H. R. 1151—2
(3) To promote thrift and credit extension, a meaningful
affinity and bond among members, manifested by a commonal-
ity 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 vol-
unteer 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.
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 sub-
section (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
H. R. 1151—3
‘‘(B) the number of members, each of which (at the
time the group is first included within the field of member-
ship of a credit union described in this paragraph) does
not exceed any numerical limitation applicable under sub-
section (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 con-
stituted 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.—Notwithstand-
ing 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 para-
graph (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).
H. R. 1151—4
‘‘(2) EXCEPTIONS.—In the case of any Federal credit union,
the field of membership category of which is described in sub-
section (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 oper-
ation 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 characteris-
tics 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 Octo-
ber 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 com-
ment, 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 member-
ship 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
H. R. 1151—5
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 stand-
ards 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 out-
weighed 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 require-
ments 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.—
H. R. 1151—6
‘‘(1) DEFINITION
OF
WELL-DEFINED
LOCAL
COMMUNITY,
NEIGHBORHOOD, OR
RURAL
DISTRICT.—The Board shall pre-
scribe, 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 prin-
ciples.
‘‘(ii) BOARD DETERMINATION.—If the Board deter-
mines that the application of any generally accepted
accounting principle to any insured credit union is
not appropriate, the Board may prescribe an account-
ing 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 pre-
scribed by the Board or an appropriate State credit
union supervisor.
‘‘(D) LARGE CREDIT UNION AUDIT REQUIREMENT.—
‘‘(i) IN GENERAL.—Each insured credit union hav-
ing total assets of $500,000,000 or more shall have
an annual independent audit of the financial state-
ments 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 juris-
diction 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
H. R. 1151—7
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 insert-
ing ‘‘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 conver-
sion 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 pro-
posal 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),
H. R. 1151—8
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 manage-
ment 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 sec-
tion 32 (f ) of the Federal Deposit Insurance Act).
‘‘(G) CONSISTENT RULES.—
‘‘(i) 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 promul-
gated 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 para-
graph 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.
‘‘(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
H. R. 1151—9
‘‘(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, cor-
porate 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 predomi-
nantly 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, share-
holders, 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 bor-
rower.
‘‘(d) 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
H. R. 1151—10
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.—
(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 busi-
ness 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 mem-
ber 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 lend-
ing 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) 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) MEMBER-
SHIP AND APPOINTMENT OF BOARD.—
‘‘(1) IN GENERAL.—The Board’’; and
(2) by adding at the end the following new paragraph:
‘‘(2) APPOINTMENT CRITERIA.—
‘‘(A) EXPERIENCE IN FINANCIAL SERVICES.—In consider-
ing 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
H. R. 1151—11
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. 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.
‘‘(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, pre-
scribe 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 subpara-
graph (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.
H. R. 1151—12
‘‘(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 capital-
ized; 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—
H. R. 1151—13
‘‘(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 subpara-
graph (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 regu-
lated 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 lever-
age 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 sub-
section (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 protec-
tion.
‘‘(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.—
H. R. 1151—14
‘‘(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 under-
capitalized 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) DEADLINES FOR SUBMISSION AND REVIEW OF PLANS.—
The Board shall, by regulation, establish deadlines for submis-
sion 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) 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;
H. R. 1151—15
‘‘(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.—Notwith-
standing section 107A(a), an insured credit union that is under-
capitalized 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 SUPER-
VISORY 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) 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 docu-
menting why the action would better achieve that purpose.
‘‘(2) PERIODIC REDETERMINATIONS REQUIRED.—Any deter-
mination by the Board under paragraph (1)(B) to take any
action with respect to an insured credit union in lieu of appoint-
ing 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 deter-
mination 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 under-
capitalized on average during the calendar quarter begin-
ning 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—
H. R. 1151—16
‘‘(I) the insured credit union has been in
substantial compliance with an approved net worth
restoration plan that requires consistent improve-
ment 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) APPEALS PROCESS.—Material supervisory determinations,
including decisions to require prompt corrective action, made pursu-
ant 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 Develop-
ment and Regulatory Improvement Act of 1994 (or, if the Board
so specifies, pursuant to separate procedures prescribed by regula-
tion).
‘‘(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;
H. R. 1151—17
‘‘(B) the Board shall, upon timely request of an official
referred to in subparagraph (A), promptly provide the offi-
cial 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 consider-
ing 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 liquidat-
ing 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 deter-
mined 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, share-
holders, 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.’’.
H. R. 1151—18
(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 sub-
paragraphs:
‘‘(F) the credit union is significantly undercapitalized, as
defined in section 216, and has no reasonable prospect of becom-
ing 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 para-
graph (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 jurisdic-
tion over the credit union) as liquidating agent of that credit
union, if—
‘‘(A) the Board determines that—
‘‘(i) the credit union is significantly undercapital-
ized, 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) 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.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
Board shall—
(A) publish in the Federal Register proposed regula-
tions to implement section 216 of the Federal Credit Union
Act (as added by subsection (a) of this section) not later
H. R. 1151—19
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) 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.—
(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 ) REPORT TO CONGRESS REQUIRED.—When the Board pub-
lishes 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:
H. R. 1151—20
‘‘(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 sub-
section (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 fol-
lows, 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
H. R. 1151—21
‘‘(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 deter-
mine 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—
H. R. 1151—22
‘‘(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 certifi-
cate, 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) 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. 
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 Adminis-
tration; and
(2) the potential effects of the application of Federal laws,
including Federal tax laws, on credit unions in the same man-
ner as those laws are applied to other federally insured financial
institutions.
H. R. 1151—23
(b) 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. 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. 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.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.