
                respect to the membership of such credit union.
                    ``(C) Annual credit union reporting requirement.--
                Any Federal credit union which has an application 
                approved under this paragraph shall submit an annual 
                report to the Administration on the number of members 
                of the credit union who are members by reason of such 
                application and the number of offices or facilities 
                maintained by the credit union in the local community, 
                neighborhood, or rural district taken into account by 
                the Board in approving such application.
                    ``(D) Publication by administration.--The 
                Administration shall publish annually a report 
                containing--
                            ``(i) a list of all the applications 
                        approved under this paragraph prior to the 
                        publication of the report;
                            ``(ii) the number and locations of the 
                        underserved areas taken into account in 
                        approving such applications; and
                            ``(iii) the total number of members of 
                        credit unions who are members by reason of the 
                        approval of such applications.''.
    (b) Underserved Area Defined.--Section 101 of the Federal Credit 
Union Act (12 U.S.C. 1752) is amended--
            (1) by striking ``and'' at the end of paragraph (8);
            (2) by striking the period at the end of paragraph (9) and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(10) the term `underserved area' means a geographic area 
        consisting of a single census tract or a group of census 
        tracts, each of which meets the criteria for--
                    ``(A) a low income community, as defined in section 
                45D(e) of the Internal Revenue Code of 1986; or
                    ``(B) an investment area, as defined and designated 
                under section 103(16) of the Community Development 
                Banking and Financial Institutions Act of 1994.''.

SEC. 10. SHORT-TERM PAYDAY LOAN ALTERNATIVES WITHIN FIELD OF 
              MEMBERSHIP.

    Section 107(a)(12)(B) of the Federal Credit Union Act (12 U.S.C. 
1757(12)(B)) (as so redesignated by section 2(1)) is amended by 
inserting ``and provide short-term loans as an alternative to payday 
loans'' after ``domestic electronic fund transfers''.

SEC. 11. 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.''.

SEC. 12. ENCOURAGING SMALL BUSINESS DEVELOPMENT IN UNDERSERVED URBAN 
              AND RURAL COMMUNITIES.

    Section 107A(c)(1)(B) of the Federal Credit Union Act (12 U.S.C. 
1757a(c)(1)(B)) is amended--
            (1) by striking ``or'' after the semicolon at the end of 
        clause (iv);
            (2) by redesignating clause (v) as clause (vi); and
            (3) by inserting after clause (iv) the following new 
        clause:
                            ``(v) that is made to a member, the 
                        proceeds of which are to be used for 
                        commercial, corporate, business, farm or 
                        agricultural purposes in an underserved area if 
                        such extension of credit--
                                    ``(I) is made to a person or 
                                organization whose principal residence 
                                or place of business is located within 
                                an underserved area (as defined in 
                                section 101(10)) served by the credit 
                                union; or
                                    ``(II) is secured by real property 
                                located within, or is intended to 
                                operate as part of a business located 
                                within, such underserved area; or''.

SEC. 13. 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''.
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