Credit Union Membership Access Act
PL 105-219 (H.R.1151), enacted 08/07/1998

PUBLIC LAW 105-219—AUG. 7, 1998 
112 STAT. 913 
Public Law 105-219 
105th Congress 
An Act 
To amend the Federal Credit Union Act to clarify existing law with regard to 
the field of membership of Federal credit unions, to preserve the integrity and 
Aug. 7,1998 
purpose of Federal credit unions, to enhance supervisoiy oversight of insured 
[H.R. 1151] 
credit unions, and for other purposes. 
Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled. 
Credit Union 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
SS^^ 
(a) SHORT TITLE.—This Act may be cited as the "Credit Union 
12 use 1751 
Membership Access Act". 
note-
(b) TABLE OF CONTENTS.—^The table of contents for this Act 
is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Findings. 
Sec. 3. Definitions. 
TITLE I—CREDIT UNION MEMBERSHIP 
Sec. 101. Fields of membership. 
Sec. 102. Criteria for approval of expansion of membership of multiple common-
bond credit unions. 
Sec. 103. Ge<^^phical guidelines for community credit unions. 
TITLE II—REGULATION OF CREDIT UNIONS 
Sec. 201. Financial statement and audit requirements. 
Sec. 202. Conversion of insured credit unions. 
Sec. 203. Limitation on member business loans. 
Sec. 204. National Credit Union Administration Board membership. 
Sec. 205. Report and congressional review requirement for certain regulations. 
TITLE III—CAPITALIZATION AND NET WORTH OF CREDIT UNIONS 
Sec. 301. Prompt corrective action. 
Sec. 302. National credit union share insurance fund equity ratio, available assets 
ratio, and standby premium charge. 
Sec. 303. Access to liquidity. 
TITLE rV—MISCELLANEOUS PROVISIONS 
Sec. 401. Study and report on differing regulatory treatment. 
Sec. 402. Update on review of regulations and paperwork reductions. 
Sec. 403. Treasury report on reduced taxation and viability of small banks. 
SEC. 2. FINDINGS. 
12 USC 1751 
The Congress finds the following: 
(1) The American credit union movement began as a 
cooperative effort to serve the productive and provident credit 
needs of individuals of modest means. 
(2) Credit unions continue to fulfill this public purpose, 
and current members and membership groups should not face 
divestiture from the financial services institution of tiieir choice 
as a result of recent court action. 
112 STAT. 914 
PUBLIC LAW 105-219—AUG. 7, 1998 
(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. 
12USC1790d 
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 
PUBLIC LAW 105-219—AUG. 7, 1998 
112 STAT. 915 
"(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). 
112 STAT. 916 
PUBLIC LAW 105-219—AUG. 7, 1998 
"(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 
'-ialt^iNf 
PUBLIC LAW 105-219—AUG. 7, 1998 
112 STAT. 917 
organization chooses to withdraw from the membership of the 
credit union,". 
SEC. 102. CRITERIA FOR APPROVAL OF EXPANSION OF MEMBERSmP 
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 £is 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.— 
6»-lMO-98-2: QL3Part2 
112 STAT. 918 
PUBLIC LAW 105-219—AUG. 7, 1998 
"(1) 
DEFINITION OF WELL-DEFINED 
LOCAL 
COMMUNITY, 
NEIGHBORHOOD, O
R 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) D E 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 
PUBLIC LAW 105-219—AUG. 7, 1998 
112 STAT. 919 
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 sifter 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 
H 
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), 
112 STAT. 920 
PUBLIC LAW 105-219—AUG. 7, 1998 
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' mesms 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.— 
Deadline. 
"(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 miles 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: 
12 use 1757a. 
"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 
PUBLIC LAW 105-219—AUG. 7, 1998 
112 STAT. 921 
"(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 predominsuitly 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 £ind 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 DeadUne. 
has, on the date of enactment of this section, a total amount 
of outstanding member business loans that exceeds the amount 
112 STAT. 922 
PUBLIC LAW 105-219—AUG. 7, 1998 
permitted under subsection (a) shall, not later th£in 3 years after 
that date of enactment, reduce the total amount of outstanding 
member business loans to £in 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.". 
