110th CONGRESS, LEGISLATIVE ISSUES A - Z
H.R. 5519, the Credit Union Regulatory Relief Act of 2008
Section-by Section of Introduced Bill
Section 1. Short title; table of contents
Section 1 establishes the title of the bill as the Credit Union Regulatory Relief Act of 2008. It also
incorporates a table of contents.
Section 2. Investments in securities by federal credit unions
The Federal Credit Union Act presently limits the investment authority of federal credit unions to loans,
government securities, deposits in other financial institutions, and certain other limited investments. Section
2 would provide additional investment authority to allow credit unions to purchase for the credit union’s own
account certain investment-grade securities. The total amount of the investment securities of any one obligor or
maker could not exceed 10% of the credit union’s net worth and total investments could not exceed 10% of total
assets.
Section 3. Increase in investment limit in credit union service organizations
The Federal Credit Union Act authorizes federal credit unions to invest in organizations providing services to
credit unions and credit union members. Currently, an individual federal credit union may invest in aggregate no
more than one percent of its unimpaired capital and surplus in these organizations, commonly known as credit
union service organizations, or CUSOs. Section 3 would raise the amount a credit union may invest in all CUSOs
to three percent.
Section 4. Member business loan exclusion for loans to non-profit religious organizations
Section 4 would exclude loans or loan participations by federal credit unions to non-profit religious
organizations from the member business loan limits contained in the Federal Credit Union Act.
Section 5. Authority of NCUA to establish longer maturities for certain credit union loans
As part of the regulatory relief law adopted in the 109th Congress, the Federal Credit Union Act was amended in
2006 to allow the NCUA Board to increase the 12-year maturity limit on non-real estate secured loans to 15 years.
Section 5 would further provide the Board with additional flexibility to issue regulations providing for loan
terms exceeding 15 years for specific types of loans.
Section 6. Providing the National Credit Union Administration with greater flexibility in responding to
market conditions
Currently, the NCUA Board may raise the usury interest rate ceiling on loans by federal credit unions whenever it
determines that money market rates have increased over the preceding 6-month period and prevailing interest rates
threaten the safety and soundness of individual credit unions. Section 6 would give the Board greater
flexibility to make such determinations based either on sustained increases in money market interest rates or
prevailing interest rate levels.
Section 7. Conversions involving certain credit unions to a community charter
In cases when a single or multiple common-bond credit union converts to a community credit union charter, there
may be groups within the credit union’s existing membership that are located outside the new community charter’s
geographic boundaries, but which desire to remain part of the credit union and can be adequately served by the
credit union. Section 7 would require NCUA to establish the criteria whereby it may determine that a member
group or other portion of a credit union’s existing membership, located outside of the community, can be
satisfactorily served and remain within the credit union’s field of membership.
Section 8. Credit union participation in the SBA section 504 program
Section 8 would clarify existing law that permits credit unions to participate in loan programs secured by the
insurance, guarantees, or commitments of State or Federal governments. The section provides that the loan
maturities, terms, and conditions on these loans may be specified in applicable regulations.
Section 9. Amendments relating to credit union service to underserved areas
Section 9 would revise a provision of the 1998 Credit Union Membership Access Act that currently permits only
credit unions with multiple common bond charters to expand services to individuals and groups living in areas of
high unemployment and below median incomes that typically are underserved by other depository institutions. The
change would permit all federal credit unions, regardless of charter type, to expand services to eligible
communities that meet income, unemployment, and other distress criteria. Section 9 would also expand the
criteria for determining whether a community or rural area qualifies as an underserved area. The definition of a
qualified underserved area includes not only census tracts that each meet the definition of “investment areas”
under the Treasury Department’s Community Development Financial Institutions (CDFI) program, but also census
tracts that each meet the criteria for qualifying as “low income areas” under the New Markets Tax Credit
targeting formula adopted by Congress in 2000. Credit unions serving an underserved area must establish and
maintain an office or facility within 24-months of receiving approval from the NCUA Board. Such credit unions
must also make certain reports to the Administration about their work in underserved areas.
Section 10. Short-term payday loan alternatives within the field of membership
Section 10 permits credit unions to offer short term loans as an alternative to payday loans to persons within
their field of membership. This provision is similar to the check cashing/money transfer/remittances provision
enacted in the last Congress as part of the regulatory relief law.
Section 11. Credit union governance
Section 11 would provide federal credit union boards the flexibility to expel a member, based on just cause, who
is disruptive to the operations of the credit union, including harassing personnel and creating safety concerns,
without the need for a two-thirds vote of the membership present at a special meeting as required by current law.
The section would also permit federal credit unions to limit the length of service of their boards of directors
to ensure broader representation from the membership.
Section 12. Encouraging small business development in underserved urban and rural communities
Section 12 excludes member business loans made to members in underserved communities from a credit union’s member
business loan cap.
Section 13. Exemption from pre-merger notification requirement of the Clayton Act
Section 13 would give all federally insured credit unions the same exemption that banks and thrift institutions
already have from pre-merger notification requirements and fees for purposes of anti-trust review by the Federal
Trade Commission under the Clayton Act.
