CHAPTER 14 —FEDERAL CREDIT UNIONS
SUBCHAPTER I—GENERAL PROVISIONS
SUBCHAPTER II—SHARE INSURANCE
SUBCHAPTER III—CENTRAL LIQUIDITY FACILITY
§1751. Short title
This chapter may be cited as the "Federal Credit Union Act".
(June 26, 1934, ch. 750, §1,
Editorial Notes
Amendments
1959—
Statutory Notes and Related Subsidiaries
Short Title of 2022 Amendment
Short Title of 2014 Amendment
Short Title of 1998 Amendment
Short Title of 1987 Amendment
Short Title of 1978 Amendment
Congressional Findings
"(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."
Transfer of Functions
Secretary and Department of Health, Education, and Welfare redesignated Secretary and Department of Health and Human Services by
Executive Documents
Transfer of Functions
Transfer of functions of Farm Credit Administration and Governor thereof to Bureau of Farm Credit Unions and Director thereof under jurisdiction of Federal Security Agency by act June 29, 1948, ch. 711, §§1, 2,
Functions of Farm Credit Administration and Governor thereof under this chapter, together with functions of Secretary of Agriculture with respect thereto, transferred to Federal Deposit Insurance Corporation by Reorg. Plan No. 1 of 1947, §401, eff. July 1, 1947, 12 F.R. 4534,
Farm Credit Administration transferred to Department of Agriculture by Reorg. Plan No. I of 1939, §401, eff. July 1, 1939, 4 F.R. 2730,
§1751a. Omitted
Editorial Notes
Codification
Section, act June 29, 1948, ch. 711, §2,
SUBCHAPTER I—GENERAL PROVISIONS
§1752. Definitions
As used in this chapter—
(1) the term "Federal credit union" means a cooperative association organized in accordance with the provisions of this chapter for the purpose of promoting thrift among its members and creating a source of credit for provident or productive purposes;
(2) the term "Chairman" means the Chairman of the National Credit Union Administration Board;
(3) the term "Administration" means the National Credit Union Administration;
(4) the term "Board" means the National Credit Union Administration Board;
(5) The terms "member account" and "account" mean a share, share certificate, or share draft account of a member of a credit union of a type approved by the Board which evidences money or its equivalent received or held by a credit union in the usual course of business and for which it has given or is obligated to give credit to the account of the member, and, in the case of a credit union serving predominantly low-income members (as defined by the Board), such terms (when referring to the account of a nonmember served by such credit union) mean a share, share certificate, or share draft account of such nonmember which is of a type approved by the Board and evidences money or its equivalent received or held by such credit union in the usual course of business and for which it has given or is obligated to give credit to the account of such nonmember, and such terms mean share, share certificate, or share draft account of nonmember credit unions and nonmember units of Federal, State, or local governments and political subdivisions thereof enumerated in
(6) The terms "State credit union" and "State-chartered credit union" mean a credit union organized and operated according to the laws of any State, the District of Columbia, the several territories and possessions of the United States, the Panama Canal Zone, or the Commonwealth of Puerto Rico, which laws provide for the organization of credit unions similar in principle and objectives to Federal credit unions;
(7) The term "insured credit union" means any credit union the member accounts of which are insured in accordance with the provisions of subchapter II of this chapter, and the term "noninsured credit union" means any credit union the member accounts of which are not so insured;
(8) The term "Fund" means the National Credit Union Share Insurance Fund; and
(9) The term "branch" includes any branch credit union, branch office, branch agency, additional office, or any branch place of business located in any State of the United States, the District of Columbia, the several territories, including the trust territories, and possessions of the United States, the Panama Canal Zone, or the Commonwealth of Puerto Rico, at which member accounts are established or money lent. The term "branch" also includes a suboffice, operated by a Federal credit union or by a credit union authorized by the Department of Defense, located on an American military installation in a foreign country or in the trust territories of the United States.
(June 26, 1934, ch. 750, title I, §101, formerly §2,
Editorial Notes
References in Text
For definition of Canal Zone, referred to in text, see
Amendments
2006—Par. (3).
Par. (5).
1982—Par. (5).
1980—Par. (5).
Par. (10).
1979—Par. (5).
Par. (10).
1978—Par. (2).
Par. (4).
Par. (5).
Pars. (6) to (8).
Par. (9).
1977—Par. (4).
1970—Par. (2).
Par. (3).
Par. (4).
Pars. (4) to (8).
1959—
Statutory Notes and Related Subsidiaries
Effective Date of 1980 Amendment
Amendment by
Effective and Termination Dates of 1979 Amendment
Amendment by
Effective Date of 1978 Amendment
Repeals
Amendment by section 103 of
Executive Documents
Ex. Ord. No. 13816. Revising the Seal for the National Credit Union Administration
Ex. Ord. No. 13816, Dec. 8, 2017, 82 F.R. 58701, provided:
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:
(i) The eagle overlaid by the shield conveys the NCUA's role as an agency of the Federal Government. The text, "NCUA," in white on a blue background on the crest of the shield is the core of the sign that federally insured credit unions are required to display.
(ii) The three stars above the eagle represent the NCUA's three-member Board, appointed by the President of the United States by and with the advice and consent of the Senate.
(iii) The oak branch the eagle is holding in its left talon symbolizes the NCUA's strength, honor, and longevity in carrying out its mission of promoting confidence in the national system of cooperative credit.
(iv) The olive branch the eagle is holding in its right talon symbolizes the peace and prosperity facilitated by the economic growth and access to affordable financial services that the Nation's credit unions have long provided to millions of Americans.
(v) The upper portion of the circle that forms the border of the seal sets forth the agency's title, "National Credit Union Administration." The date "1934" in the lower portion of the circle reflects the creation of the Federal credit union system by the Congress in 1934 and the long unbroken line of Federal credit union regulation that evolved into the NCUA.
(b) This seal is of suitable design and appropriate for adoption as the official seal of the NCUA.
(c) I hereby approve this seal as the official seal of the NCUA.
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
Donald J. Trump.
§1752a. National Credit Union Administration
(a) Establishment; management under National Credit Union Administration Board
There is established in the executive branch of the Government an independent agency to be known as the National Credit Union Administration. The Administration shall be under the management of a National Credit Union Administration Board.
(b) Membership and appointment of Board
(1) In general
The Board shall consist of three members, who are broadly representative of the public interest, appointed by the President, by and with the advice and consent of the Senate. In appointing the members of the Board, the President shall designate the Chairman. Not more than two members of the Board shall be members of the same political party.
(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.
(c) Term of office
The term of office of each member of the Board shall be six years, except that the terms of the two members, other than the Chairman, initially appointed shall expire one upon the expiration of two years after the date of appointment, and the other upon the expiration of four years after the date of appointment. Board members shall not be appointed to succeed themselves except the initial members appointed for less than a six-year term may be reappointed for a full six-year term and future members appointed to fill unexpired terms may be reappointed for a full six-year term. Any Board member may continue to serve as such after the expiration of said member's term until a successor has qualified.
(d) Management of Administration vested in Board; adoption of rules; quorum; report to President and Congress
The management of the Administration shall be vested in the Board. The Board shall adopt such rules as it sees fit for the transaction of its business and shall keep permanent and complete records and minutes of its acts and proceedings. A majority of the Board shall constitute a quorum. Not later than April 1 of each calendar year, and at such other times as the Congress shall determine, the Board shall make a report to the President and to the Congress. Such a report shall summarize the operations of the Administration and set forth such information as is necessary for the Congress to review the financial program approved by the Board.
(e) Functions of Chairman
The Chairman of the Board shall be the spokesman for the Board and shall represent the Board and the National Credit Union Administration in its official relations with other branches of the Government. The Chairman shall determine each Board member's area of responsibility and shall review such assignments biennially. It shall be the Chairman's responsibility to direct the implementation of the adopted policies and regulations of the Board.
(f) Audit by Government Accountability Office
The financial transactions of the Administration shall be subject to audit by the Government Accountability Office in accordance with the principles and procedures applicable to commercial corporate transactions and under such rules and regulations as may be prescribed by the Comptroller General of the United States. The audit shall be conducted at the place or places where the accounts of the Administration are kept.
(June 26, 1934, ch. 750, title I, §102, formerly §3, as added
Editorial Notes
Prior Provisions
Section 2 of act June 29, 1948, ch. 711,
Section 1 of act June 29, 1948 transferred to the Federal Security Agency all functions, powers, and duties of the Farm Credit Administration and of the Governor thereof under the Federal Credit Union Act, as amended [this chapter], together with the functions of the Secretary of Agriculture with respect thereto, which were transferred to the Federal Deposit Insurance Corporation by Reorganization Plan Numbered 1 of 1947, part IV, section 401 [set out in the Appendix to Title 5, Government Organization and Employees].
Section 3 of act June 29, 1948 transferred to the Federal Security Agency, to be used in the administration of the functions, transferred, (a) all property, including office equipment, transferred to the Federal Deposit Insurance Corporation pursuant to Executive Order 9148 of April 27, 1942 [see note under
Section 4 of act June 29, 1948 transferred all funds allocated, specifically or otherwise, in the budget of the Federal Deposit Insurance Corporation for the administration of the Federal Credit Union Act, as amended [this chapter], during the fiscal year ending June 30, 1949, which were unexpended on the effective date of this Act [see section 5 of act June 29, 1948, set out as a note below], to the Federal Security Agency for use in the administration of the Federal Credit Union Act, as amended [this chapter]. The Corporation was to be reimbursed for the funds so transferred and for all other funds expended by it prior to the effective date of this Act in the administration of the Federal Credit Union Act, as amended [this chapter], in excess of fees from Federal Credit unions received by the Corporation, by deducting such amounts from the first moneys payable to the Secretary of the Treasury on account of the retirement of the stock of the Federal Deposit Insurance Corporation owned by the United States, and the Corporation was to have a charge on such stock for such amounts.
Section 5 of act June 29, 1948 provided that the Act was to become effective on the thirtieth day following the date of enactment.
Amendments
2004—Subsec. (f).
1998—Subsec. (b).
1982—Subsec. (f).
1978—
1970—
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
Transfer of Functions
"(a) All functions, property, records, and personnel of the Bureau of Federal Credit Unions are transferred to the National Credit Union Administration created by this Act [which generally amended this chapter].
"(b) The Director of the Bureau of Federal Credit Unions in office on the date of enactment of this Act [Mar. 10, 1970] shall serve as acting Administrator of the National Credit Union Administration pending the appointment of an Administrator in accordance with section 3 of the Federal Credit Union Act as amended by this Act [this section]."
Study and Report on Differing Regulatory Treatment
Study of Corporate Credit Unions
Study of Credit Union System by GAO
Federally Chartered Central Credit Unions; Report to Congress
§1753. Federal credit union organization
Any seven or more natural persons who desire to form a Federal credit union shall each subscribe either individually or collectively before some officer competent to administer oaths an organization certificate in duplicate which shall specifically state:
(1) the name of the association;
(2) the location of the proposed Federal credit union and the territory in which it will operate;
(3) the names and addresses of the subscribers to the certificate and the number of shares subscribed by each;
(4) the initial par value of the shares;
(5) the proposed field of membership, specified in detail;
(6) the term of the existence of the corporation, which may be perpetual; and
(7) the fact that the certificate is made to enable such persons to avail themselves of the advantages of this chapter.
Such organization certificate may also contain any provisions approved by the Board for the management of the business of the association and for the conduct of its affairs and relative to the powers of its directors, officers, or stockholders.
(June 26, 1934, ch. 750, title I, §103, formerly §3,
Editorial Notes
Amendments
1982—
Par. (4).
1978—
1970—
1959—
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
Executive Documents
Transfer of Functions
Transfer of functions of Farm Credit Administration and Governor thereof, generally, see notes set out under
Functions of Governor of Farm Credit Administration under this section transferred to Federal Deposit Insurance Corporation by Reorg. Plan No. 1 of 1947.
§1754. Approval of organization certificate
The organization certificate shall be presented to the Board for approval. Before any organization certificate is approved, an appropriate investigation shall be made for the purpose of determining (1) whether the organization certificate conforms to the provisions of this chapter; (2) the general character and fitness of the subscribers thereto; and (3) the economic advisability of establishing the proposed Federal credit union. Upon approval of such organization certificate by the Board it shall be the charter of the corporation, and one of the originals thereof shall be delivered to the corporation after the payment of the fee required therefor. Upon such approval the Federal credit union shall be a body corporate and as such, subject to the limitations herein contained, shall be vested with all of the powers and charged with all of the liabilities conferred and imposed by this chapter upon corporations organized hereunder.
(June 26, 1934, ch. 750, title I, §104, formerly §4,
Editorial Notes
Amendments
1978—
1970—
1959—
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
Executive Documents
Transfer of Functions
Transfer of functions of Farm Credit Administration and Governor thereof, generally, see notes set out under
Functions of Governor of Farm Credit Administration under this section transferred to Federal Deposit Insurance Corporation by Reorg. Plan No. 1 of 1947.
§1755. Fees
(a) Payment by Federal credit union to Administration
In accordance with rules prescribed by the Board, each Federal credit union shall pay to the Administration an annual operating fee which may be composed of one or more charges identified as to the function or functions for which assessed.
(b) Determinations of amount, assessment periods, and payment dates
The fee assessed under this section shall be determined according to a schedule, or schedules, or other method determined by the Board to be appropriate, which gives due consideration to the expenses of the Administration in carrying out its responsibilities under this chapter and to the ability of Federal credit unions to pay the fee. The Board shall, among other things, determine the periods for which the fee shall be assessed and the date or dates for the payment of the fee or increments thereof.
(c) Supervision charge exception; waiver of payment
If the annual operating fee is composed of separate charges, no supervision charge shall be payable by a Federal credit union, and the Board may waive payment of any or all other charges comprising the fee, with respect to the year in which its charter is issued, or in which final distribution is made in its liquidation or the charter is canceled.
(d) Payment into Treasury of United States
All operating fees shall be deposited with the Treasurer of the United States for the account of the Administration and may be expended by the Board to defray the expenses incurred in carrying out the provisions of this chapter including the examination and supervision of Federal credit unions.
(e) Investment of annual operating fees not needed for current operations
(1) Upon request of the Board, the Secretary of the Treasury shall invest and reinvest such portions of the annual operating fees deposited under subsection (d) as the Board determines are not needed for current operations.
(2) Such investments may be made only in interest bearing securities of the United States with maturities requested by the Board bearing interest at rates determined by the Secretary of the Treasury, taking into consideration current market yields on outstanding marketable obligations of the United States of comparable maturities.
(3) All income derived from such investments and reinvestments shall be deposited to the account of the Administration described in subsection (d).
(June 26, 1934, ch. 750, title I, §105, formerly §5,
Editorial Notes
Amendments
1982—Subsec. (e).
1978—
1970—
1959—
1952—Act Apr. 17, 1952, amended section, substituting a graduated scale of supervisory fees for the $10 a year supervisory fee.
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
Effective Date of 1952 Amendment
Act Apr. 17, 1952, ch. 214, §2,
Executive Documents
Transfer of Functions
Transfer of functions of Farm Credit Administration and Governor thereof, generally, see notes set out under
Functions of Governor of Farm Credit Administration under this section transferred to Federal Deposit Insurance Corporation by Reorg. Plan No. 1 of 1947.
§1756. Reports and examinations
Federal credit unions shall be under the supervision of the Board, and shall make financial reports to it as and when it may require, but at least annually. Each Federal credit union shall be subject to examination by, and for this purpose shall make its books and records accessible to, any person designated by the Board.
(June 26, 1934, ch. 750, title I, §106, formerly §6,
Editorial Notes
Amendments
1978—
1970—
1959—
1937—Act Dec. 6, 1937, inserted "giving due consideration to the time and expense incident to such examinations, and to the ability of Federal credit unions to pay such fees" and struck out proviso relating to conditions relieving certain unions from payment of examination fee.
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
Executive Documents
Transfer of Functions
Transfer of functions of Farm Credit Administration and Governor thereof, generally, see notes set out under
Functions of Governor of Farm Credit Administration under this section transferred to Federal Deposit Insurance Corporation by Reorg. Plan No. 1 of 1947.
§1756a. Omitted
Editorial Notes
Codification
Section, act July 22, 1942, ch. 516,
§1757. Powers
A Federal credit union shall have succession in its corporate name during its existence and shall have power—
(1) to make contracts;
(2) to sue and be sued;
(3) to adopt and use a common seal and alter the same at pleasure;
(4) to purchase, hold, and dispose of property necessary or incidental to its operations;
(5) to make loans, the maturities of which shall not exceed 15 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 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 on a one-to-four-family dwelling, including an individual cooperative unit, that is or will be the principal residence of a credit union member, and which is secured by a first lien upon such dwelling, may have a maturity not exceeding thirty years or such other limits as shall be set by the National Credit Union Administration Board (except that a loan on an individual cooperative unit shall be adequately secured as defined by the Board), subject to the rules and regulations of the Board;
(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, a loan for the repair, alteration, or improvement of a residential dwelling which is the residence of a credit union member, or a second mortgage loan secured by a residential dwelling which is the residence of a credit union member, shall have a maturity not to exceed 15 years or any longer term which the Board may allow;
(iii) a loan secured by the insurance or guarantee of, or with advance commitment to purchase the loan by, the Federal Government, 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, guarantee, or commitment 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 $20,000 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 $20,000;
(vi) the rate of interest may not exceed 15 per centum per annum on the unpaid balance inclusive of all finance charges, except that the Board may establish—
(I) after consultation with the appropriate committees of the Congress, the Department of Treasury, and the Federal financial institution regulatory agencies, an interest rate ceiling exceeding such 15 per centum per annum rate, for periods not to exceed 18 months, if it determines that money market interest rates have risen over the preceding six-month period and that prevailing interest rate levels threaten the safety and soundness of individual credit unions as evidenced by adverse trends in liquidity, capital, earnings, and growth; and
(II) a higher interest rate ceiling for Agent members of the Central Liquidity Facility in carrying out the provisions of subchapter III for such periods as the Board may authorize;
(vii) the taking, receiving, reserving, or charging of a rate of interest greater than is allowed by this paragraph, when knowingly done, shall be deemed a forfeiture 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 maturity in whole or in part on any business day without penalty, except that on a first or second mortgage loan a Federal credit union may require that any partial prepayments (I) be made on the date monthly installments are due, and (II) be in the amount of that part of one or more monthly installments which would be applicable to principal;
(ix) loans shall be paid or amortized in accordance with rules and regulations prescribed by the Board 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 Board deems relevant; 1
(x) loans must be approved by the credit committee or a loan officer, but no loan may be made to any member if, upon the making of that loan, the member would be indebted to the Federal credit union upon loans made to him in an aggregate amount which would exceed 10 per centum of the credit union's unimpaired capital and surplus.
(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 organization as determined by the Board, which is established 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: 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;
(6) to receive from its members, from other credit unions, from an officer, employee, or agent of those nonmember units of Federal, Indian tribal, State, or local governments and political subdivisions thereof enumerated in
(A) shares which may be issued at varying dividend rates;
(B) share certificates which may be issued at varying dividend rates and maturities; and
(C) share draft accounts authorized under
subject to such terms, rates, and conditions as may be established by the board of directors, within limitations prescribed by the Board;
(7) to invest its funds (A) in loans exclusively to members; (B) in obligations of the United States of America, or securities fully guaranteed as to principal and interest thereby; (C) in accordance with rules and regulations prescribed by the Board, in loans to other credit unions in the total amount not exceeding 25 per centum of its paid-in and unimpaired capital and surplus; (D) in shares or accounts of savings and loan associations or mutual savings banks, the accounts of which are insured by the Federal Deposit Insurance Corporation; (E) in obligations issued by banks for cooperatives, Federal land banks, Federal intermediate credit banks, Federal home loan banks, the Federal Housing Finance Board, or any corporation designated in
(8) to make deposits in national banks and in State banks, trust companies, and mutual savings banks operating in accordance with the laws of the State in which the Federal credit union does business, or in banks or institutions the accounts of which are insured by the Federal Deposit Insurance Corporation, and for Federal credit unions or credit unions authorized by the Department of Defense operating suboffices on American military installations in foreign countries or trust territories of the United States to maintain demand deposit accounts in banks located in those countries or trust territories, subject to such regulations as may be issued by the Board and provided such banks are correspondents of banks described in this paragraph;
(9) to borrow, in accordance with such rules and regulations as may be prescribed by the Board, from any source, in an aggregate amount not exceeding, except as authorized by the Board in carrying out the provisions of subchapter III, 50 per centum of its paid-in and unimpaired capital and surplus: Provided, That any Federal credit union may discount with or sell to any Federal intermediate credit bank any eligible obligations up to the amount of its paid-in and unimpaired capital;
(10) to levy late charges, in accordance with the bylaws, for failure of members to meet promptly their obligations to the Federal credit union;
(11) to impress and enforce a lien upon the shares and dividends of any member, to the extent of any loan made to him and any dues or charges payable by him;
(12) in accordance with regulations prescribed by the Board—
(A) to sell, to persons in the field of membership, negotiable checks (including travelers checks), money orders, and other similar money transfer instruments (including international and domestic electronic fund transfers and remittance transfers, as defined in
(B) to cash checks and money orders for persons in the field of membership for a fee;
(13) in accordance with rules and regulations prescribed by the Board, to purchase, sell, pledge, or discount or otherwise receive or dispose of, in whole or in part, any eligible obligations (as defined by the Board) of its members and to purchase from any liquidating credit union notes made by individual members of the liquidating credit union at such prices as may be agreed upon by the board of directors of the liquidating credit union and the board of directors of the purchasing credit union, but no purchase may be made under authority of this paragraph if, upon the making of that purchase, the aggregate of the unpaid balances of notes purchased under authority of this paragraph would exceed 5 per centum of the unimpaired capital and surplus of the credit union;
(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 Board;
(15) to invest in securities that—
(A) are offered and sold pursuant to
(B) are mortgage related securities (as that term is defined in
(C) are small business related securities (as defined in
(16) subject to such regulations as the Board may prescribe, to provide technical assistance to credit unions in Poland and Hungary; and
(17) to exercise such incidental powers as shall be necessary or requisite to enable it to carry on effectively the business for which it is incorporated.
(June 26, 1934, ch. 750, title I, §107, formerly §7,
Editorial Notes
References in Text
Codification
In par. (7), "
Amendments
2010—Par. (8).
Par. (12).
"(A) to sell, to persons in the field of membership, negotiable checks (including travelers checks), money orders, and other similar money transfer instruments (including international and domestic electronic fund transfers); and
"(B) to cash checks and money orders and receive international and domestic electronic fund transfers for persons in the field of membership for a fee;".
2006—Par. (5).
Par. (5)(E).
Par. (6).
Par. (7).
Par. (7)(D).
Par. (7)(E).
