An Act to extend the authority for the flexible regulation of interest rates on deposits and accounts in depository institutions.
PL 95-22 (H.R.3365), enacted 04/19/1977

PUBLIC LAW 95-22—APR. 19, 1977 
91 STAT. 49 
Public Law 95-22 
95th Congress 
An Act 
To extend the authority for the flexible regulation of interest rates on deposits 
and accounts in depository institutions. 
Be it enacted hy the Senate and House of Representatives of the 
United States of America in Congress asserrCbled^ 
TITLE I 
Apr. 19. 1977 
[H.R. 3365] 
Depository 
institutions. 
Interest rates, 
extension. 
SEC. 101. Section 7 of the Act of September 21, 1966 (Public Law 
89-597), is amended by striking out "March 1, 1977" and inserting in 12 USC461 note, 
lieu thereof "December 15,1977". 
TITLE II 
SEC. 201. Section ]4(b) of the Federal Keserve Act (12 U.S.C. 355) 
is amended (1) by striking out "November 1, 1976" and inserting in 
lieu thereof "November 1,1978"; and (2) by striking out "October 31, 
1976" and inserting in lieu thereof "October 31,1978". 
TITLE III 
Repeal. 
Federal credit 
unions, powers. 
Loans to 
members. 
SEC. 301. Section 201 of the Federal Credit Union Act (12 U.S.C. 
1781) is amended by repealing subsection (c) (3) thereof. 
SEC. 302. (a) Paragraph (5) of section 107 of the Federal Credit 
Union Act (12 U.S.C. 1757) is amended to read as follows: 
"(5) to make loans, the maturities of which shall not exceed 
twelve years except as otherwise provided herein, and extend lines 
of credit to its members, to other credit unions, and to credit union 
organizations and to participate with other credit unions, credit 
i 
union organizations, or financial organizations in making loans 
to credit union members in accordance with the following: 
•'': 
" (A) Loans to members shall be made in conformity with 
criteria established by the board of directors: Provided^ 
That— 
"(i) a residential real estate loan which is made to Residential loans, 
finance the acquisition of a one-to-four-family dwelling 
for the principal residence of a credit union member, the 
sales price of which is not more than 150 per centum of 
-1;}: 
the median sales price of residential real property situ- 
"'^ 
ated in the geographical area (as determined by the 
board of directors) in which the property is located, 
,
.
*
« *
/
* 
and which is secured by a first lien upon such dwelling, 
may have a maturity not exceeding thirty years, subject 
to the rules and regulations of the Administrator; 
"(ii) a loan to finance the purchase of a mobile home, 
which shall be secured by a first lien on such mobile home, 
to be used by the credit union member as his residence, 
or for the repair, alteration, or improvement of a resi-
dential dwelling which is the residence of a credit union 
! 
member shall have a maturity not to exceed fifteen years 
Mobile home 
loans. 
91 STAT. 50 
PUBLIC LAW 95-22—APR. 19, 1977 
|. " ' i ' . : : . ; ; 
•
>
p
.
< iM 
'''.: "-'J f.: i,.1i'-
ffi-.pa 
.D. 
'UBV..) I:-
Self-replenishing 
line of credit. 
Loans to other 
credit unions. 
Loans to credit 
union 
organizations. 
Participation 
loans. 
unless such loan is insured or guaranteed as provided 
in subparagraph (iii); 
"(iii) a loan secured by the insurance or guarantee of 
the Federal Government, of a State government, or any 
agency of either may be made for the maturity and under 
the terms and conditions specified in the law under which 
such insurance or guarantee is provided; 
"(iv) a loan or aggregate of loans to a director or 
member of the supervisory or credit committee of the 
credit union making the loan which exceeds $5,000 plus 
pledged shares, be approved by the board of directors; 
"(v) loans to other members for which directors or 
members of the supervisory or credit committee act as 
guarantor or endorser be approved by the board of 
directors when such loans standing alone or when added 
to any outstanding loan or loans of the guarantor or 
endorser exceeds $5,000; 
"(vi) the rate of interest not exceed 1 per centum j)er 
month on the unpaid balance inclusive of all service 
charges; 
"(vii) the taking, receiving, reserving, or charging of 
a rate of interest greater than is allowed by this para-
graph, when knowingly done, shall be deemed a forfeit-
ure of the entire interest which the note, bill, or other 
evidence of debt carries with it, or which has been agreed 
to be paid thereon. If such greater rate of interest has 
been paid, the person by whom it has been paid, or his 
legal representatives, may recover back from the credit 
union taking or receiving the same, in an action in the 
nature of an action of debt, the entire amount of interest 
paid; but such action must be commenced within two 
years from the time the usurious collection was made; 
"(viii) a borrower may repay his loan, prior to matu-
rity in whole or in part on any business day without 
penalty; 
"(ix) loans shall be paid or amortized in accordance 
with rules and regulations prescribed by the Adminis-
trator after taking into account the needs or conditions 
of the borrowers, the amounts and duration of the loans, 
the interests of the members and the credit unions, and 
such other factors as the Administrator deems relevant. 
