H.R. 1151 (105th): Credit Union Membership Access Act

105th Congress, 1997–1998. Text as of Aug 04, 1998 (Passed Congress/Enrolled Bill).

Status & Summary | PDF | Source: GPO

H.R.1151

One Hundred Fifth Congress

of the

United States of America

AT THE SECOND SESSION

Begun and held at the City of Washington on Tuesday,

the twenty-seventh day of January, one thousand nine hundred and ninety-eight

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 purpose of Federal credit unions, to enhance supervisory oversight of insured 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,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) SHORT TITLE- This Act may be cited as the ‘Credit Union Membership Access Act’.

    (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. Geographical 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 IV--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.

    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 their choice as a result of recent court action.

      (3) To promote thrift and credit extension, a meaningful affinity and bond among members, manifested by a commonality 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 volunteer 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 subsection (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

        ‘(B) the number of members, each of which (at the time the group is first included within the field of membership of a credit union described in this paragraph) does not exceed any numerical limitation applicable under subsection (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 constituted 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- Notwithstanding 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 paragraph (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).

      ‘(2) EXCEPTIONS- In the case of any Federal credit union, the field of membership category of which is described in subsection (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 operation 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 characteristics 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 October 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 comment, 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 membership 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 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 standards 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 outweighed 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 requirements 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-

      ‘(1) DEFINITION OF WELL-DEFINED LOCAL COMMUNITY, NEIGHBORHOOD, OR RURAL DISTRICT- The Board shall prescribe, 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 principles.

          ‘(ii) BOARD DETERMINATION- If the Board determines that the application of any generally accepted accounting principle to any insured credit union is not appropriate, the Board may prescribe an accounting 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 prescribed by the Board or an appropriate State credit union supervisor.

        ‘(D) LARGE CREDIT UNION AUDIT REQUIREMENT-

          ‘(i) IN GENERAL- Each insured credit union having total assets of $500,000,000 or more shall have an annual independent audit of the financial statements 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 jurisdiction 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 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 inserting ‘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 conversion 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 proposal 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), 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 management 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 section 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 promulgated 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 paragraph 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

      ‘(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, corporate 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 predominantly 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, shareholders, 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 borrower.

    ‘(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 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 business 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 member 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 lending 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) MEMBERSHIP 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 considering 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 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, prescribe 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 subparagraph (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.

      ‘(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 capitalized; 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--

‘(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 subparagraph (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 regulated 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 leverage 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 subsection (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 protection.

    ‘(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-

        ‘(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 undercapitalized 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 submission 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;

        ‘(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- Notwithstanding section 107A(a), an insured credit union that is undercapitalized 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 SUPERVISORY 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 documenting why the action would better achieve that purpose.

      ‘(2) PERIODIC REDETERMINATIONS REQUIRED- Any determination by the Board under paragraph (1)(B) to take any action with respect to an insured credit union in lieu of appointing 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 determination 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 undercapitalized on average during the calendar quarter beginning 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--

            ‘(I) the insured credit union has been in substantial compliance with an approved net worth restoration plan that requires consistent improvement 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 pursuant 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 Development and Regulatory Improvement Act of 1994 (or, if the Board so specifies, pursuant to separate procedures prescribed by regulation).

    ‘(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;

        ‘(B) the Board shall, upon timely request of an official referred to in subparagraph (A), promptly provide the official 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 considering 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 liquidating 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 determined 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, shareholders, 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.’.

    (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 subparagraphs:

      ‘(F) the credit union is significantly undercapitalized, as defined in section 216, and has no reasonable prospect of becoming 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 paragraph (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 jurisdiction over the credit union) as liquidating agent of that credit union, if--

        ‘(A) the Board determines that--

          ‘(i) the credit union is significantly undercapitalized, 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 regulations to implement section 216 of the Federal Credit Union Act (as added by subsection (a) of this section) not later 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 publishes 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:

    ‘(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 subsection (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 follows, 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

          ‘(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 determine 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--

        ‘(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 certificate, 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 Administration; and

      (2) the potential effects of the application of Federal laws, including Federal tax laws, on credit unions in the same manner as those laws are applied to other federally insured financial institutions.

    (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.