Par. (9).
Par. (12).
Par. (13).
1996—Par. (5)(A)(iv), (v).
1994—Par. (15)(C).
1989—Pars. (16), (17).
1987—Par. (5)(A)(ii).
Par. (6).
1984—Par. (5)(A)(ii).
Pars. (15), (16).
1983—Par. (5)(A)(i).
Par. (7)(K).
1982—Par. (5)(A)(i).
Par. (5)(A)(ii).
Par. (5)(A)(iii).
Par. (5)(A)(iv), (v).
Par. (5)(A)(viii).
Par. (5)(A)(x).
Par. (7)(E).
Par. (7)(L).
Par. (8).
Par. (12).
1980—Par. (5)(A)(i).
Par. (5)(A)(vi).
Par. (6).
1979—Par. (6).
1978—Par. (5).
Par. (6).
Par. (7).
Par. (8).
Par. (9).
Pars. (12) to (14).
1977—Par. (5).
Par. (6).
Par. (7).
Pars. (8) to (12).
Par. (13).
Par. (14).
1974—Par. (5).
Par. (6).
Par. (7).
Par. (8)(E).
Par. (9).
1972—Par. (8)(E).
1970—Pars. (5), (6), (8), (10), (13), (14),
Par. (7).
Par. (8).
1968—Par. (5).
Par. (8).
Pars. (14), (15).
1967—Par. (5).
Pars. (6), (7).
Pars. (8) to (14).
1966—Par. (7).
1964—Par. (7)(E).
1959—
1952—Par. (7)(d). Act May 13, 1952, authorized investment of funds in shares or accounts of any other institutions whose accounts are insured by the Federal Savings and Loan Insurance Corporation.
1949—Par. (5). Act Oct. 25, 1949, increased from 2 years to 3 years the limit for maturity of loans.
1946—Par. (5). Act July 31, 1946, inserted last two sentences to provide for the forfeiture of the entire amount of interest reserved and for the recovery of the entire amount of interest paid for the violation of the interest limitation.
1937—Par. (7)(c), (d). Act Dec. 6, 1937, added cls. (c) and (d).
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Amendment by section 362(1) of
Amendment by section 1073(d) of
Effective Date of 1980 Amendment
Amendment by section 305(b) of
Effective and Termination Dates of 1979 Amendments
Amendment by
Effective Date of 1978 Amendment
Amendment by section 502(b) of
Amendment by section 1803 of
Effective Date of 1974 Amendments
Amendment by
Amendment by
Effective Date of 1968 Amendment
For effective date of amendment by title VIII of
Repeals
Amendment by section 103 of
1 So in original. Probably should be followed by "and".
2 See References in Text note below.
§1757a. Limitation on member business loans
(a) In general
On and after August 7, 1998, 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
(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
(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;
(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 August 7, 1998, a total amount of outstanding member business loans that exceeds the amount permitted under subsection (a) shall, not later than 3 years after August 7, 1998, 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.
(June 26, 1934, ch. 750, title I, §107A, as added
Editorial Notes
Amendments
2018—Subsec. (c)(1)(B)(i).
Statutory Notes and Related Subsidiaries
Rule of Construction
Study and Report
§1758. Bylaws
In order to simplify the organization of Federal credit unions the Board shall from time to time cause to be prepared a form of organization certificate and a form of bylaws, consistent with this chapter, which shall be used by Federal credit union incorporators, and shall be supplied to them on request. At the time of presenting the organization certificate the incorporators shall also submit proposed bylaws to the Board for its approval.
(June 26, 1934, ch. 750, title I, §108, formerly §8,
Editorial Notes
Amendments
1978—
1970—
1959—
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
Executive Documents
Transfer of Functions
Transfer of functions of Farm Credit Administration and Governor thereof, generally, see notes set out under
Functions of Governor of Farm Credit Administration under this section transferred to Federal Deposit Insurance Corporation by Reorg. Plan No. 1 of 1947.
§1759. Membership
(a) In general
Subject to subsection (b), Federal credit union membership shall consist of the incorporators and such other persons and incorporated and unincorporated organizations, to the extent permitted by rules and regulations prescribed by the Board, as may be elected to membership and as such shall each, subscribe to at least one share of its stock and pay the initial installment thereon and a uniform entrance fee if required by the board of directors. Shares may be issued in joint tenancy with right of survivorship with any persons designated by the credit union member, but no joint tenant shall be permitted to vote, obtain loans, or hold office, unless he is within the field of membership and is a qualified member.
(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 August 7, 1998, may remain a member of the credit union after August 7, 1998; and
(ii) a member of any group whose members constituted a portion of the membership of any Federal credit union as of August 7, 1998, shall continue to be eligible to become a member of that credit union, by virtue of membership in that group, after August 7, 1998.
(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
(ii) is underserved, based on data of the Board and the Federal banking agencies (as defined in
(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 August 7, 1998.
(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
(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
(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.
(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 August 7, 1998.
(June 26, 1934, ch. 750, title I, §109, formerly §9,
Editorial Notes
Amendments
2006—Subsec. (c)(2)(A)(i).
1998—Subsec. (a).
Subsecs. (b) to (e).
Subsec. (f).
Subsec. (g).
1978—
1974—
1970—
1959—
1946—Act July 31, 1946, inserted sentence at end permitting a Federal credit union to issue shares in joint tenancy with a right of survivorship.
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
Report and Congressional Review Requirement for Certain Regulations
"(1) the term 'immediate family or household' for purposes of section 109(e)(1) of the Federal Credit Union Act [
"(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)."
§1760. Members' meetings
The fiscal year of all Federal credit unions shall end December 31. The annual meeting of each Federal credit union shall be held at such place as its bylaws shall prescribe. Special meetings may be held in the manner indicated in the bylaws. No member shall be entitled to vote by proxy, but a member other than a natural person may vote through an agent designated for the purpose. Irrespective of the number of shares held, no member shall have more than one vote.
(June 26, 1934, ch. 750, title I, §110, formerly §10,
Editorial Notes
Amendments
1982—
1963—
§1761. Management
(a) Board of directors, credit committee, and supervisory committee; election to board
The management of a Federal credit union shall be by a board of directors, a supervisory committee, and where the bylaws so provide, a credit committee. The board shall consist of an odd number of directors, at least five in number, to be elected annually by and from the members as the bylaws provide. Any vacancy occurring on the board shall be filled until the next annual election by appointment by the remainder of the directors.
(b) Membership on supervisory committee; names and addresses of officers and committee members
The supervisory committee shall be appointed by the board of directors and shall consist of not less than three members nor more than five members, one of whom may be a director other than the compensated officer of the board. A record of the names and addresses of the executive officers, members of the supervisory committee, credit committee, and loan officers, shall be filed with the Administration within ten days after their election or appointment.
(c) Compensation
No member of the board or of any other committee shall, as such, be compensated, except that reasonable health, accident, similar insurance protection, and the reimbursement of reasonable expenses incurred in the execution of the duties of the position shall not be considered compensation.
(June 26, 1934, ch. 750, title I, §111, formerly §11,
Editorial Notes
Amendments
1982—
1978—
1974—
1970—
1964—
1959—
1954—Subsecs. (b), (c). Act Aug. 24, 1954, provided express authority for the Director of the Bureau of Federal Credit Unions to regulate the minimum amount and character of surety bonds for officers and employees.
Subsec. (c). Act June 30, 1954, inserted provision with respect to interest refunds.
1949—Subsec. (d). Act Oct. 25, 1949, substituted "$400" for "$300" wherever appearing.
1946—Subsec. (c). Act July 31, 1946, struck out "fix the amount and character of the surety bond required of any officer having custody of funds" and inserted "require any officer or employee having custody of or handling funds to give bond with good and sufficient surety in an amount and character to be determined, from time to time, by the board and authorize the payment of the premium or premiums therefor from the funds of the Federal credit union".
Subsec. (d). Act July 31, 1946, struck out requirement that notice of meeting of the credit committee must be given by the treasurer and increased the maximum amount of an unsecured loan to a member from $100 to $300.
Subsec. (e). Act July 31, 1946, inserted last sentence defining "passbook".
1940—Subsec. (d). Act June 15, 1940, substituted "$100" for "$50" in fourth sentence.
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
Executive Documents
Transfer of Functions
Transfer of functions of Farm Credit Administration and Governor thereof, generally, see notes set out under
Functions of Governor of Farm Credit Administration under this section transferred to Federal Deposit Insurance Corporation by Reorg. Plan No. 1 of 1947.
§1761a. Officers of the board
At their first meeting after the annual meeting of the members, the directors shall elect from their number the board officers specified in the bylaws. Only one board officer may be compensated as an officer of the board and the bylaws shall specify such position as well as the specific duties of each of the board officers. The board shall elect from their number a financial officer who shall give adequate fidelity coverage in accordance with
(June 26, 1934, ch. 750, title I, §112, formerly §13, as added
Editorial Notes
Prior Provisions
Provisions similar to those comprising this section were contained in section 11(b) of act June 26, 1934, ch. 750,
Amendments
1987—
1982—
1978—
1970—
1963—
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
§1761b. Board of directors; meetings; powers and duties; executive committee; membership officers; membership application
The board of directors shall meet at least once a month and shall have the general direction and control of the affairs of the Federal credit union. Minutes of all meetings shall be kept. Among other things, the board of directors shall—
(1) act upon applications for membership or appoint membership officers from among the members of the credit union, other than the board member paid as an officer, the financial board officer, any assistant to the paid officer of the board or to the financial officer, or any loan officer;
(2) provide adequate fidelity coverage for officers and employees having custody of or handling funds according to regulations issued by the Board;
(3) fill vacancies on the board of directors until successors elected at the next annual meeting have qualified;
(4) if the bylaws provide for an elected credit committee, fill vacancies on the credit committee until successors elected at the next annual meeting have qualified;
(5) appoint the members of the supervisory committee and, if the bylaws so provide, appoint the members of the credit committee;
(6) have charge of investments including the right to designate an investment committee of not less than two to act on its behalf;
(7) determine the maximum number of shares, share certificates, and share draft accounts, and the classes of shares, share certificates, and share draft accounts;
(8) subject to any limitations of this subchapter,1 determine the interest rates on loans, the security, and the maximum amount which may be loaned and provided in lines of credit;
(9) authorize interest refunds to members of record at the close of business on the last day of any dividend period from income earned and received in proportion to the interest paid by them during that dividend period;
(10) if the bylaws so provide, appoint one or more loan officers and delegate to these officers the power to approve or disapprove loans, lines of credit, or advances from lines of credit;
(11) establish the par value of the share;
(12) subject to the limitations of this subchapter and the bylaws of the credit union, provide for the hiring and compensation of officers and employees;
(13) if the bylaws so provide, appoint an executive committee of not less than three directors to act on its behalf and any other committees to which it can delegate specific functions;
(14) prescribe conditions and limitations for any committee which it appoints;
(15) review at each monthly meeting a list of approved or pending applications for membership received since the previous monthly meeting together with such other related information as it or the bylaws require;
(16) provide for the furnishing of the written reasons for any denial of a membership application to the applicant upon the written request of the applicant;
(17) in the absence of a credit committee, and upon the written request of a member, review a loan application denied by a loan officer;
(18) declare the dividend rate to be paid on shares, share certificates, and share draft accounts pursuant to the terms and conditions of
(19) establish and maintain a system of internal controls consistent with the regulations of the Board;
(20) establish lending policies; and
(21) do all other things that are necessary and proper to carry out all the purposes and powers of the Federal credit union, subject to regulations issued by the Board.
(June 26, 1934, ch. 750, title I, §113, formerly §14, as added
Editorial Notes
References in Text
This subchapter, referred to in par. (8), probably should have been a reference to this title in the original, meaning title I of act June 26, 1934, ch. 750, which is classified generally to this subchapter.
Prior Provisions
Provisions similar to those comprising this section were contained in section 11(c) of act June 26, 1934, ch. 750,
Amendments
1987—Par. (1).
Par. (2).
1983—
Par. (2).
Par. (9).
Par. (15).
1982—
1978—
1977—
1974—
1970—
1968—
1964—
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
1 See References in Text note below.
§1761c. Credit committee
(a) Members; meetings; lines of credit and approval of loans; delegation to loan officers
If the bylaws provide for a credit committee, then pursuant to the provisions of the bylaws, the board of directors may appoint or the members may elect a credit committee which shall consist of an odd number of members of the credit union, but which shall not include more than one loan officer. The method used shall be set forth in the bylaws. The credit committee shall hold such meetings as the business of the Federal credit union may require, not less frequently than once a month, to consider applications for loans or lines of credit. Reasonable notice of such meetings shall be given to all members of the committee. Except for those loans or lines of credit required to be approved by the board of directors in
(b) Review and reversal of loan refusals; review by board in lieu of committee; limitation on disbursements by loan officers
If the bylaws provide for a credit committee, all applications not approved by the loan officer shall be reviewed by the credit committee, and the approval of a majority of the members who are present at the meeting when such review is undertaken shall be required to reverse the loan officer's decision provided a majority of the full committee is present. If there is not a credit committee, a member shall have the right upon written request of review by the board of directors of a loan application which has been denied. No individual shall have authority to disburse funds of the Federal credit union with respect to any loan or line of credit for which the application has been approved by him in his capacity as a loan officer.
(June 26, 1934, ch. 750, title I, §114, formerly §15, as added
Editorial Notes
Prior Provisions
Provisions similar to those comprising this section were contained in section 11(d) of act June 26, 1934, ch. 750,
Amendments
1982—
1978—
1977—
1970—
1968—
1967—
1964—
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
§1761d. Supervisory committee; powers and duties; suspension of members; passbook
The supervisory committee shall make or cause to be made an annual audit and shall submit a report of that audit to the board of directors and a summary of the report to the members at the next annual meeting of the credit union; shall make or cause to be made such supplementary audits as it deems necessary or as may be ordered by the Board, and submit reports of the supplementary audits to the board of directors; may by a unanimous vote suspend any officer of the credit union or any member of the credit committee or of the board of directors, until the next members' meeting, which shall be held not less than seven or more than fourteen days after any such suspension, at which meeting any such suspension shall be acted upon by the members; and may call by a majority vote a special meeting of the members to consider any violations of this chapter, the charter, or the bylaws, or any practice of the credit union deemed by the supervisory committee to be unsafe or unauthorized. Any member of the supervisory committee may be suspended by a majority vote of the board of directors. The members shall decide, at a meeting held not less than seven nor more than fourteen days after any such suspension, whether the suspended committee member shall be removed from or restored to the supervisory committee. The supervisory committee shall cause the passbooks and accounts of the members to be verified with the records of the treasurer from time to time, and not less frequently than once every two years. As used in this section, the term "passbook" shall include any book, statement of account, or other record approved by the Board for use by Federal credit unions.
(June 26, 1934, ch. 750, title I, §115, formerly §16, as added
Editorial Notes
Prior Provisions
Provisions similar to those comprising this section were contained in section 11(e) of act June 26, 1934, ch. 750,
Amendments
1978—
1974—
1970—
1968—
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
§1762. Repealed. Pub. L. 105–219, title III, §301(g)(3), Aug. 7, 1998, 112 Stat. 931
Section, acts June 26, 1934, ch. 750, title I, §116, formerly §12,
§1763. Dividends
At such intervals as the board of directors may authorize, and after provision for required reserves, the board of directors may declare a dividend to be paid at different rates on different types of shares, at different rates and maturity dates in the case of share certificates, and at different rates on different types of share draft accounts. Dividends credited may be accrued on various types of shares, share certificates, and share draft accounts as authorized by the board of directors. If the par value of a share exceeds $5, dividends shall be paid on all funds in the regular share account once a full share has been purchased.
(June 26, 1934, ch. 750, title I, §117, formerly §13,
Editorial Notes
Amendments
1982—
1980—
1978—
1977—
1974—
1967—
1959—
Statutory Notes and Related Subsidiaries
Effective Date of 1980 Amendment
Amendment by section 305(c) of
Effective Date of 1978 Amendment
Amendment by
§1764. Expulsion and withdrawal
(a) Expulsion by two-thirds vote
Except as provided in subsections (b) and (c) of this section, a member may be expelled by a two-thirds vote of the members of a Federal credit union present at a special meeting called for the purpose, but only after opportunity has been given to the member to be heard.
(b) Expulsion based on nonparticipation
The board of directors of a Federal credit union may, by majority vote of a quorum of directors, adopt and enforce a policy with respect to expulsion from membership based on nonparticipation by a member in the affairs of the credit union. In establishing its policy, the board should consider a member's failure to vote in annual credit union elections or failure to purchase shares from, obtain a loan from, or lend to the Federal credit union. If such a policy is adopted, written notice of the policy as adopted and the effective date of such policy shall be mailed to each member of the credit union at the member's current address appearing on the records of the credit union not less than thirty days prior to the effective date of such policy. In addition, each new member shall be provided written notice of any such policy prior to or upon applying for membership.
(c) Expulsion for cause
(1) In general
Except as provided in subsections (a) and (b) of this section, a member may be expelled for cause by a two-thirds vote of a quorum of the directors of the Federal credit union pursuant to a policy which the National Credit Union Administration Board shall adopt, pursuant to a rulemaking, not later than the end of the 18-month period following March 15, 2022.
(2) Distribution of policy to members
A Federal credit union may not expel a member pursuant to this subsection unless the Federal credit union has provided, in written or electronic form, a copy of the policy adopted by the National Credit Union Administration Board under paragraph (1) to each member of the Federal credit union.
(3) Procedures
(A) Notification of pending expulsion
If a member will, subject to the policy adopted under paragraph (1), be subject to expulsion, the member shall be notified in advance of the expulsion, along with the reason for such expulsion. Such notice shall be provided in person, by mail to the member's address, or, if the member has elected to receive electronic communications from the Federal credit union, may be provided electronically.
(B) Right to a hearing
(i) In general
A member shall have 60 days from the date of receipt of a notification under subparagraph (A) to request a hearing from the board of directors of the Federal credit union.
(ii) Expulsion if no hearing
If a member does not request a hearing during the 60-day period described under clause (i), the member shall be expelled after the end of the 60-day period.
(C) Hearing; vote on expulsion
If a member requests a hearing during the 60-day period described under subparagraph (B)(i)—
(i) the board of directors of the Federal credit union shall provide the member with a hearing; and
(ii) after such hearing, the board of directors of the Federal credit union shall hold a vote in a timely manner on expelling the member.
(D) Notice of expulsion
If a member is expelled under subparagraph (B)(ii) or (C)(ii), notice of the expulsion of the member shall be provided to the member in person, by mail to the member's address, in written form or, if the member has elected to receive electronic communications from the Federal credit union, may be provided electronically.
(4) Reinstatement
(A) In general
A member expelled under this subsection—
(i) shall be given an opportunity to request reinstatement of membership; and
(ii) may be reinstated by either—
(I) a majority vote of a quorum of the directors of the Federal credit union; or
(II) a majority vote of the members of the Federal credit union present at a meeting.
(B) Rule of construction
Nothing in this paragraph may be construed to require that an expelled member be allowed to attend the meeting described in subparagraph (A)(ii) in person.
(5) Cause defined
In this subsection, the term "cause" means—
(A) a substantial or repeated violation of the membership agreement of the Federal credit union;
(B) a substantial or repeated disruption, including dangerous or abusive behavior (as defined by the National Credit Union Administration Board pursuant to a rulemaking), to the operations of a Federal credit union; or
(C) fraud, attempted fraud, or other illegal conduct that a member has been convicted of in relation to the Federal credit union, including the Federal credit union's employees conducting business on behalf of the Federal credit union.
(d) Liability to credit union
Withdrawal or expulsion of a member pursuant to subsection (a), (b), or (c) of this section shall not operate to relieve the member from liability to the Federal credit union. The amount to be paid a withdrawing or expelled member by a Federal credit union shall be determined and paid in a manner specified in the bylaws.
(e) No authority to expel classes of members
An expulsion of a member pursuant to this section shall be done individually, on a case-by-case basis, and neither the Board nor any Federal credit union may expel a class of members.
(June 26, 1934, ch. 750, title I, §118, formerly §14,
Editorial Notes
Amendments
2022—Subsec. (a).
Subsec. (c).
Subsec. (d).
Subsec. (e).
1987—Subsec. (a).
Subsec. (b).
1982—
§1765. Minors
Shares may be issued in the name of a minor or in trust, subject to such conditions as may be prescribed by the bylaws. When shares are issued in trust, the name of the beneficiary shall be disclosed to the Federal credit union.
(June 26, 1934, ch. 750, title I, §119, formerly §15,
Editorial Notes
Amendments
1959—
§1766. Powers of Board
(a) The Board may prescribe rules and regulations for the administration of this chapter (including, but not by way of limitation, the merger, consolidation, and dissolution of corporations organized under this chapter). Any central credit union chartered by the Board shall be subject to such rules, regulations, and orders as the Board deems appropriate and, except as otherwise specifically provided in such rules, regulations, or orders, shall be vested with or subject to the same rights, privileges, duties, restrictions, penalties, liabilities, conditions, and limitations that would apply to all Federal credit unions under this chapter.
(b)(1) The Board may suspend or revoke the charter of any Federal credit union, or place the same in involuntary liquidation and appoint a liquidating agent therefor, upon its finding that the organization is bankrupt or insolvent, or has violated any of the provisions of its charter, its bylaws, this chapter, or any regulations issued thereunder.
(2) The Board, through such persons as it shall designate, may examine any Federal credit union in voluntary liquidation and, upon its finding that such voluntary liquidation is not being conducted in an orderly or efficient manner or in the best interests of its members, may terminate such voluntary liquidation and place such organization in involuntary liquidation and appoint a liquidating agent therefor.
(3) Such liquidating agent shall have power and authority, subject to the control and supervision of the Board and under such rules and regulations as the Board may prescribe, (A) to receive and take possession of the books, records, assets, and property of every description of the Federal credit union in liquidation, to sell, enforce collection of, and liquidate all such assets and property, to compound all bad or doubtful debts, and to sue in his own name or in the name of the Federal credit union in liquidation, and defend such actions as may be brought against him as liquidating agent or against the Federal credit union; (B) to receive, examine, and pass upon all claims against the Federal credit union in liquidation, including claims of members on member accounts; (C) to make distribution and payment to creditors and members as their interests may appear; and (D) to execute such documents and papers and to do such other acts and things which he may deem necessary or desirable to discharge his duties hereunder.