"(B) A self-replenishing line of credit to a borrower may 
be established to a stated maximum amount on certain terms 
and conditions which may be different from the terms and 
conditions established for another borrower. 
"(C) Loans to other credit unions shall be approved by 
the board of directors. 
"(D) Loans to credit union organizations shall be approved 
by the board of directors and shall not exceed 1 per centum 
of the paid-in and unimpaired capital and surplus of the 
credit union. A credit union organization means any orga-
nization as determined by the Administrator, which is estab-
lished primarily to serve the needs of its member credit 
unions, and whose business relates to the daily operations of 
the credit unions they serve. 
"(E) Participation loans with other credit unions, credit 
union organizations, or financial organizations shall be in 
accordance with written policies of the board of directors: 
PUBLIC LAW 95-22—APR. 19, 1977 
91 STAT. 51 
Repeal. 
Payments on 
shares and share 
certificates. 
• 
Provided^ That a credit union which originates a loan for 
which participation arrangements are made in accordance 
with this subsection shall retain an interest of at least 10 per 
centum of the face amount of the loan.", 
(b) Paragraph (6) of such section is repealed. 
SEC. 303. (a) Paragraph (7) of section 107 of the Federal Credit 
Union Act (12 U.S.C. 1757) is redesignated as paragraph (6) and is 
amended to read as follows: 
"(6) to receive from its members, from other credit unions, 
from an officer, employee, or agent of those nonmember units of 
Federal, State, or local governments and political subdivisions 
thereof enumerated in section 207 of this Act and in the manner 12 USC 1787. 
so prescribed, and from nonmembers in the case of credit unions 
serving 
predominately low-income members (as defined by the Administrator) 
'
* ' 
payments on shares which may be issued at varying dividend rates, 
and payments on share certificates which may be issued at varying 
dividend rates and maturities, subject to such terms, rates, and condi-
tions as may be established by the board of directors, within limita-
tions prescribed by the Administrator.". 
(b) Paragraph (8) of such section is redesignated as paragraph (7) 
and amended by adding the following paragraph: 
"(I) in the shares, stocks, or obligations of any other organiza-
tion, providing services which are associated with the routine 
operations of credit unions, up to 1 per centum of the total paid 
in and unimpaired capital and surplus of the credit union with 
the approval of the Administrator: Provided^ however^ That 
such authority does not include the power to acquire control 
directly or indirectly, of another financial institution, nor invest 
in shares, stocks or obligations of an insurance company, trade 
association, liquidity facility or any other similar organization, 
corporation, or association, except as otherwise expressly provided 
by this Act;". 
(c) Paragraphs (9) through (14) of section 107 are redesignated 
paragraphs (8) through (13). 
(d) Paragraph (13), as redesignated, of section 107 is amended by 
inserting after the first comma the following: "to purchase, sell, 
pledge, or discount or otherwise receive or dispose of, in whole or in 
part, any eligible obligations (as defined by the Administrator) of its 
members and". 
(e) Section 107 is further amended by adding the following new 
paragraph after paragraph (13) : 
"(14) to sell all or a part of its assets to another credit union, 
to purchase all or part of the assets of another credit union and to 
assume the liabilities of the selling credit union and those of its 
members subject to regulations of the Administrator;". 
SEC. 304. Section 114 of the Federal Credit Union Act (12 U.S.C. 
1761c) is amended as follows: 
(1) by adding "and lines of credit" after "loans" in the first 
sentence; 
(2) by striking "No loan shall be made unless it is approved" 
in the third sentence and inserting in lieu thereof "Except for 
those loans or lines of credit required to be approved by the board 
of directors in section 107(5) of this Act, approval of an appli-
cation shall be" and by adding "and lines of credit" after "the 
power to approve loans"; 
Credit committee. 
91 STAT. 52 
PUBLIC LAW 95-22—APR. 19, 1977 
AmmH 
Reserves. 
Reserve 
requirement, 
decrease. 
Director, officer, 
or committee 
member, 
removal. 
Member account. 
Ante, p. 51. 
