I 
109TH CONGRESS 
1ST SESSION H. R. 3206
To amend the Federal Credit Union Act provisions relating to any conversion 
of a credit union charter to a mutual savings bank or savings association 
charter, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 12, 2005
Mr. MCHENRY (for himself, Mr. TOWNS, Mr. GILLMOR, Mr. KING of New 
York, and Mr. SAM JOHNSON of Texas) introduced the following bill; 
which was referred to the Committee on Financial Services 
A BILL 
To amend the Federal Credit Union Act provisions relating 
to any conversion of a credit union charter to a mutual 
savings bank or savings association charter, and for 
other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Credit Union Charter 
Choice Act’’.
SEC. 2. CONVERSIONS OF CREDIT UNIONS TO SAVINGS AS-
SOCIATIONS OR MUTUAL SAVINGS BANKS. 
(a) IN GENERAL.—Section 205(b)(2) of the Federal 
Credit Union Act (12 U.S.C. 1785(b)) is amended—
(1) in subparagraph (G)—
(A) by striking ‘‘CONSISTENT RULES’’ in 
the heading of such subparagraph and all that 
follows through ‘‘, the Administration shall pro-
mulgate’’ (where such term appears in clause 
(i) of such subparagraph) and inserting ‘‘CON-
SISTENT RULES.—The Board shall prescribe’’; 
and 
(B) by striking clause (ii); 
(2) by redesignating subparagraphs (E), (F), 
and (G) (as amended by paragraph (1)) as subpara-
graphs (K), (L), and (M), respectively; and 
(3) by striking subparagraph (D) and inserting 
the following new subparagraphs: 
‘‘(D) NOTICE OF PROPOSAL TO BOARD.—
An insured credit union that proposes to con-
vert to a mutual savings bank or savings asso-
ciation under subparagraph (A) shall submit to 
the Board, or a designee of the Board, for re-
view and approval by the Board or such des-
ignee a copy of the written notice, ballot and
such other materials to be mailed to members 
pursuant to subparagraph (C). 
‘‘(E) CONTENTS OF NOTICE TO BOARD.—
In addition to the requirements of subpara-
graph (D), a notice submitted under such sub-
paragraph shall include the following: 
‘‘(i) The date that the membership 
vote will be taken and the date by which 
ballots must be received by the inspector of 
elections to be counted. 
‘‘(ii) A brief statement of why the di-
rectors of the converting credit union are 
considering the conversion and the board’s 
recommendation to the members of the 
credit union. 
‘‘(iii) A brief statement of the mate-
rial effects of the conversion on the credit 
union, as converted, and the members of 
the credit union, including any differences 
in powers between a credit union and a 
mutual savings bank or savings association 
that the converting credit union deems to 
be material to such members. 
‘‘(F) RESTRICTIONS ON REGULATION OF 
CONTENT OF PROPOSED CONVERSION NOTICE
TO MEMBERS.—A converting credit union may 
not be required to include in the notice provided 
under subparagraph (C) any information or 
statements that—
‘‘(i) are speculative with respect to the 
future operations, governance, or form of 
organization of the financial institution 
that will result from the conversion, or 
may occur after the completion of the con-
version; 
‘‘(ii) are inaccurate with respect to a 
proposed conversion of the converting cred-
it union or the application for a mutual 
savings bank or savings association charter 
filed in connection with the conversion; 
‘‘(iii) conflict with regulations of other 
financial regulators, including the Director 
of the Office of Thrift Supervision, related 
to the subsequent conversion of the result-
ing financial institution from mutual to 
stock form; 
‘‘(iv) distort the impact of conversion 
on the members of the credit union; or 
‘‘(v) are attributable to the Board or 
state the Board’s position on conversions.
‘‘(G) BOARD APPROVAL PROCESS.—
‘‘(i) IN GENERAL.—The Board shall 
approve the materials submitted by the 
converting credit union pursuant to sub-
paragraph (D) if such materials comply 
with the requirements of subparagraph 
(E), unless the Board determines that the 
conversion is being made to circumvent a 
pending supervisory action that is about to 
be or has been initiated by the Board or by 
the State board, commission, or authority 
having jurisdiction over the credit union, in 
the case of converting State-chartered 
credit union, because of a concern over the 
safety and soundness of the converting 
credit union. 
‘‘(ii) NOTICE WITHIN 30 DAYS.—The 
Board, or the designee of the Board, shall 
provide the converting credit union with 
written approval of the materials submitted 
by a converting credit union pursuant to 
subparagraph (D) or comments thereto 
within 30 days of the initial receipt by the 
Board or such designee of such materials.