(4) Subject to the control and supervision of the Board and under such rules and regulations as the Board may prescribe, the liquidating agent of a Federal credit union in involuntary liquidation shall (A) cause notice to be given to creditors and members to present their claims and make legal proof thereof, which notice shall be published once a week in each of three successive weeks in a newspaper of general circulation in each county in which the Federal credit union in liquidation maintained an office or branch for the transaction of business on the date it ceased unrestricted operations; except that whenever the aggregate book value of the assets and property of a Federal credit union in involuntary liquidation is less than $1,000, unless the Board shall find that its books and records do not contain a true and accurate record of its liabilities he shall declare such Federal credit union in liquidation to be a "no publication" liquidation, and publication of notice to creditors and members shall not be required in such case; (B) from time to time make a ratable dividend on all such claims as may have been proved to his satisfaction or adjudicated in a court of competent jurisdiction and, after the assets of such organization have been liquidated, make further dividends on all claims previously proved or adjudicated, and he may accept in lieu of a formal proof of claim on behalf of any creditor or member the statement of any amount due to such creditor or member as shown on the books and records of the credit union; but all claims not filed before payment of the final dividend shall be barred and claims rejected or disallowed by the liquidating agent shall be likewise barred unless suit be instituted thereon within three months after notice of rejection or disallowance; and (C) in a "no publication" liquidation, determine from all sources available to him, and within the limits of available funds of the Federal credit union, the amounts due to creditors and members, and after sixty days shall have elapsed from the date of his appointment distribute the funds of the Federal credit union to creditors and members ratably and as their interests may appear.
(5) Upon certification by the liquidating agent in the case of an involuntary liquidation, and upon such proof as shall be satisfactory to the Board in the case of a voluntary liquidation, that distribution has been made and that liquidation has been completed, as provided herein, the Board shall cancel the charter of such Federal credit union; but the corporate existence of the Federal credit union shall continue for a period of three years from the date of such cancellation of its charter, during which period the liquidating agent, or his duly appointed successor, or such persons as the Board shall designate, may act on behalf of the Federal credit union for the purpose of paying, satisfying, and discharging any existing liabilities or obligations, collecting and distributing its assets, and doing all other acts required to adjust and wind up its business and affairs, and it may sue and be sued in its corporate name.
(c) After the expiration of five years from the date of cancellation of the charter of a Federal credit union the Board may, in its discretion, destroy any or all books and records of such Federal credit union in its possession or under its control.
(d) The Board is authorized and empowered to execute any and all functions and perform any and all duties vested in it hereby, through such persons as it shall designate or employ; and it may delegate to any person or persons, including any institution operating under the general supervision of the Administration, the performance and discharge of any authority, power, or function vested in it by this chapter.
(e) All books and records of Federal credit unions shall be kept and reports shall be made in accordance with forms approved by the Board.
(f)(1) The Board is authorized to make investigations and to conduct researches and studies of the problems of persons of small means in obtaining credit at reasonable rates of interest, and of the methods and benefits of cooperative saving and lending among such persons. It is further authorized to make reports of such investigations and to publish and disseminate the same.
(2)(A) The Board is authorized to conduct directly, or to make grants to or contracts with colleges or universities, State or local educational agencies, or other appropriate public or private nonprofit organizations to conduct, programs for the training of persons engaged, or preparing to engage, in the operation of credit unions, and in related consumer counseling programs, serving the poor. It is authorized to establish a program of experimental, developmental, demonstration, and pilot projects, either directly or by grants to public or private nonprofit organizations, including credit unions, or by contracts with such organizations or other private organizations, designed to promote more effective operation of credit unions, and related consumer counseling programs, serving the poor.
(B) In carrying out its authority under this paragraph, the Board shall consult with officials of the Office of Economic Opportunity and other appropriate Federal agencies responsible for the administration of projects or programs concerned with problems of the poor. The development and operation of programs and projects under this paragraph shall involve maximum feasible participation of residents of the areas and members of the groups served by such programs and projects, with community action agencies established under the provisions of the Economic Opportunity Act of 1964 [
(C) In order to carry out the purposes of this paragraph, there is authorized to be appropriated, as a supplement to any funds that may be expended by the Board pursuant to
(g) Any officer or employee of the Administration is authorized, when designated for the purpose by the Board, to administer oaths and affirmations and to take affidavits and depositions touching upon any matter within the jurisdiction of the Administration.
(h) The Board is authorized, empowered, and directed to require that every person appointed or elected by any Federal credit union to any position requiring the receipt, payment, or custody of money or other personal property owned by a Federal credit union, or in its custody or control as collateral or otherwise, give bond in a corporate surety company holding a certificate of authority from the Secretary of the Treasury under
(i) In addition to the authority conferred upon it by other sections of this chapter, the Board is authorized in carrying out its functions under this chapter—
(1) to appoint such personnel as may be necessary to enable the Administration to carry out its functions;
(2) to expend such funds, enter into such contracts with public and private organizations and persons, make such payments in advance or by way of reimbursement, acquire and dispose of, by lease or purchase, real or personal property, without regard to the provisions of any other law applicable to executive or independent agencies of the United States, and perform such other functions or acts as it may deem necessary or appropriate to carry out the provisions of this chapter, in accordance with the rules and regulations or policies established by the Board not inconsistent with this chapter; and
(3) to pay stipends, including allowances for travel to and from the place of residence, to any individual to study in a program assisted under this chapter upon a determination by the Board that assistance to such individual in such studies will be in furtherance of the purposes of this chapter.
(j)
(1)
(2)
(3)
(June 26, 1934, ch. 750, title I, §120, formerly §16,
Editorial Notes
References in Text
The Economic Opportunity Act of 1964, referred to in subsec. (f)(2)(B), is
Amendments
2006—Subsec. (h).
1994—Subsec. (k).
1989—Subsec. (j).
Subsec. (k).
1987—Subsec. (i)(2).
1982—Subsec. (a).
1978—
1977—Subsec. (b)(3)(B).
1970—Subsecs. (a) to (h).
Subsec. (i).
1968—Subsec. (f).
1959—
1954—Subsec. (f). Act June 30, 1954, added subsec. (f).
Subsec. (g). Act Aug. 24, 1954, added subsec. (g).
1946—Subsec. (b). Act July 31, 1946, provided a more adequate statutory procedure for the administration of this chapter by expressly authorizing the liquidation of a Federal credit union and setting up a procedure which will achieve more orderly and complete liquidation.
1937—Subsec. (e). Act Dec. 6, 1937, added subsec. (e).
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
Effective Date of 1968 Amendment
§1767. Fiscal agents and depositories; authorization to secure deposits by governmental bodies
(a) Each Federal credit union organized under this chapter, when requested by the Secretary of the Treasury, shall act as fiscal agent of the United States and shall perform such services as the Secretary of the Treasury may require in connection with the collection of taxes and other obligations due the United States and the lending, borrowing, and repayment of money by the United States, including the issue, sale, redemption, or repurchase of bonds, notes, Treasury certificates of indebtedness, or other obligations of the United States; and to facilitate such purposes the Board shall furnish to the Secretary of the Treasury from time to time the names and addresses of all Federal credit unions with such other available information concerning them as may be requested by the Secretary of the Treasury. Any Federal credit union organized under this chapter, when designated for that purpose by the Secretary of the Treasury, shall be a depository of public money, except receipts from customs, under such regulations as may be prescribed by the Secretary of the Treasury.
(b) Any Federal credit union, upon the deposit with it of any funds by the Federal Government, an Indian tribe, or any State or local government or political subdivision thereof as otherwise authorized by this chapter, is authorized to pledge any of its assets securing the payment of the funds so deposited.
(June 26, 1934, ch. 750, title I, §121, formerly §17,
Editorial Notes
Amendments
1987—
1978—
1970—
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
Executive Documents
Transfer of Functions
Transfer of functions of Farm Credit Administration and Governor thereof, generally, see notes set out under
Functions of Governor of Farm Credit Administration under this section transferred to Federal Deposit Insurance Corporation by Reorg. Plan No. 1 of 1947.
§1768. Taxation
The Federal credit unions organized hereunder, their property, their franchises, capital, reserves, surpluses, and other funds, and their income shall be exempt from all taxation now or hereafter imposed by the United States or by any State, Territorial, or local taxing authority; except that any real property and any tangible personal property of such Federal credit unions shall be subject to Federal, State, Territorial, and local taxation to the same extent as other similar property is taxed. Nothing herein contained shall prevent holdings in any Federal credit union organized hereunder from being included in the valuation of the personal property of the owners or holders thereof in assessing taxes imposed by authority of the State or political subdivision thereof in which the Federal credit union is located; but the duty or burden of collecting or enforcing the payment of such a tax shall not be imposed upon any such Federal credit union and the tax shall not exceed the rate of taxes imposed upon holdings in domestic credit unions.
(June 26, 1934, ch. 750, title I, §122, formerly §18,
Editorial Notes
Amendments
1959—
1937—Act Dec. 6, 1937, inserted tax exemption provision, the real and tangible personal property proviso, provided that responsibility of tax collection would not be imposed upon Federal credit unions, and that tax rate would not exceed that of domestic credit unions.
§1769. Separability; right to alter, amend, or repeal chapter
(a) If any provision of this chapter, or the application thereof to any person or circumstance, is held invalid, the remainder of the chapter, and the application of such provision to other persons or circumstances, shall not be affected thereby.
(b) The right to alter, amend, or repeal this chapter or any part thereof, or any charter issued pursuant to the provisions of this chapter, is expressly reserved.
(June 26, 1934, ch. 750, title I, §123, formerly §24, as added
Editorial Notes
Prior Provisions
A prior section 1769, act June 26, 1934, ch. 750, §19,
Provisions similar to those comprising this section were contained in section 20 of act June 26, 1934, ch. 750,
§1770. Allotment of space in Federal buildings or Federal land
Notwithstanding any other provision of law, upon application by any credit union organized under State law or by any Federal credit union organized in accordance with the terms of this chapter, which application shall be addressed to the officer or agency of the United States charged with the allotment of space on lands reserved for the use of, and under the exclusive or concurrent jurisdiction of, the United States or in the Federal buildings in the community or district in which such credit union does business, such officer or agency may in his or its discretion lease land or allot space to such credit union without charge for rent or services if at least 95 percent of the membership of the credit union to be served by the allotment of space or the facility built on the lease land is composed of persons who either are presently Federal employees or were Federal employees at the time of admission into the credit union, and members of their families, and if space is available. For the purpose of this section, the term "services" includes, but is not limited to, the providing of lighting, heating, cooling, electricity, office furniture, office machines and equipment, telephone service (including installation of lines and equipment and other expenses associated with telephone service), and security systems (including installation and other expenses associated with security systems). Where there is an agreement for the payment of costs associated with the provision of space or services, nothing in title 31 or any other provision of law, shall be construed to prohibit or restrict payment by reimbursement to the miscellaneous receipts or other appropriate account of the Treasury.
(June 26, 1934, ch. 750, title I, §124, formerly §25, as added
Editorial Notes
Prior Provisions
A prior section 1770, act June 26, 1934, ch. 750, §20,
Provisions similar to those comprising this section were contained in section 21 of act June 26, 1934, ch. 750, as added July 9, 1937, ch. 471,
Amendments
2006—
1994—
1993—
1983—
1982—
Statutory Notes and Related Subsidiaries
Effective Date of 1994 Amendment
§1771. Conversion from Federal to State credit union and from State to Federal credit union
(a) A Federal credit union may be converted into a State credit union under the laws of any State, the District of Columbia, the several Territories and possessions of the United States, the Panama Canal Zone, or the Commonwealth of Puerto Rico, by complying with the following requirements:
(1) The proposition for such conversion shall first be approved, and a date set for a vote thereon by the members (either at a meeting to be held on such date or by written ballot to be filed on or before such date), by a majority of the directors of the Federal credit union. Written notice of the proposition and of the date set for the vote shall then be delivered in person to each member, or mailed to each member at the address for such member appearing on the records of the credit union, not more than thirty nor less than seven days prior to such date. Approval of the proposition for conversion shall be by the affirmative vote of a majority of the members of the credit union who vote on the proposal. The written notice of the proposition shall in boldface type state that the issue will be decided by a majority of the members who vote.
(2) A statement of the results of the vote, verified by the affidavits of the president or vice president and the secretary, shall be filed with the Administration within ten days after the vote is taken.
(3) Promptly after the vote is taken and in no event later than ninety days thereafter, if the proposition for conversion was approved by such vote, the credit union shall take such action as may be necessary under the applicable State law to make it a State credit union, and within ten days after receipt of the State credit union charter there shall be filed with the Administration a copy of the charter thus issued. Upon such filing the credit union shall cease to be a Federal credit union.
(4) Upon ceasing to be a Federal credit union, such credit union shall no longer be subject to any of the provisions of this chapter. The successor State credit union shall be vested with all of the assets and shall continue responsible for all of the obligations of the Federal credit union to the same extent as though the conversion had not taken place.
(b)(1) A State credit union, organized under the laws of any State, the District of Columbia, the several Territories and possessions of the United States, the Panama Canal Zone, or the Commonwealth of Puerto Rico, may be converted into a Federal credit union by (A) complying with all State requirements requisite to enabling it to convert to a Federal credit union or to cease being a State credit union, (B) filing with the Administration proof of such compliance, satisfactory to the Board, and (C) filing with the Administration an organization certificate as required by this chapter.
(2) When the Board has been satisfied that all of such requirements, and all other requirements of this chapter, have been complied with, the Board shall approve the organization certificate. Upon such approval, the State credit union shall become a Federal credit union as of the date it ceases to be a State credit union. The Federal credit union shall be vested with all of the assets and shall continue responsible for all of the obligations of the State credit union to the same extent as though the conversion had not taken place.
(June 26, 1934, ch. 750, title I, §125, formerly §26, as added
Editorial Notes
References in Text
For definition of Canal Zone, referred to in text, see
Prior Provisions
A prior section 1771, act June 26, 1934, ch. 750, §21, as added July 9, 1937, ch. 471,
Amendments
1982—Subsec. (a)(1).
1978—Subsec. (b).
1970—
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
§1772. Territorial application of chapter
The provisions of this chapter shall apply to the several States, the District of Columbia, the several Territories, including the trust territories, and possessions of the United States, the Panama Canal Zone, and the Commonwealth of Puerto Rico.
(June 26, 1934, ch. 750, title I, §126, formerly §22, as added July 31, 1946, ch. 711, §7,
Editorial Notes
References in Text
For definition of Canal Zone, referred to in text, see
Amendments
1974—
1959—
1952—Act May 8, 1952, amended section to extend provisions of this chapter to the Virgin Islands.
§1772a. Gifts; acceptance of conditional gifts; deposit
The Board is authorized to accept gifts of money made unconditionally by will or otherwise for the carrying out of any of the functions under this chapter. A conditional gift of money made by will or otherwise for such purposes may be accepted and used in accordance with its conditions, but no such gift shall be accepted which is conditioned upon any expenditure not to be met therefrom or from income thereof unless the Board determines that supplementation of such gift from the fees it may expend pursuant to
(June 26, 1934, ch. 750, title I, §127, formerly §28, as added
Editorial Notes
Amendments
1978—
1970—
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
§1772b. Apportionment
Notwithstanding any other provision of law, funds received by the Board pursuant to any method provided by this chapter, and interest, dividend, or other income thereon, shall not be subject to apportionment for the purpose of
(June 26, 1934, ch. 750, title I, §128, as added
§1772c. Trust fund
Notwithstanding any other provision of law, all moneys of the Board shall be treated as trust funds for the purpose of section 906(a)(2) 1 of title 2. This section is effective for fiscal year 1986 and every fiscal year thereafter.
(June 26, 1934, ch. 750, title I, §129, as added
Editorial Notes
References in Text
1 See References in Text note below.
§1772c–1. Community development revolving loan fund for credit unions
(a) In general
The Board may exercise the authority granted to it by the Community Development Credit Union Revolving Loan Fund Transfer Act, including any additional appropriation made or earnings accrued, subject only to this section and to regulations prescribed by the Board.
(b) Investment
The Board may invest any idle Fund moneys in United States Treasury securities. Any interest accrued on such securities shall become a part of the Fund.
(c) Loans
The Board may require that any loans made from the Fund be matched by increased shares in the borrower credit union.
(d) Interest
Interest earned by the Fund may be allocated by the Board for technical assistance to community development credit unions, subject to an appropriations Act.
(e) "Fund" defined
As used in this section, the term "Fund" means the Community Development Credit Union Revolving Loan Fund.
(June 26, 1934, ch. 750, title I, §130, as added
Editorial Notes
References in Text
The Community Development Credit Union Revolving Loan Fund Transfer Act, referred to in subsec. (a), is
§1772d. Forfeiture of organization certificate for money laundering or cash transaction reporting offenses
(a) Forfeiture of franchise for money laundering or cash transaction reporting offenses
(1) Conviction of title 18 offenses
(A) Duty to notify
If a credit union has been convicted of any criminal offense under
(B) Notice of termination; pretermination hearing
After receiving written notification from the Attorney General of such a conviction, the Board shall issue to such credit union a notice of its intention to terminate all rights, privileges, and franchises of the credit union and schedule a pretermination hearing.
(2) Conviction of title 31 offenses
If a credit union is convicted of any criminal offense under
(3) Judicial review
(b) Factors to be considered
In determining whether a franchise shall be forfeited under subsection (a), the Board shall take into account the following factors:
(1) The extent to which directors, committee members, or senior executive officers (as defined by the Board in regulations which the Board shall prescribe) of the credit union knew of, or were involved in, the commission of the money laundering offense of which the credit union was found guilty.
(2) The extent to which the offense occurred despite the existence of policies and procedures within the credit union which were designed to prevent the occurrence of any such offense.
(3) The extent to which the credit union has fully cooperated with law enforcement authorities with respect to the investigation of the money laundering offense of which the credit union was found guilty.
(4) The extent to which the credit union has implemented additional internal controls (since the commission of the offense of which the credit union was found guilty) to prevent the occurrence of any other money laundering offense.
(5) The extent to which the interest of the local community in having adequate deposit and credit services available would be threatened by the forfeiture of the franchise.
(c) Successor liability
This section shall not apply to a successor to the interests of, or a person who acquires, a credit union that violated a provision of law described in subsection (a), if the successor succeeds to the interests of the violator, or the acquisition is made, in good faith and not for purposes of evading this section or regulations prescribed under this section.
(June 26, 1934, ch. 750, title I, §131, as added
Editorial Notes
Amendments
1994—Subsec. (a)(2).
§1772e. Data standards
(a) Requirement
The Board shall, by rule, adopt data standards for all collections of information and reports regularly filed with or submitted to the Administration under this chapter.
(b) Consistency
The data standards required under subsection (a) shall incorporate, and ensure compatibility with (to the extent feasible), all applicable data standards established in the rules promulgated under
(June 26, 1934, ch. 750, title I, §132, as added
Statutory Notes and Related Subsidiaries
Rulemaking
"(a)
"(b)
"(1) may scale data reporting requirements in order to reduce any unjustified burden on smaller regulated entities; and
"(2) shall seek to minimize disruptive changes to the persons affected by those regulations."
Rule of Construction Regarding No New Disclosure Requirements
§1772f. Open data publication
All public data assets published by the Administration under this subchapter shall be—
(1) made available as an open Government data asset (as defined in
(2) freely available for download;
(3) rendered in a human-readable format; and
(4) accessible via application programming interface where appropriate.
(June 26, 1934, ch. 750, title I, §133, as added
Statutory Notes and Related Subsidiaries
Rule of Construction Regarding No New Disclosure Requirements
Enactment of section not to be construed to require certain additional information to be collected or disclosed, see section 5874 of
§1773. District of Columbia credit unions; conversion to Federal status
Any credit union organized under the District of Columbia Credit Unions Act, as amended, may apply for conversion into a Federal credit union by filing with the National Credit Union Administration Board (in
(
Editorial Notes
References in Text
The District of Columbia Credit Unions Act, referred to in text, was repealed by
Codification
Section was not enacted as part of the Federal Credit Union Act which comprises this chapter.
Statutory Notes and Related Subsidiaries
Transfer of Functions
"National Credit Union Administration Board" and "Board" substituted in text for "Director of the Bureau of Federal Credit Unions" and "Director", respectively, pursuant to section 3 of
Repeals; Revocation of Organization Certificates Issued Under District of Columbia Credit Unions Act
§1774. Approval of certificate; assets and obligations of applicant credit union
The Board shall approve any such organization certificate meeting such requirements. Upon such approval, the applicant credit union shall become a Federal credit union, and shall be vested with all of the assets and shall continue responsible for all of the obligations of such applicant credit union to the same extent as though the conversion had not taken place.
(
Editorial Notes
Codification
Section was not enacted as part of the Federal Credit Union Act which comprises this chapter.
Statutory Notes and Related Subsidiaries
Transfer of Functions
"Board", meaning the National Credit Union Administration Board, substituted in text for "Director", meaning Director of Bureau of Federal Credit Unions, pursuant to section 3 of
§1775. Conditions upon conversion to Federal status
Any District of Columbia credit union converting into a Federal credit union in accordance with
(1) no fee shall be imposed upon a credit union converting pursuant to
(2) any loan or investment made by a credit union converting pursuant to
(3) a credit union converting pursuant to
(
Editorial Notes
References in Text
The Federal Credit Union Act, referred to in text, is act June 26, 1934, ch. 750,
The District of Columbia Credit Unions Act, referred to in par. (2), was act June 23, 1932, ch. 272,
Codification
Section was not enacted as part of the Federal Credit Union Act which comprises this chapter.
Statutory Notes and Related Subsidiaries
Transfer of Functions
"Board" and "the Board's", meaning the National Credit Union Administration Board, substituted in par. (3) for "Director" and "his", respectively, meaning Director of Bureau of Federal Credit Unions, pursuant to section 3 of
SUBCHAPTER II—SHARE INSURANCE
§1781. Insurance of member accounts
(a) Eligibility
The Board, as hereinafter provided, shall insure the member accounts of all Federal credit unions and it may insure the member accounts of (1) credit unions organized and operated according to the laws of any State, the District of Columbia, the several territories, including the trust territories, and possessions of the United States, the Panama Canal Zone, or the Commonwealth of Puerto Rico, and (2) credit unions organized and operating under the jurisdiction of the Department of Defense if such credit unions are operating in compliance with the requirements of subchapter I of this chapter and regulations issued thereunder.
