I 

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. 

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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Credit Union Regulatory Relief Act of 2008’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 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. 


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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. 

1 SEC. 2. INVESTMENTS IN SECURITIES BY FEDERAL CREDIT 

2 UNIONS. 

3 Section 107 of the Federal Credit Union Act (12 

4 U.S.C. 1757) is amended— 

5 (1) by striking ‘‘A Federal credit union’’ and 

6 inserting ‘‘(a) IN GENERAL.—A Federal credit 

7 union’’; and 

8 (2) by adding at the end the following new sub9 section: 

10 ‘‘(b) INVESTMENT FOR THE CREDIT UNION’S OWN

11 ACCOUNT.— 

12 ‘‘(1) IN GENERAL.—In addition to the invest13 ments authorized in subsection (a), a Federal credit 

14 union may purchase and hold for its own account 

15 such investment securities of investment grade as 

16 the Board may authorize by regulation, subject to 

17 such limitations and restrictions as the Board may 

18 prescribe in the regulations. 

19 ‘‘(2) PERCENTAGE LIMITATIONS.— 


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1 ‘‘(A) SINGLE OBLIGOR.—In no event may 

2 the total amount of investment securities of any 

3 single obligor or maker held by a Federal credit 

4 union for the credit union’s own account exceed 

5 at any time an amount equal to 10 percent of 

6 the net worth of the credit union. 

7 ‘‘(B) AGGREGATE INVESTMENTS.—In no 

8 event may the aggregate amount of investment 

9 securities held by a Federal credit union for the 

10 credit union’s own account exceed at any time 

11 an amount equal to 10 percent of the assets of 

12 the credit union. 

13 ‘‘(3) INVESTMENT SECURITY DEFINED.— 

14 ‘‘(A) IN GENERAL.—For purposes of this 

15 subsection, the term ‘investment security’ 

16 means marketable obligations evidencing the in17 debtedness of any person in the form of bonds, 

18 notes, or debentures and other instruments 

19 commonly referred to as investment securities. 

20 ‘‘(B) FURTHER DEFINITION BY BOARD.— 

21 The Board may further define the term ‘invest22 ment security’. 

23 ‘‘(4) INVESTMENT GRADE DEFINED.—The term 

24 ‘investment grade’ means with respect to an invest25 ment security purchased by a credit union for its 


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1 own account, an investment security that at the time 

2 of such purchase is rated in one of the 4 highest rat3 ing categories by at least 1 nationally recognized 

4 statistical rating organization. 

5 ‘‘(5) CLARIFICATION OF PROHIBITION ON

6 STOCK OWNERSHIP.—No provision of this subsection 

7 shall be construed as authorizing a Federal credit 

8 union to purchase shares of stock of any corporation 

9 for the credit union’s own account, except as other10 wise permitted by law.’’. 

11 SEC. 3. INCREASE IN INVESTMENT LIMIT IN CREDIT UNION 

12 SERVICE ORGANIZATIONS. 

13 Section 107(a)(7)(I) of the Federal Credit Union Act 

14 (12 U.S.C. 1757(7)(I)) (as so redesignated by section 

15 2(1)) is amended by striking ‘‘up to 1 per centum of the 

16 total paid’’ and inserting ‘‘up to 3 percent of the total 

17 paid’’. 

18 SEC. 4. MEMBER BUSINESS LOAN EXCLUSION FOR LOANS 

19 TO NONPROFIT RELIGIOUS ORGANIZATIONS. 

20 Section 107A(a) of the Federal Credit Union Act (12 

21 U.S.C. 1757a(a)) is amended by inserting ‘‘, excluding 

22 loans made to nonprofit religious organizations,’’ after 

23 ‘‘total amount of such loans’’. 


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1 SEC. 5. AUTHORITY OF NCUA TO ESTABLISH LONGER MA2 TURITIES FOR CERTAIN CREDIT UNION 

3 LOANS. 

4 Section 107(a)(5) of the Federal Credit Union Act 

5 (12 U.S.C. 1757(5)) (as so redesignated by section 2(1)) 

6 is amended in the matter preceding subparagraph (A), by 

7 striking ‘‘except as otherwise provided herein’’ and insert8 ing ‘‘or any longer maturity as the Board may allow, in 

9 regulations, except as otherwise provided in this Act’’. 

10 SEC. 6. PROVIDING THE NATIONAL CREDIT UNION ADMIN11 ISTRATION WITH GREATER FLEXIBILITY IN 

12 RESPONDING TO MARKET CONDITIONS. 

13 Section 107(a)(5)(A)(vi)(I) of the Federal Credit 

14 Union Act (12 U.S.C. 1757(5)(A)(vi)(I)) (as so redesig15 nated by section 2(1)) is amended by striking ‘‘six-month 

16 period and that prevailing interest rate levels’’ and insert17 ing ‘‘6-month period or that prevailing interest rate lev18 els’’. 