‘‘(iii) REVISIONS TO NOTICE.—Any re-
vised materials filed with the Board by a 
converting credit union shall be acted upon 
by the later of the end of the 30-day period 
referred to in clause (ii) or the end of the 
10-day period beginning when such revised 
materials are filed. 
‘‘(H) OTHER
RESTRICTIONS
ON
THE 
BOARD.—
‘‘(i) PROHIBITION
ON
SUBMISSION 
AND REVIEW OF OTHER COMMUNICATIONS 
WITH MEMBERS.—Other than the written 
materials being mailed to the converting 
credit union’s members pursuant to sub-
paragraph (C), the converting credit union 
shall not be required to submit any other 
communications involving the conversion to 
the Board for approval and the Board 
shall have no authority to regulate the con-
tent of any such communications. 
‘‘(ii) EXCEPTION FOR INCONSISTENT, 
MISLEADING, 
OR
FALSE
COMMUNICA-
TIONS.—Clause (i) shall not apply so as to 
to restrict the Board’s authority to prevent 
or correct communications under subpara-
graph (C) that are inconsistent with the 
material facts contained in the notice of 
proposed conversion or are knowingly false 
or misleading. 
‘‘(iii) LIMITATION ON AUTHORITY TO 
REQUIRE
NEW
MEMBERSHIP
VOTE.—The 
Board shall not have the authority to re-
quire a new vote on the basis of the con-
tents of the notice required under subpara-
graph (C) or any other communication 
from the converting insured credit union to 
the members of the credit union, unless 
the notice or communication contains a 
knowingly false statement that affects the 
outcome of a conversion vote. 
‘‘(I) CONDUCT
AND
SUPERVISION
OF 
ELECTION.—
‘‘(i) SECRET
BALLOT.—The vote on 
the conversion shall be conducted by secret 
ballot. 
‘‘(ii) INDEPENDENT
INSPECTOR
OF 
ELECTION.—
‘‘(I) IN
GENERAL.—The con-
verting credit union shall appoint an 
independent inspector of elections to
receive and tally the votes cast on the 
conversion proposal. 
‘‘(II) 
INELIGIBLE
PERSONS.—
The inspector shall not be an em-
ployee, officer, or director of the con-
verting credit union or have a family 
relationship with any employee, officer 
or director of the credit union. 
‘‘(III) 
FAMILY
RELATIONSHIP 
DEFINED.—For purposes of subclause 
(II), the term ‘family relationship’ 
means any relationship by blood, mar-
riage or adoption, that is not more re-
mote than first cousin. 
‘‘(iii) CERTIFICATION.—The board of 
directors of the converting credit union 
shall certify to the Board (or the designee 
of the Board) and the Federal banking 
agency or the appropriate State bank su-
pervisor (as such terms are defined in sec-
tion 3 of the Federal Deposit Insurance 
Act) that will have jurisdiction over the in-
stitution after the conversion—
‘‘(I) the results of the member-
ship vote, based on the report of the
inspector of elections, within 10 cal-
endar days after the vote is taken or 
as promptly thereafter as possible; 
and 
‘‘(II) at the same time, that the 
notice, ballot and other written mate-
rials provided to members were iden-
tical in all material respects to those 
submitted to the Board (or the des-
ignee of the Board) pursuant to sub-
paragraph (D) and approved by the 
Board or such designee. 
‘‘(J) RESTRICTION ON POST-ELECTION RE-
VIEW OR APPROVAL.—Absent fraud or reckless 
disregard for fairness during the voting process 
that affects the outcome of the vote, the Board 
shall have no further review or approval author-
ity over the conversion process following the 
submission and review of the certification under 
subparagraph (I)(iii).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this Act shall apply to all credit union conversions de-
scribed in section 205(b)(2) of the Federal Credit Union 
Act that are pending on the date of the enactment of this 
Act and any conversion commenced on or after such date
of enactment pursuant to a notice provided to the National 
Credit Union Administration Board in accordance with 
section 205(b)(2)(D) of the Federal Credit Union Act (as 
amended by subsection (a) of this section). 
(c) REGULATIONS.—Before the end of the 60-day pe-
riod beginning on the date of the enactment of this Act, 
the National Credit Union Administration Board shall 
publish proposed amendments to existing regulations of 
the Board governing conversions of insured credit unions 
to mutual savings banks or savings associations that are 
necessary to conform such regulations with the require-
ments of the amendments made by this Act.
Æ