(b) Application; agreement
Application for insurance of member accounts shall be made immediately by each Federal credit union and may be made at any time by a State credit union or a credit union operating under the jurisdiction of the Department of Defense. Applications for such insurance shall be in such form as the Board shall provide and shall contain an agreement by the applicant—
(1) to pay the reasonable cost of such examinations as the Board may deem necessary in connection with determining the eligibility of the applicant for insurance: Provided, That examinations required under subchapter I of this chapter shall be so conducted that the information derived therefrom may be utilized for share insurance purposes, and examinations conducted by State regulatory agencies shall be utilized by the Board for such purposes to the maximum extent feasible;
(2) to permit and pay the reasonable cost of such examinations as in the judgment of the Board may from time to time be necessary for the protection of the fund and of other insured credit unions;
(3) to permit the Board to have access to any information or report with respect to any examination made by or for any public regulatory authority, including any commission, board, or authority having supervision of a State-chartered credit union, and furnish such additional information with respect thereto as the Board may require;
(4) to provide protection and indemnity against burglary, defalcation, and other similar insurable losses, of the type, in the form, and in an amount at least equal to that required by the laws under which the credit union is organized and operates;
(5) to maintain such regular reserves as may be required by the laws of the State, district, territory, or other jurisdiction pursuant to which it is organized and operated, in the case of a State-chartered credit union, or as may be required by this chapter, in the case of a Federal credit union;
(6) to maintain such special reserves as the Board, by regulation or in special cases, may require for protecting the interest of members or to assure that all insured credit unions maintain regular reserves which are not less than those required under subchapter I of this chapter;
(7) not to issue or have outstanding any account or security the form of which, by regulation or in special cases, has not been approved by the Board except for accounts authorized by State law for State credit unions;
(8) to pay and maintain its deposit and to pay the premium charges for insurance imposed by this subchapter; and
(9) to comply with the requirements of this subchapter and of regulations prescribed by the Board pursuant thereto.
(c) Approval of application
(1) Before approving the application of any credit union for insurance of its member accounts, the Board shall consider—
(A) the history, financial condition, and management policies of the applicant;
(B) the economic advisability of insuring the applicant without undue risk of the fund;
(C) the general character and fitness of the applicant's management;
(D) the convenience and needs of the members to be served by the applicant; and
(E) whether the applicant is a cooperative association organized for the purpose of promoting thrift among its members and creating a source of credit for provident or productive purposes.
(2) The Board shall disapprove the application of any credit union for insurance of its member accounts if it finds that its reserves are inadequate, that its financial condition and policies are unsafe or unsound, that its management is unfit, that insurance of its member accounts would otherwise involve undue risk to the fund, or that its powers and purposes are inconsistent with the promotion of thrift among its members and the creation of a source of credit for provident or productive purposes.
(3) Repealed.
(d) Certificate of insurance
Upon the approval of any application for insurance, the Board shall notify the applicant and shall issue to it a certificate evidencing the fact that it is, as of the date of issuance of the certificate, an insured credit union under the provisions of this subchapter.
(e) Prohibition on certain associations
(1) In general
No insured credit union may be sponsored by or accept financial support, directly or indirectly, from any Government-sponsored enterprise, if the credit union includes the customers of the Government-sponsored enterprise in the field of membership of the credit union.
(2) Routine business financing
Paragraph (1) shall not apply with respect to advances or other forms of financial assistance generally provided by a Government-sponsored enterprise in the ordinary course of business of the enterprise.
(3) "Government-sponsored enterprise" defined
For purposes of this subsection, the term "Government-sponsored enterprise" has the meaning given to such term in section 1404(e)(1)(A) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
(4) Employee credit union
No provision of this subsection shall be construed as prohibiting any employee of a Government-sponsored enterprise from becoming a member of a credit union whose field of membership is the employees of such enterprise.
(June 26, 1934, ch. 750, title II, §201, as added
Editorial Notes
References in Text
For definition of Canal Zone, referred to in text, see
Section 1404(e)(1)(A) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, referred to in subsec. (e)(3), is section 1404(e)(1)(A) of
Amendments
2006—Subsec. (b)(5).
1996—Subsec. (e).
1984—Subsec. (b)(8).
1978—Subsec. (a).
Subsec. (b).
Subsec. (c).
Subsecs. (d), (e).
1977—Subsec. (c)(3).
1971—Subsec. (c)(2).
Subsec. (c)(3).
Subsec. (d).
Statutory Notes and Related Subsidiaries
Effective Date of 1996 Amendment
Effective Date of 1978 Amendment
Amendment by
§1782. Administration of insurance fund
(a) Reports of condition
(1) Each insured credit union shall make reports of condition to the Board upon dates which shall be selected by it. Such reports of condition shall be in such form and shall contain such information as the Board may require. The reporting dates selected for reports of condition shall be the same for all insured credit unions except that when any of said reporting dates is a nonbusiness day for any credit union the preceding business day shall be its reporting date. The total amount of the member accounts of each insured credit union as of each reporting date shall be reported in such reports of condition in accordance with regulations prescribed by the Board. Each report of condition shall contain a declaration by the president, by a vice president, by the treasurer, or by any other officer designated by the board of directors of the reporting credit union to make such declaration, that the report is true and correct to the best of such officer's knowledge and belief. Unless such requirement is waived by the Board, the correctness of each report of condition shall be attested by the signatures of three of the officers of the reporting credit union with the declaration that the report has been examined by them and to the best of their knowledge and belief is true and correct.
(2) The Board may call for such other reports as it may from time to time require.
(3) The Board may require reports of condition to be published in such manner, not inconsistent with any applicable law, as it may direct. Any insured credit union which maintains procedures reasonably adapted to avoid any inadvertent error and, unintentionally and as a result of such an error, fails to submit or publish any report required under this subsection or
(4) The Board may accept any report of condition made to any commission, board, or authority having supervision of a State-chartered credit union and may furnish to any such commission, board, or authority reports of condition made to the Board.
(5) Reports required under subchapter I of this chapter shall be so prepared that they can be used for share insurance purposes. To the maximum extent feasible, the Board shall use for insurance purposes reports submitted to State regulatory agencies by State-chartered credit unions.
(6)
(A)
(i) for which such credit union has not conducted an annual supervisory committee audit;
(ii) for which such credit union has not received a complete and satisfactory supervisory committee audit; or
(iii) during which such credit union has experienced persistent and serious recordkeeping deficiencies, as determined by the Board.
(B)
(C)
(i)
(ii)
(iii)
(D)
(i)
(ii)
(7)
(A)
(B)
(i) a copy of any supervisory memorandum of understanding with such credit union and any written agreement between the Board or a State regulatory agency and the credit union which is in effect during the period covered by the audit; and
(ii) a report of any action initiated or taken by the Board during such period under subsection (e), (f), (g), (i), (l), or (q) of
(I) the credit union; or
(II) any institution-affiliated party.
(8)
(A) any other Federal or State agency or authority with supervisory or regulatory authority over the credit union or other entity;
(B) any officer, director, or receiver of such credit union or entity; and
(C) any other person that the Board determines to be appropriate.
(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 subchapter and the regulations issued under this subchapter.
(c) Deposit with National Credit Union Share Insurance Fund; amount, return, distribution, etc.
(1)(A)(i) Each insured credit union shall pay to and maintain with the National Credit Union Share Insurance Fund a deposit in an amount equaling 1 per centum of the credit union's insured shares.
(ii) The Board may, in its discretion, authorize insured credit unions to initially fund such deposit over a period of time in excess of one year if necessary to avoid adverse effects on the condition of insured credit unions.
(iii)
(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.
(B)(i) The deposit shall be returned to an insured credit union in the event that its insurance coverage is terminated, it converts to insurance coverage from another source, or in the event the operations of the fund are transferred from the National Credit Union Administration Board.
(ii) The deposit shall be returned in accordance with procedures and valuation methods determined by the Board, but in no event shall the deposit be returned any later than one year after the final date on which no shares of the credit union are insured by the Board.
(iii) The deposit shall not be returned in the event of liquidation on account of bankruptcy or insolvency.
(iv) The deposit funds may be used by the fund if necessary to meet its expenses, in which case the amount so used shall be expensed and shall be replenished by insured credit unions in accordance with procedures established by the Board.
(2)
(A)
(B)
(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)
(D)
(i)
(I) the Board projects that the equity ratio of the Fund will, within 6 months of such determination, fall below the minimum amount specified in subparagraph (C); or
(II) the equity ratio of the Fund actually falls below the minimum amount specified in subparagraph (C) without any determination under sub-clause (I) having been made,
the Board shall establish and implement a restoration plan within 90 days that meets the requirements of clause (ii) and such other conditions as the Board determines to be appropriate.
(ii)
(iii)
(3)
(A)
(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)
(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)
(4)
(d) Remedy for failure to report; penalty for failure to file certified statement or pay premium; dispute as to deposit or premium charge; prohibition on distribution of assets or dividends while in default
(1) Any insured credit union which fails to make any report of condition under subsection (a) of this section or to file any certified statement required to be filed by it in connection with determining the amount of its deposit or any premium charge for insurance may be compelled to make such report or to file such statement by mandatory injunction or other appropriate remedy in a suit brought for such purpose by the Board against the credit union and any officer or officers thereof. Any such suit may be brought in any court of the United States of competent jurisdiction in the district or territory in which the principal office of the credit union is located.
(2)
(A)
(i) maintains procedures reasonably adapted to avoid any inadvertent error and, unintentionally and as a result of such an error, fails to submit any certified statement under subsection (b)(1) within the period of time required or submits a false or misleading certified statement under such subsection; or
(ii) submits the statement at a time which is minimally after the time required,
shall be subject to a penalty of not more than $2,000 for each day during which such failure continues or such false and misleading information is not corrected. The insured credit union shall have the burden of proving that an error was inadvertent or that a statement was inadvertently submitted late.
(B)
(i) fails to submit any certified statement under subsection (b)(1) within the period of time required or submits a false or misleading certified statement in a manner not described in subparagraph (A); or
(ii) fails or refuses to pay any deposit or premium for insurance required under this subchapter,
shall be subject to a penalty of not more than $20,000 for each day during which such failure continues, such false and misleading information is not corrected, or such deposit or premium is not paid.
(C)
(D)
(E)
(F)
(i) the failure is due to a dispute between the credit union and the Board over the amount of the deposit or premium which is due from the credit union; and
(ii) the credit union deposits security satisfactory to the Board for payment of the deposit or insurance premium upon final determination of the dispute.
(3) No insured credit union shall pay any dividends on its insured shares or distribute any of its assets while it remains in default in the payment of its deposit or any premium charge for insurance due to the fund. Any director or officer of any insured credit union who knowingly participates in the declaration or payment of any such dividend or in any such distribution shall, upon conviction, be fined not more than $1,000 or imprisoned not more than one year, or both. The provisions of this paragraph shall not be applicable in any case in which the default is due to a dispute between the credit union and the Board over the amount of its deposit or the premium charge due to the fund if the credit union deposits security satisfactory to the Board for payment of its deposit or the premium charge upon final determination of the issue.
(e) Recovery of unpaid deposit or premium; limitations
The Board, in a suit brought at law or in equity in any court of competent jurisdiction, shall be entitled to recover from any insured credit union the amount of any unpaid deposit or premium charge for insurance lawfully payable by the credit union to the fund, whether or not such credit union shall have made any report of condition under subsection (a) of this section or filed any certified statement required under subsection (b) of this section and whether or not suit shall have been brought to compel the credit union to make any such report or to file any such statement. No action or proceeding shall be brought for the recovery of any deposit or premium charge due to the fund, or for the recovery of any amount paid to the fund in excess of the amount due it, unless such action or proceeding shall have been brought within five years after the right accrued for which the claim is made. Where the insured credit union has made or filed with the Board a false or fraudulent certified statement with the intent to evade, in whole or in part, the payment of its deposit or any premium charge, the claim shall not be deemed to have accrued until the discovery by the Board of the fact that the certified statement is false or fraudulent.
(f) Penalty for failure to comply with section; court determination of failure; remedies not exclusive
Should any Federal credit union fail to make any report of condition under subsection (a) of this section or to file any certified statement required to be filed under subsection (b) of this section or to pay its deposit or any premium charge for insurance required to be paid under any provision of this subchapter, and should the credit union fail to correct such failure within thirty days after written notice has been given by the Board to an officer of the credit union, citing this subsection and stating that the credit union has failed to make any such report or file any such statement or pay any such deposit or premium charges as required by law, all the rights, privileges, and franchises of the credit union granted to it under subchapter I of this chapter shall be thereby forfeited. Whether or not the penalty provided in this subsection has been incurred shall be determined and adjudged by any court of the United States of competent jurisdiction in a suit brought for that purpose in the district or territory in which the principal office of such credit union is located, under direction of and by the Board in its own name, before the credit union shall be declared dissolved. The remedies provided in this subsection and in subsections (d) and (e) of this section shall not be construed as limiting any other remedies against any insured credit union but shall be in addition thereto.
(g) Records
Each insured credit union shall maintain such records as will readily permit verification of the correctness of its reports of condition, certified statements, and deposit and premium charges for insurance. However, no insured credit union shall be required to retain such records for such purpose for a period in excess of five years from the date of the making of any such report, the filing of any such statement, or the payment of any deposit or adjustment thereof or any premium charge, except that when there is a dispute between the insured credit union and the Board over the amount of any deposit or adjustment thereof or any premium charge for insurance the credit union shall retain such records until final determination of the issue.
(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
(B) the aggregate amount of the insured shares in all insured credit unions.
(2) Equity ratio
The term "equity ratio", which shall be calculated using the financial statements of the Fund alone, without any consolidation or combination with the financial statements of any other fund or entity, 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
(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.
(June 26, 1934, ch. 750, title II, §202, as added
Editorial Notes
Amendments
2011—Subsec. (h)(2).
2009—Subsec. (c)(2)(D).
Subsec. (c)(3)(A).
2006—Subsec. (a)(8).
Subsec. (h)(3).
1998—Subsec. (a)(6).
Subsec. (b).
"(b)(1) For each insurance year, each insured credit union which became insured prior to the beginning of that year 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 preceding insurance year and both the amount of its deposit or adjustment thereof and the amount of the premium charge for insurance due to the fund for that year, both as computed under subsection (c) of this section.
"(2) 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) Each such statement shall be certified by the president of the credit union, or by any officer of the credit union designated by its board of directors, that to the best of his knowledge and belief that statement is true, correct, and complete and in accordance with this subchapter and regulations issued thereunder."
Subsec. (c)(1)(A)(iii).
Subsec. (c)(2), (3).
"(2) Each insured credit union, at such time as the Board prescribes, shall pay to the fund a premium charge for insurance equal to one–twelfth of 1 per centum of the total amount of the insured shares in such credit union at the close of the preceding insurance year.
"(3) When, at the end of a given insurance year, any loans to the fund from the Federal Government and the interest thereon have been repaid and the equity of the fund exceeds the normal operating level, the Board shall effect for that insurance year a pro rata distribution to insured credit unions of an amount sufficient to reduce the equity in the fund to its normal operating level."
Subsec. (c)(4).
Subsec. (h).
"(1) the term 'insurance year' means the period beginning on January 1 and ending on the following December 31, both dates inclusive, unless otherwise prescribed by the Board;
"(2) the term 'normal operating level', when applied to the fund, means an amount equal to 1.3 per centum of the aggregate amount of the insured shares in all insured credit unions, or such lower level as the Board may determine; and
"(3) 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 in excess of the insured account limit set forth in
1992—Subsec. (d)(2).
1991—Subsec. (d)(2).
1989—Subsec. (a)(3).
Subsec. (a)(6).
Subsec. (a)(7).
1984—Subsec. (b).
Subsec. (c)(1).
Subsec. (c)(2).
Subsec. (c)(3).
Subsec. (c)(4).
Subsec. (d)(1), (2).
Subsec. (d)(3).
Subsec. (e).
Subsec. (f).
Subsec. (g).
Subsec. (h)(1).
Subsec. (h)(2).
Subsec. (h)(3).
1983—Subsec. (c)(1).
1982—Subsec. (c)(3).
Subsec. (c)(4), (5).
Subsec. (c)(6).
Subsec. (h)(3).
1978—Subsec. (a).
Subsecs. (b) to (g).
Subsec. (h)(3).
1974—Subsec. (h)(3).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1989 Amendment
Amendment by section 911(f) of
Effective Date of 1978 Amendment
Amendment by
1 So in original. Probably should be "De minimis".
§1783. National Credit Union Share Insurance Fund
(a) Creation; use of fund
There is hereby created in the Treasury of the United States a National Credit Union Share Insurance Fund which shall be used by the Board as a revolving fund for carrying out the purposes of this subchapter. Money in the fund shall be available upon requisition by the Board, without fiscal year limitation, for making payments of insurance under
(b) Deposit of deposits and premium charges, fees and penalties
All deposits and premium charges for insurance paid pursuant to the provisions of
(c) Investment authorization
The Board may authorize the Secretary of the Treasury to invest and reinvest such portions of the fund as the Board may determine are not needed for current operations in any interest-bearing securities of the United States or in any securities guaranteed as to both principal and interest by the United States or in bonds or other obligations which are lawful investments for fiduciary, trust, and public funds of the United States, and the income therefrom shall constitute a part of the fund.
(d) Loans to fund, limitation and terms; interest accrual; determination of interest rate
(1) If, in the judgment of the Board, a loan to the insurance fund, or to the stabilization fund described in
(2) Interest shall accrue to the Treasury on the amount of any outstanding loans made to the fund pursuant to paragraph (1) of this subsection on the basis of the average daily amount of such outstanding loans determined at the close of each fiscal year with respect to such year, and the Board shall pay the interest so accruing into the Treasury as miscellaneous receipts annually from the fund. The Secretary of the Treasury shall determine the applicable interest rate in advance by calculating the average yield to maturity (on the basis of daily closing market bid quotations during the month of September of the preceding fiscal year) on outstanding marketable public debt obligations of the United States having a maturity date of five or less years from the first day of such month of September and by adjusting such yield to the nearest one-eighth of 1 per centum.
(3) For the purpose of making loans under paragraph (1) of this subsection, the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds of the sale of any securities issued under
(4)
(A)
(B)
(e) Excess funds credited against loans
So long as any loans to the fund are outstanding, the Board shall from time to time, not less often than annually, determine whether the balance in the fund is in excess of the amount which, in its judgment, is needed to meet the requirements of the fund and shall pay such excess to the Secretary of the Treasury, to be credited against the loans to the fund.
(f) Authorization for fund to borrow from Central Liquidity Facility
In addition to the authority to borrow from the Secretary of the Treasury provided in subsection (d), if in the judgment of the Board, a loan to the fund is required at any time for carrying out the purposes of this subchapter, the fund is authorized to borrow from the National Credit Union Administration Central Liquidity Facility.
(June 26, 1934, ch. 750, title II, §203, as added
Editorial Notes
References in Text
This subchapter, referred to in subsec. (d)(1), probably should have been a reference to this title in the original, meaning title II of act June 26, 1934, ch. 750, which is classified generally to this subchapter.
Codification
In subsec. (d)(3), "
Amendments
2009—Subsec. (d)(1).
Subsec. (d)(4).
1984—Subsec. (b).
1982—Subsec. (f).
1978—
1976—Subsec. (d)(2).
Statutory Notes and Related Subsidiaries
Change of Name
Committee on Banking, Finance and Urban Affairs of House of Representatives treated as referring to Committee on Banking and Financial Services of House of Representatives by section 1(a) of
Effective Date of 1978 Amendment
Amendment by
1 See References in Text note below.
§1784. Examination of insured credit unions
(a) Examiners and claim agents; powers; report by examiner; jurisdiction of court
The Board shall appoint examiners who shall have power, on its behalf, to examine any insured credit union, any credit union making application for insurance of its member accounts, or any closed insured credit union whenever in the judgment of the Board an examination is necessary to determine the condition of any such credit union for insurance purposes. Each examiner shall have power to make a thorough examination of all of the affairs of the credit union and shall make a full and detailed report of the condition of the credit union to the Board. The Board in like manner shall appoint claim agents who shall have power to investigate and examine all claims for insured member accounts. Each claim agent shall have power to administer oaths and affirmations, to examine and to take and preserve testimony under oath as to any matter in respect to claims for insured accounts, and to issue subpenas and subpenas duces tecum and, for the enforcement thereof, to apply to the United States district court for the judicial district or the United States court in any territory in which the principal office of the credit union is located or in which the witness resides or carries on business. Such courts shall have jurisdiction and power to order and require compliance with any such subpena.
(b) Power of Board; jurisdiction of court
In connection with examinations of insured credit unions, or with other types of investigations to determine compliance with applicable law and regulations, the Board, or its designated representatives, shall have power to administer oaths and affirmations, to examine and to take and preserve testimony under oath as to any matter in respect of the affairs of any such credit union, and to issue subpenas and subpenas duces tecum and to exercise such other powers as are set forth in
(c) Court orders enforcing subpenas; immunity
In cases of refusal to obey a subpena issued to, or contumacy by, any person, the Board may invoke the aid of any court of the United States within the jurisdiction of which such hearing, examination, or investigation is carried on, or where such person resides or carries on business, in requiring the attendance and testimony of witnesses and the production of books, records, or other papers. Such court may issue an order requiring such person to appear before the Board, or before a person designated by it, there to produce records, if so ordered, or to give testimony touching the matter in question. Any failure to obey such order of the court may be punished by such court as a contempt thereof. All process in any such case may be served in the judicial district whereof such person is an inhabitant or carries on business or wherever he may be found. No person shall be excused from attending and testifying or from producing books, records, or other papers in obedience to a subpena issued under the authority of this subchapter on the ground that the testimony or evidence, documentary or otherwise, required of him may tend to incriminate him or subject him to penalty or forfeiture, but no individual shall be prosecuted or subject to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he is compelled to testify or produce evidence, documentary or otherwise, after having claimed his privilege against self-incrimination, except that such individual so testifying shall not be exempt from prosecution and punishment for perjury committed in so testifying.
(d) Administration acceptance of State board reports; reports of Board furnished to State board
The Administration may accept any report of examination made by or to any commission, board, or authority having supervision of a State-chartered credit union and may furnish to any such commission, board, or authority reports of examination made on behalf of the Board.
(e) Flood insurance compliance by insured credit unions
(1) Examination
The Board shall, during each examination conducted under this section, determine whether the insured credit union is complying with the requirements of the national flood insurance program.
(2) Report
(A) Requirement
Not later than 1 year after September 23, 1994, and biennially thereafter for the next 4 years, the Board shall submit a report to the Congress on compliance by insured credit unions with the requirements of the national flood insurance program.
(B) Contents
The report shall include a description of the methods used to determine compliance, the number of insured credit unions examined during the reporting year, a listing and total number of insured credit unions found not to be in compliance, actions taken to correct incidents of noncompliance, and an analysis of compliance, including a discussion of any trends, patterns, and problems, and recommendations regarding reasonable actions to improve the efficiency of the examinations processes.
(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.
(June 26, 1934, ch. 750, title II, §204, as added
Editorial Notes
Amendments
2006—Subsec. (b).
1998—Subsecs. (f), (g).
1994—Subsec. (e).
1989—Subsec. (b).
1978—
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
§1785. Requirements governing insured credit unions
(a) Insurance logo
(1) Insured credit unions
(A) In general
Each insured credit union shall display at each place of business maintained by that credit union a sign or signs relating to the insurance of the share accounts of the institution, in accordance with regulations to be prescribed by the Board.