19 SEC. 7. CONVERSIONS OF CERTAIN CREDIT UNIONS TO A 

20 COMMUNITY CHARTER. 

21 Section 109(g) of the Federal Credit Union Act (12 

22 U.S.C. 1759(g)) is amended by inserting after paragraph 

23 (2) the following new paragraph: 

24 ‘‘(3) CRITERIA FOR CONTINUED MEMBERSHIP

25 OF CERTAIN MEMBER GROUPS IN COMMUNITY CHAR26 TER CONVERSIONS.—In the case of a voluntary conVerDate Aug 31 2005 22:11 Mar 03, 2008 Jkt 059200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5519.IH H5519

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1 version of a common-bond credit union described in 

2 paragraph (1) or (2) of subsection (b) into a com3 munity credit union described in subsection (b)(3), 

4 the Board shall prescribe, by regulation, the criteria 

5 under which the Board may determine that a mem6 ber group or other portion of a credit union’s exist7 ing membership, that is located outside the well-de8 fined local community, neighborhood, or rural dis9 trict that shall constitute the community charter, 

10 can be satisfactorily served by the credit union and 

11 remain within the community credit union’s field of 

12 membership.’’. 

13 SEC. 8. CREDIT UNION PARTICIPATION IN THE SBA SEC14 TION 504 PROGRAM. 

15 Section 107(a)(5)(A)(iii) of the Federal Credit Union 

16 Act (12 U.S.C. 1757(5)(A)(iii)) (as so redesignated by 

17 section 2(1)) is amended by inserting ‘‘, and applicable 

18 regulations,’’ after ‘‘specified in the law’’. 

19 SEC. 9. AMENDMENTS RELATING TO CREDIT UNION SERV20 ICE TO UNDERSERVED AREAS. 

21 (a) IN GENERAL.—Paragraph (2) of section 109(c) 

22 of the Federal Credit Union Act (12 U.S.C. 1759(c)(2)) 

23 is amended to read as follows: 

24 ‘‘(2) EXCEPTION FOR UNDERSERVED AREAS.— 


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1 ‘‘(A) IN GENERAL.—Notwithstanding sub2 section (b), the Board may approve an applica3 tion by a Federal credit union to allow the 

4 membership of such credit union to include any 

5 person or organization whose principal resi6 dence or place of business is located within a 

7 local community, neighborhood, or rural district 

8 if— 

9 ‘‘(i) the Board determines— 

10 ‘‘(I) at any time after August 7, 

11 1998, that all of the local community, 

12 neighborhood, or rural district taken 

13 into account for purposes of this para14 graph is an underserved area (as de15 fined in section 101(10)); and 

16 ‘‘(II) at the time of such ap17 proval, that the credit union is well 

18 capitalized or adequately capitalized 

19 (as defined in section 216(c)(1)); and 

20 ‘‘(ii) before the end of the 24-month 

21 period beginning on the date of such ap22 proval, the credit union has established 

23 and maintains an office or facility in the 

24 local community, neighborhood, or rural 


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1 district at which credit union services are 

2 available. 

3 ‘‘(B) TERMINATION OF APPROVAL.—Any 

4 failure of a Federal credit union to meet the re5 quirement of clause (ii) of subparagraph (A) by 

6 the end of the 24-month period referred to in 

7 such clause shall constitute a termination, as a 

8 matter of law, of any approval of an application 

9 under this paragraph by the Board with respect 

10 to the membership of such credit union. 

11 ‘‘(C) ANNUAL CREDIT UNION REPORTING

12 REQUIREMENT.—Any Federal credit union 

13 which has an application approved under this 

14 paragraph shall submit an annual report to the 

15 Administration on the number of members of 

16 the credit union who are members by reason of 

17 such application and the number of offices or 

18 facilities maintained by the credit union in the 

19 local community, neighborhood, or rural district 

20 taken into account by the Board in approving 

21 such application. 

22 ‘‘(D) PUBLICATION BY ADMINISTRA23 TION.—The Administration shall publish annu24 ally a report containing— 


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1 ‘‘(i) a list of all the applications ap2 proved under this paragraph prior to the 

3 publication of the report; 

4 ‘‘(ii) the number and locations of the 

5 underserved areas taken into account in 

6 approving such applications; and 

7 ‘‘(iii) the total number of members of 

8 credit unions who are members by reason 

9 of the approval of such applications.’’. 