12 u s e 1757a 
(b) STUDY AND REPORT.— 
note. 
(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 £ind 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). 
Deadline. 
(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 
MEMBERSmP. 
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.— 
President. 
"(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 
PUBLIC LAW 105-219—AUG. 7, 1998 
112 STAT. 923 
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 
12 USC 1759 
CERTAIN REGULATIONS. 
note. 
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 o
f
— 
(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. 
12 USC 1790d. 
"(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. 
112 STAT. 924 
PUBLIC LAW 105-219—AUG. 7, 1998 
"(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 shsdl 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— 
PUBLIC LAW 105-219—AUG. 7, 1998 
112 STAT. 925 
"(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 
t 
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.— 
112 STAT. 926 
PUBLIC LAW 105-219—AUG. 7, 1998 
Regulations. 
Notification. 
"(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; 
PUBLIC LAW 105-219—AUG. 7, 1998 
112 STAT. 927 
"(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— 
Deadline. 
Termination 
date. 
112 STAT. 928 
PUBLIC LAW 105-219—AUG. 7, 1998 
"(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 
"(11) 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. 
Regulations. 
"(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). 
"(1) 
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; 
PUBLIC LAW 105-219—AUG. 7, 1998 
112 STAT. 929 
"(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^tl^e 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 bsdance 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.". 
112 STAT. 930 
PUBLIC LAW 105-219—AUG. 7, 1998 
(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(1).". 
(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(1).". 
I2usci790d 
(c) CONSULTATION REQUIRED.—In developing regulations to 
note. 
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. 
12 use i790d 
(d) DEADLINES FOR REGULATIONS.— 
note. 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
Board shall— 
Federal Register, 
(A) publish in the Federal Register proposed regula-
publication. 
tions to implement section 216 of the Federal Credit Union 
Act (as added by subsection (a) of this section) not later 
PUBLIC LAW 105-219—AUG. 7, 1998 
112 STAT. 931 
than 
and 
270 days after the date of enactment of this Act; 
(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: 
Federal Register, 
publication. 
12 use 1790d 
note. 
12 use 1790d 
note. 
112 STAT. 932 
PUBLIC LAW 105-219—AUG. 7, 1998 
"(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 
PUBLIC LAW 105-219—AUG. 7, 1998 
112 STAT. 933 
"(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 csdendar 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 undfer 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— 
112 STAT. 934 
PUBLIC LAW 105-219—AUG. 7, 1998 
"(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.". 
12 use 1782 
(b) EFFECTIVE DATE.—This section and the amendments made 
"^ote- 
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 
12 u s e 1752a 
SEC. 
401. 
STUDY 
AND 
REPORT 
ON 
DIFFERING REGULATORY 
note. 
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. 
•^l^|WS»-4 
PUBLIC LAW 105-219—AUG. 7, 1998 
112 STAT. 935 
(b) REPORT.—Not later than 1 year after the date of enactment Deadline, 
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 
DeadUne. 
REDUCTIONS. 
Reports. 
12 use 4803 
Not later than 1 year after the date of enactment of this note. 
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 
DeadUne. 
OF SMALL BANKS. 
12.USC 4801 
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. 
Approved August 7, 1998. 
note. 
LEGISLATIVE HISTORY—H.R. 1151: 
HOUSE REPORTS: No. 105-472 (Comm. on Banking and Financial Services). 
SENATE REPORTS: No. 105-193 (Comm. on Banking, Housing, and Urban Af-
fairs). 
CONGRESSIONAL RECORD, Vol. 144 (1998): 
Apr. 1, considered and passed House. 
July 24, 27, 28, considered and passed Senate, amended. 
Aug. 4, House concurred in Senate amendment. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 34 (1998): 
Aug. 7, Presidential statement.