(B) Statement to be included
Each sign required under subparagraph (A) shall include a statement that insured share accounts are backed by the full faith and credit of the United States Government.
(2) Regulations
The Board shall prescribe regulations to carry out this subsection, including regulations governing the substance of signs required by paragraph (1) and the manner of display or use of such signs.
(3) Penalties
For each day that an insured credit union continues to violate this subsection or any regulation issued under this subsection, it shall be subject to a penalty of not more than $100, which the Board may recover for its use.
(b) Restrictions
(1) Except as provided in paragraph (2), no insured credit union shall, without the prior approval of the Board—
(A) merge or consolidate with any noninsured credit union or institution;
(B) assume liability to pay any member accounts in, or similar liabilities of, any noninsured credit union or institution;
(C) transfer assets to any noninsured credit union or institution in consideration of the assumption of liabilities for any portion of the member accounts in such insured credit union; or
(D) convert into a noninsured credit union or institution.
(2)
(A)
(B)
(C)
(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)
(E)
(F)
(i)
(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)
(G)
(i)
(ii)
(3) Except with the prior written approval of the Board, no insured credit union shall merge or consolidate with any other insured credit union or, either directly or indirectly, acquire the assets of, or assume liability to pay any member accounts in, any other insured credit union.
(c) Considerations for waiver or enforcement of restrictions
In granting or withholding approval or consent under subsection (b) of this section, the Board shall consider—
(1) the history, financial condition, and management policies of the credit union;
(2) the adequacy of the credit union's reserves;
(3) the economic advisability of the transaction;
(4) the general character and fitness of the credit union's management;
(5) the convenience and needs of the members to be served by the credit union; and
(6) whether the credit union is a cooperative association organized for the purpose of promoting thrift among its members and creating a source of credit for provident or productive purposes.
(d) Prohibition
(1) In general
Except with prior written consent of the Board—
(A) any person who has been convicted of any criminal offense involving dishonesty or a breach of trust, or has agreed to enter into a pretrial diversion or similar program in connection with a prosecution for such offense, may not—
(i) become, or continue as, an institution-affiliated party with respect to any insured credit union; or
(ii) otherwise participate, directly or indirectly, in the conduct of the affairs of any insured credit union; and
(B) any insured credit union may not permit any person referred to in subparagraph (A) to engage in any conduct or continue any relationship prohibited under such subparagraph.
(2) Minimum 10-year prohibition period for certain offenses
(A) In general
If the offense referred to in paragraph (1)(A) in connection with any person referred to in such paragraph is—
(i) an offense under—
(I) section 215, 656, 657, 1005, 1006, 1007, 1008,1 1014, 1032, 1344, 1517, 1956, or 1957 of title 18; or
(II) section 1341 or 1343 of such title which affects any financial institution (as defined in section 20 of such title); or
(ii) the offense of conspiring to commit any such offense,
the Board may not consent to any exception to the application of paragraph (1) to such person during the 10-year period beginning on the date the conviction or the agreement of the person becomes final.
(B) Exception by order of sentencing court
(i) In general
On motion of the Board, the court in which the conviction or the agreement of a person referred to in subparagraph (A) has been entered may grant an exception to the application of paragraph (1) to such person if granting the exception is in the interest of justice.
(ii) Period for filing
A motion may be filed under clause (i) at any time during the 10-year period described in subparagraph (A) with regard to the person on whose behalf such motion is made.
(3) Penalty
Whoever knowingly violates paragraph (1) or (2) shall be fined not more than $1,000,000 for each day such prohibition is violated or imprisoned for not more than 5 years, or both.
(4) Exceptions
(A) Certain older offenses
(i) In general
With respect to an individual, paragraph (1) shall not apply to an offense if—
(I) it has been 7 years or more since the offense occurred; or
(II) the individual was incarcerated with respect to the offense and it has been 5 years or more since the individual was released from incarceration.
(ii) Offenses committed by individuals 21 or younger
For individuals who committed an offense when they were 21 years of age or younger, paragraph (1) shall not apply to the offense if it has been more than 30 months since the sentencing occurred.
(iii) Limitation
This subparagraph shall not apply to an offense described under paragraph (1)(B).1
(B) Expungement and sealing
With respect to an individual, paragraph (1) shall not apply to an offense if—
(i) there is an order of expungement, sealing, or dismissal that has been issued in regard to the conviction in connection with such offense; and
(ii) it is intended by the language in the order itself, or in the legislative provisions under which the order was issued, that the conviction shall be destroyed or sealed from the individual's State, Tribal, or Federal record, even if exceptions allow the record to be considered for certain character and fitness evaluation purposes.
(C) De minimis exemption
(i) In general
Paragraph (1) shall not apply to such de minimis offenses as the Board determines, by rule.
(ii) Confinement criteria
In issuing rules under clause (i), the Board shall include a requirement that the offense was punishable by a term of three years or less confined in a correctional facility, where such confinement—
(I) is calculated based on the time an individual spent incarcerated as a punishment or a sanction, not as pretrial detention; and
(II) does not include probation or parole where an individual was restricted to a particular jurisdiction or was required to report occasionally to an individual or a specific location.
(iii) Bad check criteria
In setting the criteria for de minimis offenses under clause (i), if the Board establishes criteria with respect to insufficient funds checks, the Board shall require that the aggregate total face value of all insufficient funds checks across all convictions or program entries related to insufficient funds checks is $2,000 or less.
(iv) Designated lesser offenses
Paragraph (1) shall not apply to certain lesser offenses (including the use of a fake ID, shoplifting, trespass, fare evasion, driving with an expired license or tag, and such other low-risk offenses as the Board may designate) if 1 year or more has passed since the applicable conviction or program entry.
(5) Consent applications
(A) In general
The Board shall accept consent applications from an individual and from an insured credit union on behalf of an individual that are filed separately or contemporaneously with a regional office of the Board.
(B) Sponsored applications filed with regional offices
Consent applications filed at a regional office of the Board by an insured credit union on behalf of an individual—
(i) shall be reviewed by such office;
(ii) may be approved or denied by such office, if such authority has been delegated to such office by the Board; and
(iii) may only be denied by such office if the general counsel of the Board (or a designee) certifies that the denial is consistent with this section.
(C) Individual applications filed with regional offices
Consent applications filed at a regional office by an individual—
(i) shall be reviewed by such office; and
(ii) may be approved or denied by such office, if such authority has been delegated to such office by the Board, except with respect to—
(I) cases involving an offense described under paragraph (1)(B); 1 and
(II) such other high-level security cases as may be designated by the Board.
(D) National office review
The national office of the Board shall—
(i) review any consent application with respect to which a regional office is not authorized to approve or deny the application; and
(ii) review any consent application that is denied by a regional office, if the individual requests a review by the national office.
(E) Forms and instructions
(i) Availability
The Board shall make all forms and instructions related to consent applications available to the public, including on the website of the Board.
(ii) Contents
The forms and instructions described under clause (i) shall provide a sample cover letter and a comprehensive list of items that may accompany the application, including clear guidance on evidence that may support a finding of rehabilitation.
(F) Consideration of criminal history
(i) Regional office consideration
In reviewing a consent application, a regional office shall—
(I) primarily rely on the criminal history record of the Federal Bureau of Investigation; and
(II) provide such record to the applicant to review for accuracy.
(ii) Certified copies
The Board may not require an applicant to provide certified copies of criminal history records unless the Board determines that there is a clear and compelling justification to require additional information to verify the accuracy of the criminal history record of the Federal Bureau of Investigation.
(G) Consideration of rehabilitation
Consistent with title VII of the Civil Rights Act of 1964 (
(i) conduct an individualized assessment when evaluating consent applications that takes into account evidence of rehabilitation, the applicant's age at the time of the conviction or program entry, the time that has elapsed since conviction or program entry, and the relationship of individual's 2 offense to the responsibilities of the applicable position;
(ii) consider the individual's employment history, letters of recommendation, certificates documenting participation in substance abuse programs, successful participating in job preparation and educational programs, and other relevant mitigating evidence; and
(iii) consider any additional information the Board determines necessary for safety and soundness.
(H) Scope of employment
With respect to an approved consent application filed by an insured credit union on behalf of an individual, if the Board determines it appropriate, such approved consent application shall allow the individual to work for the same employer (without restrictions on the location) and across positions, except that the prior consent of the Board (which may require a new application) shall be required for any proposed significant changes in the individual's security-related duties or responsibilities, such as promotion to an officer or other positions that the employer determines will require higher security screening credentials.
(I) Coordination with FDIC
In carrying out this subsection, the Board shall consult and coordinate with the Federal Deposit Insurance Corporation as needed to promote consistent implementation where appropriate.
(6) Definitions
In this subsection:
(A) Consent application
The term "consent application" means an application filed with Board 2 by an individual (or by an insured credit union on behalf of an individual) seeking the written consent of the Board under paragraph (1)(A).
(B) Criminal offense involving dishonesty
The term "criminal offense involving dishonesty"—
(i) means an offense under which an individual, directly or indirectly—
(I) cheats or defrauds; or
(II) wrongfully takes property belonging to another in violation of a criminal statute;
(ii) includes an offense that Federal, State, or local law defines as dishonest, or for which dishonesty is an element of the offense; and
(iii) does not include—
(I) a misdemeanor criminal offense committed more than one year before the date on which an individual files a consent application, excluding any period of incarceration; or
(II) an offense involving the possession of controlled substances.
(C) Pretrial diversion or similar program
The term "pretrial diversion or similar program" means a program characterized by a suspension or eventual dismissal or reversal of charges or criminal prosecution upon agreement by the accused to restitution, drug or alcohol rehabilitation, anger management, or community service.
(e) Security standards; reports; penalty
(1) The Board shall promulgate rules establishing minimum standards with which each insured credit union must comply with respect to the installation, maintenance, and operation of security devices and procedures, reasonable in cost, to discourage robberies, burglaries, and larcenies and to assist in the identification and apprehension of persons who commit such acts.
(2) The rules shall establish the time limits within which insured credit unions shall comply with the standards and shall require the submission of periodic reports with respect to the installation, maintenance, and operation of security devices and procedures.
(3) An insured credit union which violates a rule promulgated pursuant to this subsection shall be subject to a civil penalty which shall not exceed $100 for each day of the violation.
(f) Share draft accounts; maintenance, loans, etc.
(1) Every insured credit union is authorized to maintain, and make loans with respect to, share draft accounts in accordance with rules and regulations prescribed by the Board. Except as provided in paragraph (2), an insured credit union may pay dividends on share draft accounts and may permit the owners of such share draft accounts to make withdrawals by negotiable or transferable instruments or other orders for the purpose of making transfers to third parties.
(2) Paragraph (1) shall apply only with respect to share draft accounts in which the entire beneficial interest is held by one or more individuals or members or by an organization which is operated primarily for religious, philanthropic, charitable, educational, or other similar purposes and which is not operated for profit, and with respect to deposits of public funds by an officer, employee, or agent of the United States, any State, county, municipality, or political subdivision thereof, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, any territory or possession of the United States, or any political subdivision thereof.
(g) Interest rates
(1) If the applicable rate prescribed in this subsection exceeds the rate an insured credit union would be permitted to charge in the absence of this subsection, such credit union may, notwithstanding any State constitution or statute which is hereby preempted for the purposes of this subsection, take, receive, reserve, and charge on any loan, interest at a rate of not more than 1 per centum in excess of the discount rate on ninety-day commercial paper in effect at the Federal Reserve bank in the Federal Reserve district where such insured credit union is located or at the rate allowed by the laws of the State, territory, or district where such credit union is located, whichever may be greater.
(2) If the rate prescribed in paragraph (1) exceeds the rate such credit union would be permitted to charge in the absence of this subsection, and such State fixed rate is thereby preempted by the rate described in paragraph (1), the taking, receiving, reserving, or charging a greater rate than is allowed by paragraph (1), when knowingly done, shall be deemed a forfeiture of the entire interest which the loan carries with it, or which has been agreed to be paid thereon. If such greater rate of interest has been paid, the person who paid it may recover, in a civil action commenced in a court of appropriate jurisdiction not later than two years after the date of such payment, an amount equal to twice the amount of interest paid from the credit union taking or receiving such interest.
(h) Emergency merger
Notwithstanding any other provision of law, the Board may authorize a merger or consolidation of an insured credit union which is insolvent or is in danger of insolvency with any other insured credit union or may authorize an insured credit union to purchase any of the assets of, or assume any of the liabilities of, any other insured credit union which is insolvent or in danger of insolvency if the Board is satisfied that—
(1) an emergency requiring expeditious action exists with respect to such other insured credit union;
(2) other alternatives are not reasonably available; and
(3) the public interest would best be served by approval of such merger, consolidation, purchase, or assumption.
(i) Emergency purchase of assets; conversion to insured deposits
(1) Notwithstanding any other provision of this chapter or of State law, the Board may authorize an institution whose deposits or accounts are insured by the Federal Deposit Insurance Corporation to purchase any of the assets of or assume any of the liabilities of an insured credit union which is insolvent or in danger of insolvency, except that prior to exercising this authority the Board must attempt to effect the merger or consolidation of an insured credit union which is insolvent or in danger of insolvency with another insured credit union, as provided in subsection (h).
(2) For purposes of the authority contained in paragraph (1), insured accounts of the credit union may upon consummation of the purchase and assumption be converted to insured deposits or other comparable accounts in the acquiring institution, and the Board and the National Credit Union Share Insurance Fund shall be absolved of any liability to the credit union's members with respect to those accounts.
(j) Privileges not affected by disclosure to banking agency or supervisor
(1) In general
The submission by any person of any information to the Administration, any State credit union supervisor, or foreign banking authority for any purpose in the course of any supervisory or regulatory process of such Board, supervisor, or authority shall not be construed as waiving, destroying, or otherwise affecting any privilege such person may claim with respect to such information under Federal or State law as to any person or entity other than such Board, supervisor, or authority.
(2) Rule of construction
No provision of paragraph (1) may be construed as implying or establishing that—
(A) any person waives any privilege applicable to information that is submitted or transferred under any circumstance to which paragraph (1) does not apply; or
(B) any person would waive any privilege applicable to any information by submitting the information to the Administration, any State credit union supervisor, or foreign banking authority, but for this subsection.
(June 26, 1934, ch. 750, title II, §205, as added
Editorial Notes
References in Text
Paragraph (1)(B), referred to in subsec. (d)(4)(A)(iii), (5)(C)(i)(I), probably should be a reference to "paragraph (2)", meaning par. (2) of subsec. (d). See similar provisions in section 1829(c)(1)(C) and (f)(3)(B)(i) of this title, which refer to offenses described in subsec. (a)(2) of that section, which correspond to those listed in subsec. (d)(2) of this section.
The Civil Rights Act of 1964, referred to in subsec. (d)(5)(G), is
Amendments
2022—Subsec. (d)(4) to (6).
2010—Subsec. (b)(2)(G)(i).
Subsec. (i)(1).
2006—Subsec. (a).
Subsec. (j).
1998—Subsec. (b)(1).
Subsec. (b)(2), (3).
1994—Subsec. (d).
"(1)
"(A) any person who has been convicted of any criminal offense involving dishonesty or a breach of trust may not participate, directly or indirectly, in any manner in the conduct of the affairs of an insured credit union; and
"(B) an insured credit union may not permit such participation.
"(2)
1989—Subsec. (d).
1987—
1982—Subsec. (f)(2).
Subsecs. (h), (i).
1980—Subsec. (f).
Subsec. (g).
1978—
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Amendment by
Effective Date of 2006 Amendment
Effective Date of 1980 Amendment
Enactment of subsec. (f) by
Effective Date of 1978 Amendment
Amendment by
Extension of Emergency Acquisition and Net Worth Guarantee Provisions of Pub. L. 97–320
No amendment made by section 141(a) of
No amendment made by section 141(a) of
Section 141(a) of
Definition of "State"
For purposes of subsec. (g) of this section, the term "State" to include the several States, the Commonwealth of Puerto Rico, the District of Columbia, Guam, the Trust Territories of the Pacific Islands, the Northern Mariana Islands, and the Virgin Islands, see section 527 of
Choice of Highest Applicable Interest Rate
In any case in which one or more provisions of, or amendments made by, title V of
1 See References in Text note below.
2 So in original. Probably should be preceded by "the".
§1786. Termination of insured credit union status; cease and desist orders; removal or suspension from office; procedure
(a) Termination of insurance
(1) Any insured credit union other than a Federal credit union may, upon not less than ninety days' written notice to the Board and upon the affirmative vote of a majority of its members within one year prior to the giving of such notice, terminate its status as an insured credit union.
(2) Any insured credit union, other than a Federal credit union, which has obtained a new certificate of insurance from a corporation authorized and duly licensed to insure member accounts may upon not less than ninety days' written notice to the Board convert from status as an insured credit union under this chapter: Provided, That at the time of giving notice to the Board the provisions of paragraph (b)(1) of this section are not being invoked against the credit union.
(b) Unsound condition of credit union; notice to correct condition; hearing; judicial review
(1) Whenever, in the opinion of the Board, any insured credit union is engaging or has engaged in unsafe or unsound practices in conducting the business of such credit union, or is in an unsafe or unsound condition to continue operations as an insured credit union, or is violating or has violated an applicable law, rule, regulation, order, or any condition imposed in writing by the Board in connection with any action on any application, notice, or other request by the credit union or institution-affiliated party,, 1 or is violating or has violated any written agreement entered into with the Board, the Board shall serve upon the credit union a statement with respect to such practices or conditions or violations for the purpose of securing the correction thereof. In the case of an insured State-chartered credit union, the Board shall send a copy of such statement to the commission, board, or authority, if any, having supervision of such credit union. Unless such correction shall be made within one hundred and twenty days after service of such statement, or within such shorter period of not less than twenty days after such service as the Board shall require in any case where it determines that the insurance risk with respect to such credit union could be unduly jeopardized by further delay in the correction of such practices or conditions or violations, or as the commission, board, or authority having supervision of such credit union, if any, shall require in the case of an insured State-chartered credit union, the Board, if it shall determine to proceed further, shall give to the credit union not less than thirty days' written notice of its intention to terminate the status of the credit union as an insured credit union. Such notice shall contain a statement of the facts constituting the alleged unsafe and unsound practices or conditions or violations and shall fix a time and place for a hearing thereon. Such hearing shall be fixed for a date not earlier than thirty days nor later than sixty days after service of such notice unless an earlier or a later date is set by the Board at the request of the credit union. Unless the credit union shall appear at the hearing by a duly authorized representative, it shall be deemed to have consented to the termination of its status as an insured credit union. In the event of such consent, or if upon the record made at any such hearing the Board shall find that any unsafe or unsound practice or condition or violation specified in the notice has been established and has not been corrected within the time above-prescribed in which to make such correction, the Board may issue and serve upon the credit union an order terminating its status as an insured credit union on a date subsequent to the date of such finding and subsequent to the expiration of the time specified in the notice.
(2) Any credit union whose insured status has been terminated by order of the Board under this subsection shall have the right of judicial review of such order only to the same extent as provided for the review of orders under subsection (j) of this section.
(c) Notice to members of termination of insured status
In the event of the termination of a credit union's status as an insured credit union as provided under subsection (a)(1) or (b) of this section, the credit union shall give prompt and reasonable notice to all of its members whose accounts are insured that it has ceased to be an insured credit union. It may include in such notice a statement of the fact that member accounts insured on the effective date of such termination, to the extent not withdrawn, remain insured for one year from the date of such termination, but it shall not further represent itself in any manner as an insured credit union. In the event of failure to give the notice as herein provided to members whose accounts are insured, the Board is authorized to give reasonable notice.
(d) Continuation of insurance for one year; approval of conversion of status; procedure subsequent to approval; reduction of premium charges
(1) After the termination of the insured status of any credit union as provided under subsection (a)(1) or (b) of this section, insurance of its member accounts to the extent that they were insured on the effective date of such termination, less any amounts thereafter withdrawn which reduce the accounts below the amount covered by insurance on the effective date of such termination, shall continue for a period of one year, but no shares issued by the credit union or deposits made after the date of such termination shall be insured by the Board. The credit union shall continue to maintain its deposit with and pay premiums to the Board during such period as in the case of an insured credit union and the Board shall have the right to examine such credit union from time to time during the period during which such insurance continues. Such credit union shall, in all other respects, be subject to the duties and obligations of an insured credit union for the period of one year from the date of such termination. In the event that such credit union shall be closed for liquidation within such period of one year, the Board shall have the same powers and rights with respect to such credit union as in the case of an insured credit union. Notwithstanding the above, when an insured credit union's insured status is terminated and the credit union subsequently obtains comparable insurance coverage from another source, insurance of its accounts by the fund may cease immediately upon the effective date of such comparable coverage by mutual consent of the credit union and the Board.
(2) No credit union shall convert from status as an insured credit union under this chapter as provided under subsection (a)(2) of this section until the proposition for such conversion has been approved by a majority of all the directors of the credit union, and by affirmative vote of a majority of the members of the credit union who vote on the proposition in a vote in which at least 20 per centum of the total membership of the credit union participates. Following approval by the directors, written notice of the proposition and of the date set for the membership vote shall be delivered in person to each member, or mailed to each member at the address for such member appearing on the records of the credit union, not more than thirty nor less than seven days prior to such date. The membership shall be given the opportunity to vote by mail ballot. If the proposition is approved by the membership, prompt and reasonable notice of insurance conversion shall be given to all members.
(3) In the event of a conversion of a credit union from status as an insured credit union under this chapter as provided under subsection (a)(2) of this section, premium charges payable under
(e) Opinion of Board as to unsound condition of credit union; notice of charges; hearing; order to cease and desist; judicial review
(1) If, in the opinion of the Board, any insured credit union, credit union which has insured accounts, or any institution-affiliated party is engaging or has engaged, or the Board has reasonable cause to believe that the credit union or any institution-affiliated party is about to engage, in an unsafe or unsound practice in conducting the business of such credit union, or is violating or has violated, or the Board has reasonable cause to believe that the credit union or any institution-affiliated party is about to violate, a law, rule, or regulation, or any condition imposed in writing by the Board in connection with the granting of any application or other request by the credit union or any written agreement entered into with the Board, the Board may issue and serve upon the credit union or such party a notice of charges in respect thereof. The notice shall contain a statement of the facts constituting the alleged violation or violations or the unsafe or unsound practice or practices, and shall fix a time and place at which a hearing will be held to determine whether an order to cease and desist therefrom should issue against the credit union or the institution-affiliated party. Such hearing shall be fixed for a date not earlier than thirty days nor later than sixty days after service of such notice unless an earlier or a later date is set by the Board at the request of any party so served. Unless the party or parties so served shall appear at the hearing by a duly authorized representative, they shall be deemed to have consented to the issuance of the cease-and-desist order. In the event of such consent, or if upon the record made at any such hearing, the Board shall find that any violation or unsafe or unsound practice specified in the notice of charges has been established, the Board may issue and serve upon the credit union or the institution-affiliated party an order to cease and desist from any such violation or practice. Such order may, by provisions which may be mandatory or otherwise, require the credit union or its institution-affiliated parties to cease and desist from the same, and, further, to take affirmative action to correct the conditions resulting from any such violation or practice.