10 (b) UNDERSERVED AREA DEFINED.—Section 101 of 

11 the Federal Credit Union Act (12 U.S.C. 1752) is amend12 ed— 

13 (1) by striking ‘‘and’’ at the end of paragraph 

14 (8); 

15 (2) by striking the period at the end of para16 graph (9) and inserting ‘‘; and’’; and 

17 (3) by adding at the end the following new 

18 paragraph: 

19 ‘‘(10) the term ‘underserved area’ means a geo20 graphic area consisting of a single census tract or a 

21 group of census tracts, each of which meets the cri22 teria for— 

23 ‘‘(A) a low income community, as defined 

24 in section 45D(e) of the Internal Revenue Code 

25 of 1986; or 


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1 ‘‘(B) an investment area, as defined and 

2 designated under section 103(16) of the Com3 munity Development Banking and Financial In4 stitutions Act of 1994.’’. 

5 SEC. 10. SHORT-TERM PAYDAY LOAN ALTERNATIVES WITH6 IN FIELD OF MEMBERSHIP. 

7 Section 107(a)(12)(B) of the Federal Credit Union 

8 Act (12 U.S.C. 1757(12)(B)) (as so redesignated by sec9 tion 2(1)) is amended by inserting ‘‘and provide short10 term loans as an alternative to payday loans’’ after ‘‘do11 mestic electronic fund transfers’’. 

12 SEC. 11. CREDIT UNION GOVERNANCE. 

13 (a) EXPULSION OF MEMBERS FOR JUST CAUSE.— 

14 Subsection (b) of section 118 of the Federal Credit Union 

15 Act (12 U.S.C. 1764(b)) is amended to read as follows: 

16 ‘‘(b) POLICY AND ACTIONS OF BOARDS OF DIREC17 TORS OF FEDERAL CREDIT UNIONS.— 

18 ‘‘(1) EXPULSION OF MEMBERS FOR NON19 PARTICIPATION OR FOR JUST CAUSE.—The board of 

20 directors of a Federal credit union may, by majority 

21 vote of a quorum of directors, adopt and enforce a 

22 policy with respect to expulsion from membership, 

23 by a majority vote of such board of directors, based 

24 on just cause, including disruption of credit union 


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1 operations, or on nonparticipation by a member in 

2 the affairs of the credit union. 

3 ‘‘(2) WRITTEN NOTICE OF POLICY TO MEM4 BERS.—If a policy described in paragraph (1) is 

5 adopted, written notice of the policy as adopted and 

6 the effective date of such policy shall be provided 

7 to— 

8 ‘‘(A) each existing member of the credit 

9 union not less than 30 days prior to the effec10 tive date of such policy; and 

11 ‘‘(B) each new member prior to or upon 

12 applying for membership.’’. 

13 (b) TERM LIMITS AUTHORIZED FOR BOARD MEM14 BERS OF FEDERAL CREDIT UNIONS.—Section 111(a) of 

15 the Federal Credit Union Act (12 U.S.C. 1761(a)) is 

16 amended by adding at the end the following new sentence: 

17 ‘‘The bylaws of a Federal credit union may limit the num18 ber of consecutive terms any person may serve on the 

19 board of directors of such credit union.’’. 

20 SEC. 12. ENCOURAGING SMALL BUSINESS DEVELOPMENT 

21 IN UNDERSERVED URBAN AND RURAL COM22 MUNITIES. 

23 Section 107A(c)(1)(B) of the Federal Credit Union 

24 Act (12 U.S.C. 1757a(c)(1)(B)) is amended— 


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1 (1) by striking ‘‘or’’ after the semicolon at the 

2 end of clause (iv); 

3 (2) by redesignating clause (v) as clause (vi); 

4 and 

5 (3) by inserting after clause (iv) the following 

6 new clause: 

7 ‘‘(v) that is made to a member, the 

8 proceeds of which are to be used for com9 mercial, corporate, business, farm or agri10 cultural purposes in an underserved area if 

11 such extension of credit— 

12 ‘‘(I) is made to a person or orga13 nization whose principal residence or 

14 place of business is located within an 

15 underserved area (as defined in sec16 tion 101(10)) served by the credit 

17 union; or 

18 ‘‘(II) is secured by real property 

19 located within, or is intended to oper20 ate as part of a business located with21 in, such underserved area; or’’. 

22 SEC. 13. EXEMPTION FROM PRE-MERGER NOTIFICATION 

23 REQUIREMENT OF THE CLAYTON ACT. 

24 Section 7A(c)(7) of the Clayton Act (15 U.S.C. 

25 18a(c)(7)) is amended by inserting ‘‘section 205(b)(3) of 


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1 the Federal Credit Union Act (12 U.S.C. 1785(b)(3)),’’ 

2 before ‘‘or section 3’’. 

Æ 


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