(3) by striking "loan" as it appears after "each" and before 
"approved" in the fourth sentence, and inserting in lieu thereof 
"application"; 
(4) by striking "loans" in the fifth sentence and inserting in 
lieu thereof "applications"; 
(5) by Striking "for any loan which" in the sixth sentence and 
inserting in lieu thereof "with respect to any loan or line of credit 
for which the application"; 
(6) by adding "and lines of credit" after "loans" in the eighth 
sentence and by striking "the purpose for which the loan is 
desired"; 
(7) by striking the ninth sentence; and 
(8) by striking "$200 or" and "whichever is greater", in the 
SEC. 305. Section 116 of the Federal Credit Union Act (12 U.S.C. 
1762) is amended by striking out the first sentence of subsection (a) 
and inserting in lieu thereof "At the end of each accounting period the 
gross income shall be determined." and by striking out all after the 
colon in subsection (a), by striking out subsection (b), and by insert-
ing in lieu thereof the following: 
"(1) A credit union in operation for more than four years and 
having assets of $500,000 or more shall set aside (A) 10 per centum 
of gross income until the regular reserve shall equal 4 per centum 
of the total of outstanding loans and risk assets, then (B) 5 per 
centum of gross income until the regular reserve shall equal 6 per 
centum of the total of outstanding loans and risk assets. 
" (2) A credit union in operation less than four years or having 
assets of less than $500,000 shall set aside (A) 10 per centum of 
gross income until the regular reserve shall equal 71^ per centum 
of the total of outstanding loans and risk assets, then (B) 5 per 
centum of gross income until the regular reserve shall equal 10 
per centum of the total of outstanding loans and risk assets. 
"(3) Whenever the regular reserve falls below the stated per 
centum of the total of outstanding loans and risk assets, it shall 
be replenished by regular contributions in such amounts as may 
be needed to maintain the stat^ reserve goals. 
"(b) The Administrator may decrease the reserve requirement set 
forth in subsection (a) of this section when in his opinion such a 
decrease is necessary or desirable. The Administrator may also require 
special reserves to protect the interests of members either by regulation 
or for an individual credit union in any special case.". 
SEO. 306. Subsection (b) (3) (B) of section 120 of the Federal Credit 
Union Act (12 U.S.C. 1766) is amended by striking out "shares" and 
inserting in lieu thereof "member accounts^'. 
SEC. 307. (a) Subsection (g) (1) of section 206 of the Federal Credit 
Union Act (12 U.S.C. 1786) is amended by striking out "and that such 
violation or practice or breach of fiduciary duty is one involving per-
sonal dishonesty on the part of such director, officer, or committee 
member". 
(b) Subsection (g) (2) of such section is amended by changing "dis-
honesty and unfitness" to read "dishonesty or unfitness" each place it 
appears therein. 
SEC. 308. Paragraph (4) of section 101 of the Federal Credit Union 
Act (12 U.S.C. 1752), the second time it appears therein, is amended 
by inserting immediately before the semicolon at the end thereof the 
following:", and such terms mean those accounts of nonmember credit 
unions and nonmember units of Federal, State, or local governments 
and political subdivisions thereof in which payments are received by a 
credit union pursuant to section 107(6) of this Act;". 
PUBLIC LAW 95-22—APR. 19, 1977 
91 STAT. 53 
SEC. 309. The third sentence of section 113 of the Federal Credit 
Union Act (12 U.S.C. 1761b) is amended by striking out "that may be 
held by an individual" and inserting in lieu thereof "and share cer-
tificates and the classes of shares and share certificates that may be 
held", and by striking out "and the maximum amount which may be 
loaned with or without security to any member" and inserting in lieu 
thereof ", the security, and the maximum amount which may be loaned 
or provided in lines of credit". 
SEC. 310. Section 117 of the Federal Credit Union Act (12 U.S.C. 
1763) is amended to read as follows: 
*^-' 
• * 
" D I V I D E N D S 
"SEC. 117. At such intervals as the board of directors may author-
ize, and after provision for required reserves, the board may 
declare, pursuant to such regulations as may be issued by the Admin-
istrator, a dividend to be paid at different rates on different types of 
shares and at different rates and maturity dates in the case of share 
certificates. Dividend credit may be accrued on various types of shares 
and share certificates as authorized by the board of directors.". 
Approved April 19, 1977. 
Board of 
directors. 
islr-
LEGISLATIVE HISTORY: 
HOUSE REPORTS: No. 95-23 (Comm. on Banking, Finance and Urban Affairs) and No. 
95-160 (Comm. of Conference). 
SENATE REPORT No. 95-33 accompanying S. 756 (Comm. on Banking, Housing, and 
Urban Affairs). 
CONGRESSIONAL RECORD, Vol. 123 (1977): 
Mar. 1, considered and passed House; considered and passed Senate, amended, in 
lieu of S. 756. 
Apr. 4, Senate agreed to conference report. 
Apr. 5, House agreed to conference report. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 13, No. 17: 
Apr. 19, Presidential statement.