(2) A cease-and-desist order shall become effective at the expiration of thirty days after the service of such order upon the credit union or other person concerned (except in the case of a cease-and-desist order issued upon consent, which shall become effective at the time specified therein), and shall remain effective and enforceable as provided therein, except to such extent as it is stayed, modified, terminated, or set aside by action of the Board or a reviewing court.
(3)
(A) make restitution or provide reimbursement, indemnification, or guarantee against loss if—
(i) such credit union or such party was unjustly enriched in connection with such violation or practice; or
(ii) the violation or practice involved a reckless disregard for the law or any applicable regulations or prior order of the Board;
(B) restrict the growth of the institution;
(C) rescind agreements or contracts;
(D) dispose of any loan or asset involved;
(E) employ qualified officers or employees (who may be subject to approval by the Board at the direction of such Board); and
(F) take such other action as the Board determines to be appropriate.
(4)
(f) Temporary cease and desist order; injunctive procedure
(1) Whenever the Board shall determine that the violation or threatened violation or the unsafe or unsound practice or practices, specified in the notice of charges served upon the credit union or any institution-affiliated party pursuant to paragraph (1) of subsection (e) of this section, or the continuation thereof, is likely to cause insolvency or significant dissipation of assets or earnings of the credit union, or is likely to weaken the condition of the credit union or otherwise prejudice the interests of its insured members prior to the completion of the proceedings conducted pursuant to paragraph (1) of subsection (e) of this section, the Board may issue a temporary order requiring the credit union or such party to cease and desist from any such violation or practice and to take affirmative action to prevent such insolvency, dissipation, condition, or prejudice pending completion of such proceedings. Such order may include any requirement authorized under subsection (e)(3). Such order shall become effective upon service upon the credit union or such institution-affiliated party and, unless set aside, limited, or suspended by a court in proceedings authorized by paragraph (2) of this subsection, shall remain effective and enforceable pending the completion of the administrative proceedings pursuant to such notice and until such time as the Administration shall dismiss the charges specified in such notice, or if a cease-and-desist order is issued against the credit union or such party, until the effective date of such order.
(2) Within ten days after the credit union concerned or any institution-affiliated party has been served with a temporary cease-and-desist order, the credit union or such party may apply to the United States district court for the judicial district in which the home office of the credit union is located, or the United States District Court for the District of Columbia, for an injunction setting aside, limiting, or suspending the enforcement, operation, or effectiveness of such order pending the completion of the administrative proceedings pursuant to the notice of charges served upon the credit union or such party under paragraph (1) of subsection (e) of this section, and such court shall have jurisdiction to issue such injunction.
(3)
(A)
(i) the cessation of any activity or practice which gave rise, whether in whole or in part, to the incomplete or inaccurate state of the books or records; or
(ii) affirmative action to restore such books or records to a complete and accurate state, until the completion of the proceedings under subsection (e)(1).
(B)
(i) shall become effective upon service; and
(ii) unless set aside, limited, or suspended by a court in proceedings under paragraph (2), shall remain in effect and enforceable until the earlier of—
(I) the completion of the proceeding initiated under subsection (e)(1) in connection with the notice of charges; or
(II) the date the Board determines, by examination or otherwise, that the insured credit union's books and records are accurate and reflect the financial condition of the credit union.
(4) In the case of violation or threatened violation of, or failure to obey, a temporary cease-and-desist order, the Board may apply to the United States district court, or the United States court of any territory, within the jurisdiction of which the principal office of the credit union is located for an injunction to enforce such order, and, if the court shall determine that there has been such violation or threatened violation or failure to obey, it shall be the duty of the court to issue such injunction.
(g) Removal and prohibition authority
(1)
(A) any institution-affiliated party has, directly or indirectly—
(i) violated—
(I) any law or regulation;
(II) any cease-and-desist order which has become final;
(III) any condition imposed in writing by the Board in connection with any action on any application, notice, or request by such credit union or institution-affiliated party; or
(IV) any written agreement between such credit union and the Board;
(ii) engaged or participated in any unsafe or unsound practice in connection with any insured credit union or business institution; or
(iii) committed or engaged in any act, omission, or practice which constitutes a breach of such party's fiduciary duty;
(B) by reason of the violation, practice, or breach described in any clause of subparagraph (A)—
(i) such insured credit union or business institution has suffered or will probably suffer financial loss or other damage;
(ii) the interests of the insured credit union's members have been or could be prejudiced; or
(iii) such party has received financial gain or other benefit by reason of such violation, practice or breach; and
(C) such violation, practice, or breach—
(i) involves personal dishonesty on the part of such party; or
(ii) demonstrates such party's unfitness to serve as a director or officer of, or to otherwise participate in the conduct of the affairs of, an insured credit union,
the Board may serve upon such party a written notice of the Board's intention to remove such party from office or to prohibit any further participation, by such party, in any manner in the conduct of the affairs of any insured credit union.
(2)
(A)
(i) an institution-affiliated party has committed a violation of any provision of subchapter II of
(ii) an officer or director of an insured credit union has knowledge that an institution-affiliated party of the insured credit union has violated any such provision or any provision of law referred to in subsection (i)(1)(A)(ii); or
(iii) an officer or director of an insured credit union has committed any violation of the Depository Institution Management Interlocks Act [
the Board may serve upon such party, officer, or director a written notice of the Board's intention to remove such officer or director from office.
(B)
(3)
(A)
(i) determines that such action is necessary for the protection of the credit union or the interests of the credit union's members; and
(ii) serves such person with written notice of the suspension order.
(B)
(i) shall become effective upon service; and
(ii) unless a court issues a stay of such order under paragraph (6), shall remain in effect and enforceable until—
(I) the date the Board dismisses the charges contained in the notice served under paragraph (1) or (2) with respect to such party; or
(II) the effective date of an order issued by the Board to such person under paragraph (1) or (2).
(C)
(4) A notice of intention to remove a director, committee member, officer, or other person from office or to prohibit his participation in the conduct of the affairs of an insured credit union, shall contain a statement of the facts constituting grounds therefor, and shall fix a time and place at which a hearing will be held thereon. Such hearing shall be fixed for a date not earlier than thirty days nor later than sixty days after the date of service of such notice, unless an earlier or a later date is set by the Board at the request of (A) such director, committee member, or officer or other person, and for good cause shown, or (B) the Attorney General of the United States. Unless such director, committee member, officer, or other person shall appear at the hearing in person or by a duly authorized representative, he shall be deemed to have consented to the issuance of an order of such removal or prohibition. In the event of such consent, or if upon the record made at any such hearing the Board shall find that any of the grounds specified in such notice have been established, the Board may issue such orders of suspension or removal from office, or prohibition from participation in the conduct of the affairs of the credit union, as it may deem appropriate. Any such order shall become effective at the expiration of thirty days after service upon such credit union and the director, committee member, officer, or other person concerned (except in the case of an order issued upon consent, which shall become effective at the time specified therein). Such order shall remain effective and enforceable except to such extent as it is stayed, modified, terminated, or set aside by action of the Board or a reviewing court.
(5)
(A) participate in any manner in the conduct of the affairs of any institution or agency specified in paragraph (7)(A);
(B) solicit, procure, transfer, attempt to transfer, vote, or attempt to vote any proxy, consent, or authorization with respect to any voting rights in any institution described in subparagraph (A);
(C) violate any voting agreement previously approved by the appropriate Federal banking agency; or
(D) vote for a director, or serve or act as an institution-affiliated party.
(6) Within ten days after any director, officer, committee member, or other person has been suspended from office and/or prohibited from participation in the conduct of the affairs of an insured credit union under paragraph (3) of this subsection, such director, officer, committee member, or other person may apply to the United States district court for the judicial district in which the principal office of the credit union is located, or the United States District Court for the District of Columbia, for a stay of such suspension and/or prohibition pending the completion of the administrative proceedings pursuant to the notice served upon such director, officer, committee member, or other person under paragraph (1) or (2) of this subsection, and such court shall have jurisdiction to stay such suspension and/or prohibition.
(7)
(A)
(i) any insured depository institution;
(ii) any institution treated as an insured bank under paragraph (3) or (4) of
(iii) any insured credit union;
(iv) any institution chartered under the Farm Credit Act of 1971 [
(v) any appropriate Federal financial institution regulatory agency; and
(vi) the Federal Housing Finance Agency and any Federal home loan bank.
(B)
(i) the Board; and
(ii) the appropriate Federal financial institutions regulatory agency of the institution described in any clause of subparagraph (A) with respect to which such party proposes to become an institution-affiliated party,
subparagraph (A) shall, to the extent of such consent, cease to apply to such party with respect to the institution described in each written consent. If any person receives such a written consent from the Board, the Board shall publicly disclose such consent. If the agency referred to in clause (ii) grants such a written consent, such agency shall report such action to the Board and publicly disclose such consent.
(C)
(D)
(i) the appropriate Federal banking agency, as provided in
(ii) the Farm Credit Administration, in the case of an institution chartered under the Farm Credit Act of 1971 [
(iii) the National Credit Union Administration Board, in the case of an insured credit union (as defined in
(iv) the Secretary of the Treasury, in the case of the Federal Housing Finance Agency and any Federal home loan bank; 2
(E)
(F)
(h) Board's appointment of conservator; consultation with State; authority
(1) The Board may, ex parte without notice, 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 conservator and immediately take possession and control of the business and assets of any insured credit union in any case in which—
(A) the Board determines that such action is necessary to conserve the assets of any insured credit union or to protect the Fund or the interests of the members of such insured credit union;
(B) an insured credit union, by a resolution of its board of directors, consents to such an action by the Board;
(C) the Attorney General notifies the Board in writing that an insured credit union has been found guilty of a criminal offense under
(D) there is a willful violation of a cease-and-desist order which has become final;
(E) there is concealment of books, papers, records, or assets of the credit union or refusal to submit books, papers, records, or affairs of the credit union for inspection to any examiner or to any lawful agent of the Board;
(F) the credit union is significantly undercapitalized, as defined in
(G) the credit union is critically undercapitalized, as defined in
(2)(A) Except as provided in subparagraph (C), in the case of a State-chartered insured credit union, the authority conferred by paragraph (1) shall not be exercised without the written approval of the State official having jurisdiction over the State-chartered credit union that the grounds specified for such exercise exist.
(B) If such approval has not been received by the Board within 30 days of receipt of notice by the State that the Board has determined such grounds exist, and the Board has responded in writing to the State's written reasons, if any, for withholding approval, then the Board may proceed without State approval only by a unanimous vote of the Board.
(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
(3) Not later than ten days after the date on which the Board takes possession and control of the business and assets of an insured credit union pursuant to paragraph (1), such insured credit union may apply to the United States district court for the judicial district in which the principal office of such insured credit union is located or the United States District Court for the District of Columbia, for an order requiring the Board to show cause why it should not be enjoined from continuing such possession and control. Except as provided in this paragraph, no court may take any action, except at the request of the Board by regulation or order, to restrain or affect the exercise of powers or functions of the Board as conservator.
(4) Except as provided in paragraph (3), in the case of a Federal credit union, the Board may maintain possession and control of the business and assets of such credit union and may operate such credit union until such time—
(A) as the Board shall permit such credit union to continue business subject to such terms and conditions as may be imposed by the Board; or
(B) as such credit union is liquidated in accordance with the provisions of
(5) Except as provided in paragraph (3), in the case of an insured State-chartered credit union, the Board may maintain possession and control of the business and assets of such credit union and may operate such credit union until such time—
(A) as the Board shall permit such credit union to continue business, subject to such terms and conditions as may be imposed by the Board;
(B) as the Board shall permit the transfer of possession and control of such credit union to any commission, board, or authority which has supervisory authority over such credit union and which is authorized by State law to operate such credit union; or
(C) as such credit union is liquidated in accordance with the provisions of
(6) The Board may appoint such agents as it considers necessary in order to assist the Board in carrying out its duties as a conservator under this subsection.
(7) All expenses incurred by the Board in exercising its authority under this subsection with respect to any credit union shall be paid out of the assets of such credit union.
(8) The conservator shall have all the powers of the members, the directors, the officers, and the committees of the credit union and shall be authorized to operate the credit union in its own name or to conserve its assets in the manner and to the extent authorized by the Board.
(9) The authority granted by this subsection is in addition to all other authority granted to the Board under this chapter.
(i) Suspension, removal, and prohibition from participation orders in the case of certain criminal offenses
(1)
(A)
(i) a crime involving dishonesty or breach of trust which is punishable by imprisonment for a term exceeding one year under State or Federal law, or
(ii) a criminal violation of
the Board may, if continued service or participation by such party may pose a threat to the interests of the credit union's members or may threaten to impair public confidence in any credit union, by written notice served upon such party, suspend such party from office or prohibit such party from further participation in any manner in the conduct of the affairs of any credit union.
(B)
(i)
(ii)
(C)
(i)
(ii)
(D)
(i)
(ii)
(iii)
(E)
(i) whether such individual is an institution-affiliated party at any credit union at the time the order is considered or issued by the Board; or
(ii) whether the credit union at which the individual was an institution-affiliated party at the time of the offense remains in existence at the time the order is considered or issued by the Board.
(2) If at any time, because of the suspension of one or more directors pursuant to this section, there shall be on the board of directors of a Federal credit union less than a quorum of directors not so suspended, all powers and functions vested in or exercisable by such board shall vest in and be exercisable by the director or directors on the board not so suspended, until such time as there shall be a quorum of the board of directors. In the event all of the directors of a Federal credit union are suspended pursuant to this section, the Board shall appoint persons to serve temporarily as directors in their place and stead pending the termination of such suspensions, or until such time as those who have been suspended cease to be directors of the credit union and their respective successors have been elected by the members at an annual or special meeting and have taken office. Directors appointed temporarily by the Board shall, within thirty days following their appointment, call a special meeting for the election of new directors, unless during the thirty-day period (A) the regular annual meeting is scheduled, or (B) the suspensions giving rise to the appointment of temporary directors are terminated.
(3) Within thirty days from service of any notice of suspension or order of removal issued pursuant to paragraph (1) of this subsection, the institution-affiliated party concerned may request in writing an opportunity to appear before the Board to show that the continued service to or participation in the conduct of the affairs of the credit union by such party does not, or is not likely to, pose a threat to the interests of the credit union's members or threaten to impair public confidence in the credit union. Upon receipt of any such request, the Board shall fix a time (not more than thirty days after receipt of such request, unless extended at the request of such party) and place at which such party may appear, personally or through counsel, before the Board or its designee to submit written materials (or, at the discretion of the Board, oral testimony) and oral argument. Within sixty days of such hearing, the Board shall notify such party whether the suspension or prohibition from participation in any manner in the conduct of the affairs of the credit union will be continued, terminated or otherwise modified, or whether the order removing such party from office or prohibiting such party from further participation in any manner in the conduct of the affairs of the credit union will be rescinded or otherwise modified. Such notification shall contain a statement of the basis for the Board's decision, if adverse to such party. The Board is authorized to prescribe such rules as may be necessary to effectuate the purposes of this subsection.
(j) Jurisdiction of hearing; procedure; judicial review
(1) Any hearing provided for in this section (other than the hearing provided for in subsection (i)(3) of this section) shall be held in the Federal judicial district or in the territory in which the principal office of the credit union is located, unless the party afforded the hearing consents to another place, and shall be conducted in accordance with the provisions of
(2) Any party to any proceeding under paragraph (1) may obtain a review of any order served pursuant to paragraph (1) of this subsection (other than an order issued with the consent of the credit union or the institution-affiliated party concerned or an order issued under subsection (i)(1) of this section) by filing in the court of appeals of the United States for the circuit in which the principal office of the credit union is located, or in the United States Court of Appeals for the District of Columbia Circuit, within thirty days after the date of service of such order, a written petition praying that the order of the Board be modified, terminated, or set aside. A copy of such petition shall be forthwith transmitted by the clerk of the court to the Board, and thereupon the Board shall file in the court the record in the proceeding, as provided in
(3) The commencement of proceedings for judicial review under paragraph (2) of this subsection shall not, unless specifically ordered by the court, operate as a stay of any order issued by the Board.
(k) Jurisdiction and enforcement; penalty
(1) The Board may in its discretion apply to the United States district court, or the United States court of any territory within the jurisdiction of which the principal office of the credit union is located, for the enforcement of any effective and outstanding notice or order issued under this section or
(2)
(A)
(i) violates any law or regulation;
(ii) violates any final order or temporary order issued pursuant to subsection (e), (f), (g), (i), or (q), or any final order under
(iii) violates any condition imposed in writing by the Board in connection with any action on any application, notice, or other request by the credit union or institution-affiliated party; or
(iv) violates any written agreement between such credit union and such agency,
shall forfeit and pay a civil penalty of not more than $5,000 for each day during which such violation continues.
(B)
(i)(I) commits any violation described in any clause of subparagraph (A);
(II) recklessly engages in an unsafe or unsound practice in conducting the affairs of such credit union; or
(III) breaches any fiduciary duty;
(ii) which violation, practice, or breach—
(I) is part of a pattern of misconduct;
(II) causes or is likely to cause more than a minimal loss to such credit union; or
(III) results in pecuniary gain or other benefit to such party,
shall forfeit and pay a civil penalty of not more than $25,000 for each day during which such violation, practice, or breach continues.
(C)
(i) knowingly—
(I) commits any violation described in any clause of subparagraph (A);
(II) engages in any unsafe or unsound practice in conducting the affairs of such credit union; or
(III) breaches any fiduciary duty; and
(ii) knowingly or recklessly causes a substantial loss to such credit union or a substantial pecuniary gain or other benefit to such party by reason of such violation, practice, or breach,
shall forfeit and pay a civil penalty in an amount not to exceed the applicable maximum amount determined under subparagraph (D) for each day during which such violation, practice, or breach continues.
(D)
(i) in the case of any person other than an insured credit union, an amount to not 3 exceed $1,000,000; and
(ii) in the case of any insured credit union, an amount not to exceed the lesser of—
(I) $1,000,000; or
(II) 1 percent of the total assets of such credit union.
(E)
(i)
(ii)
(F)
(G)
(i) the size of financial resources and good faith of the insured credit union or the person charged;
(ii) the gravity of the violation;
(iii) the history of previous violations; and
(iv) such other matters as justice may require.
(H)
(I)
(i)
(ii)
(J)
(K)
(L)
(3)
(l) Criminal penalty for violation of certain orders
Whoever—
(1) under this chapter, is suspended or removed from, or prohibited from participating in the affairs of any credit union described in subsection (g)(5); and
(2) knowingly participates, directly or indirectly, in any manner (including by engaging in an activity specifically prohibited in such an order or in subsection (g)(5)) in the conduct of the affairs of such a credit union;
shall be fined not more than $1,000,000, imprisoned for not more than 5 years, or both.
(m) Definitions
As used in this section (1) the terms "cease-and-desist order which has become final" and "order which has become final" means a cease-and-desist order, or an order issued by the Board with the consent of the credit union or the director, officer, committee member, or other person concerned, or with respect to which no petition for review of the action of the Board has been filed and perfected in a court of appeals as specified in paragraph (2) of subsection (j) of this section, or with respect to which the action of the court in which said petition is so filed is not subject to further review by the Supreme Court of the United States in proceedings provided for in said paragraph, or an order issued under subsection (i) of this section, and (2) the term "violation" includes, without limitation any action (alone or with another or others) for or toward causing, bringing about, participating in, counseling, or aiding or abetting a violation.
(n) Notice or order to State board supervising State-chartered credit union
Any service required or authorized to be made by the Board under this section may be made by registered mail or in such other manner reasonably calculated to give actual notice as the Board may by regulation or otherwise provide. Copies of any notice or order served by the Board upon any State-chartered credit union or any director, officer, or committee member thereof or other person participating in the conduct of its affairs, pursuant to the provisions of this section, shall also be sent to the commission, board, or authority, if any, having supervision of such credit union.
(o) Notice of proceedings to State board supervising State-chartered credit union; effect of corrective action by State board; attack on validity of notice or order
In connection with any proceeding under subsection (e), (f)(1), or (g) of this section involving an insured State-chartered credit union or any institution-affiliated party, the Board shall provide the commission, board, or authority, if any, having supervision of such credit union, with notice of its intent to institute such a proceeding and the grounds thereof. Unless within such time as the Board deems appropriate in the light of the circumstances of the case (which time must be specified in the notice prescribed in the preceding sentence) satisfactory corrective action is effectuated by action of such commission, board, or authority, the Board may proceed as provided in this section. No credit union or other party who is the subject of any notice or order issued by the Board under this section shall have standing to raise the requirements of this subsection as ground for attacking the validity of any such notice or order.
(p) Proceedings; powers of Board; court enforcement of subpenas; witness fees; expenses and attorneys' fees
In the course of or in connection with any proceeding under this section or in connection with any claim for insured deposits or any examination or investigation under
(q) Compliance with monetary transaction recordkeeping and report requirements
(1) Compliance procedures required
The Board shall prescribe regulations requiring insured credit unions to establish and maintain procedures reasonably designed to assure and monitor the compliance of such credit unions with the requirements of subchapter II of
(2) Examinations of credit unions to include review of compliance procedures
(A) In general
Each examination of an insured credit union by the Board shall include a review of the procedures required to be established and maintained under paragraph (1).
(B) Exam report requirement
The report of examination shall describe any problem with the procedures maintained by the credit union.
(3) Order to comply with requirements
If the Board determines that an insured credit union—
(A) has failed to establish and maintain the procedures described in paragraph (1); or
(B) has failed to correct any problem with the procedures maintained by such credit union which was previously reported to the credit union by the Board,
the Board shall issue an order in the manner prescribed in subsection (e) or (f) requiring such credit union to cease and desist from its violation of this subsection or regulations prescribed under this subsection.
(r) "Institution-affiliated party" defined
For purposes of this chapter, the term "institution-affiliated party" means—
(1) any committee member, director, officer, or employee of, or agent for, an insured credit union;
(2) any consultant, joint venture partner, and any other person as determined by the Board (by regulation or on a case-by-case basis) who participates in the conduct of the affairs of an insured credit union; and
(3) any independent contractor (including any attorney, appraiser, or accountant) who knowingly or recklessly participates in—
(A) any violation of any law or regulation;
(B) any breach of fiduciary duty; or
(C) any unsafe or unsound practice,
which caused or is likely to cause more than a minimal financial loss to, or a significant adverse effect on, the insured credit union.
(s) Public disclosure of agency action
(1) In general
The Board shall publish and make available to the public on a monthly basis—
(A) any written agreement or other written statement for which a violation may be enforced by the Board, unless the Board, in its discretion, determines that publication would be contrary to the public interest;
(B) any final order issued with respect to any administrative enforcement proceeding initiated by the Board under this section or any other law; and
(C) any modification to or termination of any order or agreement made public pursuant to this paragraph.
(2) Hearings
All hearings on the record with respect to any notice of charges issued by the Board shall be open to the public, unless the agency, in its discretion, determines that holding an open hearing would be contrary to the public interest.
(3) Reports to Congress
A written report shall be made part of a determination not to hold a public hearing pursuant to paragraph (2) or not to publish a document pursuant to paragraph (1)(A). At the end of each calendar quarter, all such reports shall be transmitted to the Congress.
(4) Transcript of hearing
A transcript that includes all testimony and other documentary evidence shall be prepared for all hearings commenced pursuant to subsection (k). A transcript of public hearings shall be made available to the public pursuant to
(5) Delay of publication under exceptional circumstances
If the Board makes a determination in writing that the publication of a final order pursuant to paragraph (1)(B) would seriously threaten the safety and soundness of an insured depository institution, the agency may delay the publication of the document for a reasonable time.
(6) Documents filed under seal in public enforcement hearings
The Board may file any document or part of a document under seal in any administrative enforcement hearing commenced by the agency if disclosure of the document would be contrary to the public interest. A written report shall be made part of any determination to withhold any part of a document from the transcript of the hearing required by paragraph (2).
(7) Retention of documents
The Board shall keep and maintain a record, for a period of at least 6 years, of all documents described in paragraph (1) and all informal enforcement agreements and other supervisory actions and supporting documents issued with respect to or in connection with any administrative enforcement proceeding initiated by such agency under this section or any other laws.
(8) Disclosures to Congress
No provision of this subsection may be construed to authorize the withholding, or to prohibit the disclosure, of any information to the Congress or any committee or subcommittee of the Congress.
(9) Preservation of records
(A) In general
The Board may cause any and all records, papers, or documents kept by the Administration or in the possession or custody of the Administration to be—
(i) photographed or microphotographed or otherwise reproduced upon film; or
(ii) preserved in any electronic medium or format which is capable of—
(I) being read or scanned by computer; and
(II) being reproduced from such electronic medium or format by printing or any other form of reproduction of electronically stored data.
(B) Treatment as original records
Any photographs, micrographs, or photographic film or copies thereof described in subparagraph (A)(i) or reproduction of electronically stored data described in subparagraph (A)(ii) shall be deemed to be an original record for all purposes, including introduction in evidence in all State and Federal courts or administrative agencies, and shall be admissible to prove any act, transaction, occurrence, or event therein recorded.
(C) Authority of the administration
Any photographs, microphotographs, or photographic film or copies thereof described in subparagraph (A)(i) or reproduction of electronically stored data described in subparagraph (A)(ii) shall be preserved in such manner as the Administration shall prescribe, and the original records, papers, or documents may be destroyed or otherwise disposed of as the Administration may direct.
(t) Regulation of certain forms of benefits to institution-affiliated parties
(1) Golden parachutes and indemnification payments
The Board may prohibit or limit, by regulation or order, any golden parachute payment or indemnification payment.
(2) Factors to be taken into account
The Board shall prescribe, by regulation, the factors to be considered by the Board in taking any action pursuant to paragraph (1) which may include such factors as the following:
(A) Whether there is a reasonable basis to believe that the institution-affiliated party has committed any fraudulent act or omission, breach of trust or fiduciary duty, or insider abuse with regard to the credit union that has had a material affect on the financial condition of the credit union.
(B) Whether there is a reasonable basis to believe that the institution-affiliated party is substantially responsible for the insolvency of the credit union, the appointment of a conservator or liquidating agent for the credit union, or the credit union's troubled condition (as defined in regulations prescribed by the Board pursuant to paragraph (4)(A)(ii)(III)).
(C) Whether there is a reasonable basis to believe that the institution-affiliated party has materially violated any applicable Federal or State banking law or regulation that has had a material effect on the financial condition of the credit union.
(D) Whether there is a reasonable basis to believe that the institution-affiliated party has violated or conspired to violate—
(i)
(ii) section 1341 or 1343 of such title affecting a financial institution.
(E) Whether the institution-affiliated party was in a position of managerial or fiduciary responsibility.
(F) The length of time the party was affiliated with the credit union and the degree to which—
(i) the payment reasonably reflects compensation earned over the period of employment; and
(ii) the compensation involved represents a reasonable payment for services rendered.
(3) Certain payments prohibited
No credit union may prepay the salary or any liability or legal expense of any institution-affiliated party if such payment is made—
(A) in contemplation of the insolvency of such credit union or after the commission of an act of insolvency; and
(B) with a view to, or has the result of—
(i) preventing the proper application of the assets of the credit union; or
(ii) preferring one creditor over another.
(4) "Golden parachute payment" defined
For purposes of this subsection—
(A) In general
The term "golden parachute payment" means any payment (or any agreement to make any payment) in the nature of compensation by any credit union for the benefit of any institution-affiliated party pursuant to an obligation of such credit union that—
(i) is contingent on the termination of such party's affiliation with the credit union; and
(ii) is received on or after the date on which—
(I) the credit union is insolvent;
(II) any conservator or liquidating agent is appointed for such credit union;
(III) the Board determines that the credit union is in a troubled condition (as defined in regulations which the Board shall prescribe);
(IV) the credit union has been assigned a composite rating by the Board of 4 or 5 under the Uniform Financial Institutions Rating System (as applicable with respect to credit unions); or
(V) the credit union is subject to a proceeding initiated by the Board to terminate or suspend deposit insurance for such credit union.
(B) Certain payments in contemplation of an event
Any payment which would be a golden parachute payment but for the fact that such payment was made before the date referred to in subparagraph (A)(ii) shall be treated as a golden parachute payment if the payment was made in contemplation of the occurrence of an event described in any subclause of such subparagraph.
(C) Certain payments not included
The term "golden parachute payment" shall not include—
(i) any payment made pursuant to a retirement plan which is qualified (or is intended to be qualified) under
(ii) any payment made pursuant to a bona fide deferred compensation plan or arrangement which the Board determines, by regulation or order, to be permissible; or
(iii) any payment made by reason of the death or disability of an institution-affiliated party.
(5) Other definitions
For purposes of this subsection—
(A) Indemnification payment
Subject to paragraph (6), the term "indemnification payment" means any payment (or any agreement to make any payment) by any credit union for the benefit of any person who is or was an institution-affiliated party, to pay or reimburse such person for any liability or legal expense with regard to any administrative proceeding or civil action instituted by the Board which results in a final order under which such person—
(i) is assessed a civil money penalty;
(ii) is removed or prohibited from participating in conduct of the affairs of the credit union; or
(iii) is required to take any affirmative action described in subsection (e)(3) with respect to such credit union.
(B) Liability or legal expense
The term "liability or legal expense" means—
(i) any legal or other professional expense incurred in connection with any claim, proceeding, or action;
(ii) the amount of, and any cost incurred in connection with, any settlement of any claim, proceeding, or action; and
(iii) the amount of, and any cost incurred in connection with, any judgment or penalty imposed with respect to any claim, proceeding, or action.
(C) Payment
The term "payment" includes—
(i) any direct or indirect transfer of any funds or any asset; and
(ii) any segregation of any funds or assets for the purpose of making, or pursuant to an agreement to make, any payment after the date on which such funds or assets are segregated, without regard to whether the obligation to make such payment is contingent on—
(I) the determination, after such date, of the liability for the payment of such amount; or
(II) the liquidation, after such date, of the amount of such payment.
(6) Certain commercial insurance coverage not treated as covered benefit payment
No provision of this subsection shall be construed as prohibiting any credit union from purchasing any commercial insurance policy or fidelity bond, except that, subject to any requirement described in paragraph (5)(A)(iii), such insurance policy or bond shall not cover any legal or liability expense of the credit union which is described in paragraph (5)(A).
(u) Foreign investigations
(1) Requesting assistance from foreign banking authorities
In conducting any investigation, examination, or enforcement action under this chapter, the Board may—
(A) request the assistance of any foreign banking authority; and
(B) maintain an office outside the United States.
(2) Providing assistance to foreign banking authorities
(A) In general
The Board may, at the request of any foreign banking authority, assist such authority if such authority states that the requesting authority is conducting an investigation to determine whether any person has violated, is violating, or is about to violate any law or regulation relating to banking matters or currency transactions administered or enforced by the requesting authority.
(B) Investigation by Federal banking agency
The Board may, in the Board's discretion, investigate and collect information and evidence pertinent to a request for assistance under subparagraph (A). Any such investigation shall comply with the laws of the United States and the policies and procedures of the Board.
(C) Factors to consider
In deciding whether to provide assistance under this paragraph, the Board shall consider—
(i) whether the requesting authority has agreed to provide reciprocal assistance with respect to banking matters within the jurisdiction of the Board or any appropriate Federal banking agency; and
(ii) whether compliance with the request would prejudice the public interest of the United States.
(D) Treatment of foreign banking authority
For purposes of any Federal law or Board regulation relating to the collection or transfer of information by the Board or any appropriate Federal banking agency, the foreign banking authority shall be treated as another appropriate Federal banking agency.
(3) Rule of construction
Paragraphs (1) and (2) shall not be construed to limit the authority of the Board or any other Federal agency to provide or receive assistance or information to or from any foreign authority with respect to any matter.
(v) Termination of insurance for money laundering or cash transaction reporting offenses
(1) In general
(A) Conviction of title 18 offenses
(i) Duty to notify
If an insured State credit union has been convicted of any criminal offense under
(ii) Notice of termination
After written notification from the Attorney General to the Board of such a conviction, the Board shall issue to such insured credit union a notice of its intention to terminate the insured status of the insured credit union and schedule a hearing on the matter, which shall be conducted as a termination hearing pursuant to subsection (b) of this section, except that no period for correction shall apply to a notice issued under this subparagraph.
(B) Conviction of title 31 offenses
If a credit union is convicted of any criminal offense under
(C) Notice to State supervisor
The Board shall simultaneously transmit a copy of any notice under this paragraph to the appropriate State financial institutions supervisor.
(2) Factors to be considered
In determining whether to terminate insurance under paragraph (1), the Board shall take into account the following factors:
(A) The extent to which directors, committee members, or senior executive officers (as defined by the Board in regulations which the Board shall prescribe) of the credit union knew of, or were involved in, the commission of the money laundering offense of which the credit union was found guilty.
(B) The extent to which the offense occurred despite the existence of policies and procedures within the credit union which were designed to prevent the occurrence of any such offense.
(C) The extent to which the credit union has fully cooperated with law enforcement authorities with respect to the investigation of the money laundering offense of which the credit union was found guilty.
(D) The extent to which the credit union has implemented additional internal controls (since the commission of the offense of which the credit union was found guilty) to prevent the occurrence of any other money laundering offense.
(E) The extent to which the interest of the local community in having adequate deposit and credit services available would be threatened by the termination of insurance.
(3) Notice to State credit union supervisor and public
When the order to terminate insured status initiated pursuant to this subsection is final, the Board shall—
(A) notify the commission, board, or authority (if any) having supervision of the credit union described in paragraph (1) at least 10 days prior to the effective date of the order of the termination of the insured status of such credit union; and
(B) publish notice of the termination of the insured status of the credit union.
(4) Temporary insurance of previously insured deposits
Upon termination of the insured status of any State credit union pursuant to paragraph (1), the deposits of such credit union shall be treated in accordance with subsection (d)(2).
(5) Successor liability
This subsection shall not apply to a successor to the interests of, or a person who acquires, an insured credit union that violated a provision of law described in paragraph (1), if the successor succeeds to the interests of the violator, or the acquisition is made, in good faith and not for purposes of evading this subsection or regulations prescribed under this subsection.
(w) One-year restrictions on Federal examiners of insured credit unions
(1) In general
In addition to other applicable restrictions set forth in title 18, the penalties set forth in paragraph (5) of this subsection shall apply to any person who—
(A) was an officer or employee (including any special Government employee) of the Administration;
(B) served 2 or more months during the final 12 months of his or her employment with the Administration as the senior examiner (or a functionally equivalent position) of an insured credit union with continuing, broad responsibility for the examination (or inspection) of that insured credit union on behalf of the Administration; and
(C) within 1 year after the termination date of his or her service or employment with the Administration, knowingly accepts compensation as an employee, officer, director, or consultant from such insured credit union.
(2) Rule of construction
For purposes of this subsection, a person shall be deemed to act as a consultant for an insured credit union only if such person directly works on matters for, or on behalf of, such insured credit union.
(3) Regulations
(A) In general
The Board shall prescribe rules or regulations to administer and carry out this subsection, including rules, regulations, or guidelines to define the scope of persons referred to in paragraph (1)(B).
(B) Consultation
In prescribing rules or regulations under this paragraph, the Board shall, to the extent it deems necessary, consult with the Federal banking agencies (as defined in
(4) Waiver
The Board may grant a waiver, on a case by case basis, of the restriction imposed by this subsection to any officer or employee (including any special Government employee) of the Administration if the Chairman certifies in writing that granting the waiver would not affect the integrity of the supervisory program of the Administration.
(5) Penalties
(A) In general
In addition to any other administrative, civil, or criminal remedy or penalty that may otherwise apply, whenever the Board determines that a person subject to paragraph (1) has become associated, in the manner described in paragraph (1)(C), with an insured credit union, the Board shall impose upon such person one or more of the following penalties:
(i) Industry-wide prohibition order
The Board shall serve a written notice or order in accordance with and subject to the provisions of subsection (g)(4) for written notices or orders under paragraph (1) or (2) of subsection (g), upon such person of the intention of the Board—
(I) to remove such person from office or to prohibit such person from further participation in the conduct of the affairs of the insured credit union for a period of up to 5 years; and
(II) to prohibit any further participation by such person, in any manner, in the conduct of the affairs of any insured credit union for a period of up to 5 years.
(ii) Civil monetary penalty
The Board may, in an administrative proceeding or civil action in an appropriate United States district court, impose on such person a civil monetary penalty of not more than $250,000. Any administrative proceeding under this clause shall be conducted in accordance with subsection (k). In lieu of an action by the Board under this clause, the Attorney General of the United States may bring a civil action under this clause in the appropriate United States district court.
(B) Scope of prohibition order
Any person subject to an order issued under this subparagraph (A)(i) shall be subject to paragraphs (5) and (7) of subsection (g) in the same manner and to the same extent as a person subject to an order issued under subsection (g).
(June 26, 1934, ch. 750, title II, §206, as added
Editorial Notes
References in Text
The Depository Institution Management Interlocks Act, referred to in subsec. (g)(2)(A)(iii), is title II of
The Farm Credit Act of 1971, referred to in subsec. (g)(7)(A)(iv), (D)(ii), is
Amendments
2010—Subsec. (g)(7)(A)(ii).
Subsec. (g)(7)(A)(v).
Subsec. (g)(7)(A)(vi).
Subsec. (g)(7)(A)(vii).
Subsec. (g)(7)(D)(iii).
Subsec. (g)(7)(D)(iv).
Subsec. (g)(7)(D)(v).
2006—Subsec. (b)(1).
Subsec. (e)(3)(D).
Subsec. (f)(1).
Subsec. (g)(1)(A)(i)(III).
Subsec. (g)(7)(D).
Subsec. (i).
Subsec. (i)(1)(A).
Subsec. (i)(1)(B)(i).
Subsec. (i)(1)(C).
Subsec. (i)(1)(D)(i).
Subsec. (i)(1)(E).
Subsec. (k)(2)(A)(iii).
Subsec. (k)(3).
Subsec. (s)(9).
Subsec. (t)(2)(B).
Subsec. (t)(2)(C).
Subsec. (t)(4)(A)(ii)(II).
2004—Subsec. (w).
1998—Subsec. (h)(1).
Subsec. (h)(1)(F), (G).
Subsec. (h)(2)(A).
Subsec. (h)(2)(C).
Subsec. (k)(1).
Subsec. (k)(2)(A)(ii).
1994—Subsecs. (h)(1)(C), (i)(1)(A)(ii), (v)(1)(B).
1992—Subsec. (g)(2).
Subsec. (h)(1)(C) to (E).
Subsec. (i)(1).
Subsec. (v).
1990—Subsec. (j)(1).
Subsec. (s).
"(1)
"(A) any final order issued with respect to any administrative enforcement proceeding initiated by such agency under this section or any other provision of law; and
"(B) any modification to or termination of any final order described in subparagraph (A).
"(2)
Subsec. (t).
Subsec. (u).
1989—Subsec. (e)(1).
Subsec. (e)(3), (4).
Subsec. (f)(1).
Subsec. (f)(2).
Subsec. (f)(3), (4).
Subsec. (g)(1).
Subsec. (g)(2).
Subsec. (g)(3).
Subsec. (g)(4).
Subsec. (g)(5).
Subsec. (g)(6).
Subsec. (g)(7).
Subsec. (h)(3).
Subsec. (i)(1).
Subsec. (i)(3).
Subsec. (j)(2).
Subsec. (k)(2).
Subsec. (k)(3).
Subsec. (l).
Subsec. (o).
Subsec. (p).
Subsec. (r).
Subsec. (s).
1987—
Subsec. (g)(1).
Subsec. (g)(2).
Subsec. (g)(7).
Subsec. (h)(1)(C), (D).
Subsec. (h)(2)(B).
Subsec. (h)(8), (9).
1986—Subsec. (k)(2)(A).
Subsec. (q).
1984—Subsec. (d)(1).
1982—Subsec. (b)(2).
Subsec. (g)(3) to (6).
Subsecs. (h), (i).
Subsec. (j).
Subsec. (k).
Subsec. (k)(2)(A), (D).
Subsec. (l).
Subsec. (m).
Subsecs. (n) to (p).
1978—Subsecs. (a) to (d).
Subsec. (e).
Subsec. (f).
Subsec. (g).
Subsec. (h).
Subsec. (i).
Subsec. (j).
Subsecs. (k) to (o).
1977—Subsec. (g)(1).
Subsec. (g)(2).
1974—Subsec. (a).
Subsec. (c).
Subsec. (d).
Statutory Notes and Related Subsidiaries
Change of Name
Oversight Board redesignated Thrift Depositor Protection Oversight Board, effective Feb. 1, 1992, see section 302(a) of
Effective Date of 2010 Amendment
Amendment by
Effective Date of 2004 Amendment
Effective Date of 1992 Amendment
Effective Date of 1989 Amendment
Effective Date of 1978 Amendment
Amendment by sections 107(a)(4), (c)(4), (d)(4), and 111(d)(1)–(3) of
Amendment by section 107(e)(4) of
Amendment by section 502(b) of
Effective Date of Regulations Prescribed Under 1986 Amendment
The regulations required to be prescribed under amendment by
Extension of Emergency Acquisition and Net Worth Guarantee Provisions of Pub. L. 97–320
No amendment made by section 141(a) of
No amendment made by section 141(a) of
Section 141(a) of
2 So in original. The semicolon probably should be a period.
3 So in original. Probably should be "not to".
§1786a. Omitted
Editorial Notes
Codification
Section, act June 26, 1934, ch. 750, title II, §206A, as added
§1787. Payment of insurance
(a) Liquidation by Board; bond; appointment of agent; fees to be fixed by Board
(1)(A) Upon its finding that a Federal credit union insured under this subchapter is bankrupt or insolvent, the Board shall close such credit union for liquidation and appoint itself liquidating agent therefor.
(B) Not later than 10 days after the date on which the Board closes a credit union for liquidation pursuant to paragraph (1), or accepts appointment as liquidating agent pursuant to subsection (b), such insured credit union may apply to the United States district court for the judicial district in which the principal office of such insured credit union is located or the United States District Court for the District of Columbia, for an order requiring the Board to show cause why it should not be prohibited from continuing such liquidation. Except as otherwise provided in this subparagraph, no court may take any action for or toward the removal of any liquidating agent or, except at the instance of the Board, restrain or affect the exercise of powers or functions of a liquidating agent.
(2) Notwithstanding any other provision of law, the Board as liquidating agent of a closed Federal credit union insured under this subchapter shall not be required to furnish bond and shall have the right to appoint an agent or agents to assist it in its duties as such liquidating agent. All fees, compensation, and expenses of liquidation and administration thereof shall be fixed by the Board and may be paid by them out of funds coming into its possession as such liquidating agent.
(3)
(A) the Board determines that—
(i) the credit union is significantly undercapitalized, as defined in
(ii) the credit union is critically undercapitalized, as defined in
(B) in the case of a State-chartered insured credit union, the Board has complied with
(b) Powers and duties of Board as conservator or liquidating agent
(1) Rulemaking authority of Board
The Board may prescribe such regulations as the Board determines to be appropriate regarding the conduct of the Board as conservator or liquidating agent.
(2) General powers
(A) Successor to credit union
The Board shall, as conservator or liquidating agent, and by operation of law, succeed to—
(i) all rights, titles, powers, and privileges of the credit union, and of any member, accountholder, officer, or director of such credit union with respect to the credit union and the assets of the credit union; and
(ii) title to the books, records, and assets of any previous conservator or other legal custodian of such credit union.
(B) Operate the credit union
The Board may, as conservator or liquidating agent—
(i) take over the assets of and operate the credit union with all the powers of the members or shareholders, the directors, and the officers of the credit union and shall be authorized to conduct all business of the credit union;
(ii) collect all obligations and money due the credit union;
(iii) perform all functions of the credit union in the name of the credit union which is consistent with the appointment as conservator or liquidating agent; and
(iv) preserve and conserve the assets and property of such credit union.
(C) Functions of credit union's officers, directors, and shareholders
The Board may, by regulation or order, provide for the exercise of any function by any member or stockholder, director, or officer of any credit union for which the Board has been appointed conservator or liquidating agent.
(D) Powers as conservator
The Board may, as conservator, take such action as may be—
(i) necessary to put the credit union in a sound and solvent condition; and
(ii) appropriate to carry on the business of the credit union and preserve and conserve the assets and property of the credit union.
(E) Additional powers as liquidating agent
The Board may, as liquidating agent, place the credit union in liquidation and proceed to realize upon the assets of the credit union, having due regard to the conditions of credit in the locality.
(F) Payment of valid obligations
The Board, as conservator or liquidating agent, shall pay all valid obligations of the credit union in accordance with the prescriptions and limitations of this chapter.
(G) Attachment of assets and injunctive relief
Subject to subparagraph (H), any court of competent jurisdiction may, at the request of the Board (in the Board's capacity as conservator or liquidating agent for any insured credit union or in the Board's corporate capacity in the exercise of any authority under this section), issue an order in accordance with Rule 65 of the Federal Rules of Civil Procedure, including an order placing the assets of any person designated by the Board under the control of the court and appointing a trustee to hold such assets.
(H) Standards
(i) Showing
Rule 65 of the Federal Rules of Civil Procedure shall apply with respect to any proceeding under subparagraph (G) without regard to the requirement of such rule that the applicant show that the injury, loss, or damage is irreparable and immediate.
(ii) State proceeding
If, in the case of any proceeding in a State court, the court determines that rules of civil procedure available under the laws of such State provide substantially similar protections to such party's right to due process as Rule 65 (as modified with respect to such proceeding by clause (i)), the relief sought by the Board pursuant to subparagraph (G) may be requested under the laws of such State.
(I) Subpoena authority
(i) In general
The Board may, as conservator or liquidating agent and for purposes of carrying out any power, authority, or duty with respect to an insured credit union (including determining any claim against the credit union and determining and realizing upon any asset of any person in the course of collecting money due the credit union), exercise any power established under
(ii) Authority of Board
A subpoena or subpoena duces tecum may be issued under clause (i) only by, or with the written approval of, the Board or their designees.
(iii) Rule of construction
This subsection shall not be construed as limiting any rights that the Board, in any capacity, might otherwise have under
(J) Incidental powers
The Board may, as conservator or liquidating agent—
(i) exercise all powers and authorities specifically granted to conservators or liquidating agents, respectively, under this chapter and such incidental powers as shall be necessary to carry out such powers; and
(ii) take any action authorized by this chapter,
which the Board determines is in the best interests of the credit union, its account holders, or the Board.
(K) Exemption from criminal prosecution
The Administration shall be exempt from all prosecution by the United States or any State, county, municipality, or local authority for any criminal offense arising under Federal, State, county, municipal, or local law, which was allegedly committed by a credit union, or persons acting on behalf of a credit union, prior to the appointment of the Administration as liquidating agent.
(3) Authority of liquidating agent to determine claims
(A) In general
The Board may, as liquidating agent, determine claims in accordance with the requirements of this subsection and regulations prescribed under paragraph (4).
(B) Notice requirements
The liquidating agent, in any case involving the liquidation or winding up of the affairs of a closed credit union, shall—
(i) promptly publish a notice to the credit union's creditors to present their claims, together with proof, to the liquidating agent by a date specified in the notice which shall be not less than 90 days after the publication of such notice; and
(ii) republish such notice approximately 1 month and 2 months, respectively, after the publication under clause (i).
(C) Mailing required
The liquidating agent shall mail a notice similar to the notice published under subparagraph (B)(i) at the time of such publication to any creditor shown on the credit union's books—
(i) at the creditor's last address appearing in such books; or
(ii) upon discovery of the name and address of a claimant not appearing on the credit union's books within 30 days after the discovery of such name and address.
(4) Rulemaking authority relating to determination of claims
The Board may prescribe regulations regarding the allowance or disallowance of claims by the liquidating agent and providing for administrative determination of claims and review of such determination.
(5) Procedures for determination of claims
(A) Determination period
(i) In general
Before the end of the 180-day period beginning on the date any claim against a credit union is filed with the Board as liquidating agent, the Board shall determine whether to allow or disallow the claim and shall notify the claimant of any determination with respect to such claim.
(ii) Extension of time
The period described in clause (i) may be extended by a written agreement between the claimant and the Board.
(iii) Mailing of notice sufficient
The requirements of clause (i) shall be deemed to be satisfied if the notice of any determination with respect to any claim is mailed to the last address of the claimant which appears—
(I) on the credit union's books;
(II) in the claim filed by the claimant; or
(III) in documents submitted in proof of the claim.
(iv) Contents of notice of disallowance
If any claim filed under clause (i) is disallowed, the notice to the claimant shall contain—
(I) a statement of each reason for the disallowance; and
(II) the procedures available for obtaining agency review of the determination to disallow the claim or judicial determination of the claim.
(B) Allowance of proven claims
The liquidating agent shall allow any claim received on or before the date specified in the notice published under paragraph (3)(B)(i) by the liquidating agent from any claimant which is proved to the satisfaction of the liquidating agent.
(C) Disallowance of claims filed after end of filing period
(i) In general
Except as provided in clause (ii), claims filed after the date specified in the notice published under paragraph (3)(B)(i) shall be disallowed and such disallowance shall be final.
(ii) Certain exceptions
Clause (i) shall not apply with respect to any claim filed by any claimant after the date specified in the notice published under paragraph (3)(B)(i) and such claim may be considered by the liquidating agent if—
(I) the claimant did not receive notice of the appointment of the liquidating agent in time to file such claim before such date; and
(II) such claim is filed in time to permit payment of such claim.
(D) Authority to disallow claims
The liquidating agent may disallow any portion of any claim by a creditor or claim of security, preference, or priority which is not proved to the satisfaction of the liquidating agent.
(E) No judicial review of determination pursuant to subparagraph (D)
No court may review the Board's determination pursuant to subparagraph (D) to disallow a claim.
(F) Legal effect of filing
(i) Statute of limitation tolled
For purposes of any applicable statute of limitations, the filing of a claim with the liquidating agent shall constitute a commencement of an action.
(ii) No prejudice to other actions
Subject to paragraph (12), the filing of a claim with the liquidating agent shall not prejudice any right of the claimant to continue any action which was filed before the appointment of the liquidating agent.
(6) Provision for agency review or judicial determination of claims
(A) In general
Before the end of the 60-day period beginning on the earlier of—
(i) the end of the period described in paragraph (5)(A)(i) with respect to any claim against a credit union for which the Board is liquidating agent; or
(ii) the date of any notice of disallowance of such claim pursuant to paragraph (5)(A)(i),
the claimant may request administrative review of the claim in accordance with subparagraph (A) or (B) of paragraph (7) or file suit on such claim (or continue an action commenced before the appointment of the liquidating agent) in the district or territorial court of the United States for the district within which the credit union's principal place of business is located or the United States District Court for the District of Columbia (and such court shall have jurisdiction to hear such claim).
(B) Statute of limitations
If any claimant fails to—
(i) request administrative review of any claim in accordance with subparagraph (A) or (B) of paragraph (7); or
(ii) file suit on such claim (or continue an action commenced before the appointment of the liquidating agent),
before the end of the 60-day period described in subparagraph (A), the claim shall be deemed to be disallowed (other than any portion of such claim which was allowed by the liquidating agent) as of the end of such period, such disallowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim.
(7) Review of claims
(A) Administrative hearing
If any claimant requests review under this subparagraph in lieu of filing or continuing any action under paragraph (6) and the Board agrees to such request, the Board shall consider the claim after opportunity for a hearing on the record. The final determination of the Board with respect to such claim shall be subject to judicial review under
(B) Other review procedures
(i) In general
The Board shall also establish such alternative dispute resolution processes as may be appropriate for the resolution of claims filed under paragraph (5)(A)(i).
(ii) Criteria
In establishing alternative dispute resolution processes, the Board shall strive for procedures which are expeditious, fair, independent, and low cost.
(iii) Voluntary binding or nonbinding procedures
The Board may establish both binding and nonbinding processes, which may be conducted by any government or private party, but all parties, including the claimant and the Board, must agree to the use of the process in a particular case.
(iv) Consideration of incentives
The Board shall seek to develop incentives for claimants to participate in the alternative dispute resolution process.
(8) Expedited determination of claims
(A) Establishment required
The Board shall establish a procedure for expedited relief outside of the routine claims process established under paragraph (5) for claimants who—
(i) allege the existence of legally valid and enforceable or perfected security interests in assets of any credit union for which the Board has been appointed liquidating agent; and
(ii) allege that irreparable injury will occur if the routine claims procedure is followed.
(B) Determination period
Before the end of the 90-day period beginning on the date any claim is filed in accordance with the procedures established pursuant to subparagraph (A), the Board shall—
(i) determine—
(I) whether to allow or disallow such claim; or
(II) whether such claim should be determined pursuant to the procedures established pursuant to paragraph (5); or
(ii) notify the claimant of the determination, and if the claim is disallowed, a statement of each reason for the disallowance and the procedure for obtaining agency review or judicial determination.
(C) Period for filing or renewing suit
Any claimant who files a request for expedited relief shall be permitted to file a suit, or to continue a suit filed before the appointment of the liquidating agent, seeking a determination of the claimant's rights with respect to such security interest after the earlier of—
(i) the end of the 90-day period beginning on the date of the filing of a request for expedited relief; or
(ii) the date the Board denies the claim.
(D) Statute of limitations
If an action described in subparagraph (C) is not filed, or the motion to renew a previously filed suit is not made, before the end of the 30-day period beginning on the date on which such action or motion may be filed in accordance with subparagraph (B), the claim shall be deemed to be disallowed as of the end of such period (other than any portion of such claim which was allowed by the liquidating agent), such disallowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim.
(E) Legal effect of filing
(i) Statute of limitation tolled
For purposes of any applicable statute of limitations, the filing of a claim with the liquidating agent shall constitute a commencement of an action.
(ii) No prejudice to other actions
Subject to paragraph (12), the filing of a claim with the liquidating agent shall not prejudice any right of the claimant to continue any action which was filed before the appointment of the liquidating agent.
(9) Agreement as basis of claim
(A) Requirements
Except as provided in subparagraph (B), any agreement which does not meet the requirements set forth in
(B) Exception to contemporaneous execution requirement
Notwithstanding
(10) Payment of claims
(A) In general
The liquidating agent may, in the liquidating agent's discretion and to the extent funds are available, pay creditor claims which are allowed by the liquidating agent, approved by the Board pursuant to a final determination pursuant to paragraph (7) or (8), or determined by the final judgment of any court of competent jurisdiction in such manner and amounts as are authorized under this chapter.
(B) Payment of dividends on claims
The liquidating agent may, in the liquidating agent's sole discretion, pay dividends on proved claims at any time, and no liability shall attach to the Board (in such Board's corporate capacity or as liquidating agent), by reason of any such payment, for failure to pay dividends to a claimant whose claim is not proved at the time of any such payment.
(11) Distribution of assets
(A) Subrogated claims; claims of uninsured accountholders and other creditors
The liquidating agent shall—
(i) retain for the account of the Board such portion of the amounts realized from any liquidation as the Board may be entitled to receive in connection with the subrogation of the claims of accountholders; and
(ii) pay to accountholders and other creditors the net amounts available for distribution to them.
(B) Distribution to shareholders of amounts remaining after payment of all other claims and expenses
In any case in which funds remain after all accountholders, creditors, other claimants, and administrative expenses are paid, the liquidating agent shall distribute such funds to the credit union's shareholders or members together with the accounting report required under paragraph (14)(C).
(12) Suspension of legal actions
(A) In general
After the appointment of a conservator or liquidating agent for an insured credit union, the conservator or liquidating agent may request a stay for a period not to exceed—
(i) 45 days, in the case of any conservator; and
(ii) 90 days, in the case of any liquidating agent,
in any judicial action or proceeding to which such credit union is or becomes a party.
(B) Grant of stay by all courts required
Upon receipt of a request by any conservator or liquidating agent pursuant to subparagraph (A) for a stay of any judicial action or proceeding in any court with jurisdiction of such action or proceeding, the court shall grant such stay as to all parties.
(13) Additional rights and duties
(A) Prior final adjudication
The Board shall abide by any final unappealable judgment of any court of competent jurisdiction which was rendered before the appointment of the Board as conservator or liquidating agent.
(B) Rights and remedies of conservator or liquidating agent
In the event of any appealable judgment, the Board as conservator or liquidating agent shall—
(i) have all the rights and remedies available to the credit union (before the appointment of such conservator or liquidating agent) and the Board in its corporate capacity, including removal to Federal court and all appellate rights; and
(ii) not be required to post any bond in order to pursue such remedies.
(C) No attachment or execution
No attachment or execution may issue by any court upon assets in the possession of the liquidating agent.
(D) Limitation on judicial review
Except as otherwise provided in this subsection, no court shall have jurisdiction over—
(i) any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets of any credit union for which the Board has been appointed liquidating agent, including assets which the Board may acquire from itself as such liquidating agent; or
(ii) any claim relating to any act or omission of such credit union or the Board as liquidating agent.
(14) Statute of limitations for actions brought by conservator or liquidating agent
(A) In general
Notwithstanding any provision of any contract, the applicable statute of limitations with regard to any action brought by the Board as conservator or liquidating agent shall be—
(i) in the case of any contract claim, the longer of—
(I) the 6-year period beginning on the date the claim accrues; or
(II) the period applicable under State law; and
(ii) in the case of any tort claim, the longer of—
(I) the 3-year period beginning on the date the claim accrues; or
(II) the period applicable under State law.
(B) Determination of the date on which a claim accrues
For purposes of subparagraph (A), the date on which the statute of limitation begins to run on any claim described in such subparagraph shall be the later of—
(i) the date of the appointment of the Board as conservator or liquidating agent; or
(ii) the date on which the cause of action accrues.
(15) Accounting and recordkeeping requirements
(A) In general
The Board as conservator or liquidating agent shall, consistent with the accounting and reporting practices and procedures established by the Board, maintain a full accounting of each conservatorship and liquidation or other disposition of credit unions in default.
(B) Annual accounting or report
With respect to each conservatorship or liquidation to which the Board was appointed, the Board shall make an annual accounting or report, as appropriate, available to the Comptroller General of the United States or, in the case of a State-chartered credit union, the authority which appointed the Board as conservator or liquidating agent.
(C) Availability of reports
Any report prepared pursuant to subparagraph (B) shall be made available by the Board upon request to any shareholder of the credit union for which the Board was appointed conservator or liquidating agent or any other member of the public.
(D) Recordkeeping requirement
(i) In general
Except as provided in clause (ii), after the end of the 6-year period beginning on the date the Board is appointed as liquidating agent of an insured credit union, the Board may destroy any records of such credit union which the Board, in the Board's discretion, determines to be unnecessary unless directed not to do so by a court of competent jurisdiction or governmental agency, or prohibited by law.
(ii) Old records
Notwithstanding clause (i) the Board may destroy records of an insured credit union which are at least 10 years old as of the date on which the Board is appointed as liquidating agent of such credit union in accordance with clause (i) at any time after such appointment is final, without regard to the 6-year period of limitation contained in clause (i).
(16) Fraudulent transfers
(A) In general
The Board, as conservator or liquidating agent for any insured credit union, may avoid a transfer of any interest of an institution-affiliated party, or any person who the Board determines is a debtor of the institution, in property, or any obligation incurred by such party or person, that was made within 5 years of the date on which the Board becomes conservator or liquidating agent if such party or person voluntarily or involuntarily made such transfer or incurred such liability with the intent to hinder, delay, or defraud the insured credit union or the Board.
(B) Right of recovery
To the extent a transfer is avoided under subparagraph (A), the Board may recover, for the benefit of the insured credit union, the property transferred, or, if a court so orders, the value of such property (at the time of such transfer) from—
(i) the initial transferee of such transfer or the institution-affiliated party or person for whose benefit such transfer was made; or
(ii) any immediate or mediate transferee of any such initial transferee.
(C) Rights of transferee or obligee
The Board may not recover under subparagraph (B) from—
(i) any transferee that takes for value, including satisfaction or securing of a present or antecedent debt, in good faith; or
(ii) any immediate or mediate good faith transferee of such transferee.
(D) Rights under this paragraph
The rights of the Board under this paragraph shall be superior to any rights of a trustee or any other party (other than any party which is a Federal agency) under title 11.
(c) Provisions relating to contracts entered into before appointment of conservator or liquidating agent
(1) Authority to repudiate contracts
In addition to any other rights a conservator or liquidating agent may have, the conservator or liquidating agent for any insured credit union may disaffirm or repudiate any contract or lease—
(A) to which such credit union is a party;
(B) the performance of which the conservator or liquidating agent, in the conservator's or liquidating agent's discretion, determines to be burdensome; and
(C) the disaffirmance or repudiation of which the conservator or liquidating agent determines, in the conservator's or liquidating agent's discretion, will promote the orderly administration of the credit union's affairs.
(2) Timing of repudiation
The conservator or liquidating agent appointed for any insured credit union shall determine whether or not to exercise the rights of repudiation under this subsection within a reasonable period following such appointment.
(3) Claims for damages for repudiation
(A) In general
Except as otherwise provided in subparagraph (C) and paragraphs (4), (5), and (6), the liability of the conservator or liquidating agent for the disaffirmance or repudiation of any contract pursuant to paragraph (1) shall be—
(i) limited to actual direct compensatory damages; and
(ii) determined as of—
(I) the date of the appointment of the conservator or liquidating agent; or
(II) in the case of any contract or agreement referred to in paragraph (8), the date of the disaffirmance or repudiation of such contract or agreement.
(B) No liability for other damages
For purposes of subparagraph (A), the term "actual direct compensatory damages" does not include—
(i) punitive or exemplary damages;
(ii) damages for lost profits or opportunity; or
(iii) damages for pain and suffering.
(C) Measure of damages for repudiation of financial contracts
In the case of any qualified financial contract or agreement to which paragraph (8) applies, compensatory damages shall be—
(i) deemed to include normal and reasonable costs of cover or other reasonable measures of damages utilized in the industries for such contract and agreement claims; and
(ii) paid in accordance with this subsection and subsection (f) except as otherwise specifically provided in this section.
(4) Leases under which the credit union is the lessee
(A) In general
If the conservator or liquidating agent disaffirms or repudiates a lease under which the credit union was the lessee, the conservator or liquidating agent shall not be liable for any damages (other than damages determined pursuant to subparagraph (B)) for the disaffirmance or repudiation of such lease.
(B) Payments of rent
Notwithstanding subparagraph (A), the lessor under a lease to which such subparagraph applies shall—
(i) be entitled to the contractual rent accruing before the later of the date—
(I) the notice of disaffirmance or repudiation is mailed; or
(II) the disaffirmance or repudiation becomes effective,
unless the lessor is in default or breach of the terms of the lease;
(ii) have no claim for damages under any acceleration clause or other penalty provision in the lease; and
(iii) have a claim for any unpaid rent, subject to all appropriate offsets and defenses, due as of the date of the appointment which shall be paid in accordance with this subsection and subsection (b).
(5) Leases under which the credit union is the lessor
(A) In general
If the conservator or liquidating agent repudiates an unexpired written lease of real property of the credit union under which the credit union is the lessor and the lessee is not, as of the date of such repudiation, in default, the lessee under such lease may either—
(i) treat the lease as terminated by such repudiation; or
(ii) remain in possession of the leasehold interest for the balance of the term of the lease unless the lessee defaults under the terms of the lease after the date of such repudiation.
(B) Provisions applicable to lessee remaining in possession
If any lessee under a lease described in subparagraph (A) remains in possession of a leasehold interest pursuant to clause (ii) of such subparagraph—
(i) the lessee—
(I) shall continue to pay the contractual rent pursuant to the terms of the lease after the date of the repudiation of such lease; and
(II) may offset against any rent payment which accrues after the date of the repudiation of the lease, any damages which accrue after such date due to the nonperformance of any obligation of the credit union under the lease after such date; and
(ii) the conservator or liquidating agent shall not be liable to the lessee for any damages arising after such date as a result of the repudiation other than the amount of any offset allowed under clause (i)(II).
(6) Contracts for the sale of real property
(A) In general
If the conservator or liquidating agent repudiates any contract (which meets the requirements of each paragraph of
(i) treat the contract as terminated by such repudiation; or
(ii) remain in possession of such real property.
(B) Provisions applicable to purchaser remaining in possession
If any purchaser of real property under any contract described in subparagraph (A) remains in possession of such property pursuant to clause (ii) of such subparagraph—
(i) the purchaser—
(I) shall continue to make all payments due under the contract after the date of the repudiation of the contract; and
(II) may offset against any such payments any damages which accrue after such date due to the nonperformance (after such date) of any obligation of the credit union under the contract; and
(ii) the conservator or liquidating agent shall—
(I) not be liable to the purchaser for any damages arising after such date as a result of the repudiation other than the amount of any offset allowed under clause (i)(II);
(II) deliver title to the purchaser in accordance with the provisions of the contract; and
(III) have no obligation under the contract other than the performance required under subclause (II).
(C) Assignment and sale allowed
(i) In general
No provision of this paragraph shall be construed as limiting the right of the conservator or liquidating agent to assign the contract described in subparagraph (A) and sell the property subject to the contract and the provisions of this paragraph.
(ii) No liability after assignment and sale
If an assignment and sale described in clause (i) is consummated, the conservator or liquidating agent shall have no further liability under the contract described in subparagraph (A) or with respect to the real property which was the subject of such contract.
(7) Provisions applicable to service contracts
(A) Services performed before appointment
In the case of any contract for services between any person and any insured credit union for which the Board has been appointed conservator or liquidating agent, any claim of such person for services performed before the appointment of the conservator or the liquidating agent shall be—
(i) a claim to be paid in accordance with subsection (b); and
(ii) deemed to have arisen as of the date the conservator or liquidating agent was appointed.
(B) Services performed after appointment and prior to repudiation
If, in the case of any contract for services described in subparagraph (A), the conservator or liquidating agent accepts performance by the other person before the conservator or liquidating agent makes any determination to exercise the right of repudiation of such contract under this section—
(i) the other party shall be paid under the terms of the contract for the services performed; and
(ii) the amount of such payment shall be treated as an administrative expense of the conservatorship or liquidation.
(C) Acceptance of performance no bar to subsequent repudiation
The acceptance by any conservator or liquidating agent of services referred to in subparagraph (B) in connection with a contract described in such subparagraph shall not affect the right of the conservator or liquidating agent to repudiate such contract under this section at any time after such performance.
(8) Certain qualified financial contracts
(A) Rights of parties to contracts
Subject to paragraphs (9) and (10) of this subsection and notwithstanding any other provision of this chapter (other than subsection (b)(9) of this section and
(i) any right such person has to cause the termination, liquidation, or acceleration of any qualified financial contract with an insured credit union which arises upon the appointment of the Board as liquidating agent for such credit union at any time after such appointment;
(ii) any right under any security agreement or arrangement or other credit enhancement related to 1 or more qualified financial contracts described in clause (i); 1
(iii) any right to offset or net out any termination value, payment amount, or other transfer obligation arising under or in connection with 1 or more contracts and agreements described in clause (i), including any master agreement for such contracts or agreements.
(B) Applicability of other provisions
Subsection (b)(12) shall apply in the case of any judicial action or proceeding brought against any liquidating agent referred to in subparagraph (A), or the credit union for which such liquidating agent was appointed, by any party to a contract or agreement described in subparagraph (A)(i) with such credit union.
(C) Certain transfers not avoidable
(i) In general
Notwithstanding paragraph (11),
(ii) Exception for certain transfers
Clause (i) shall not apply to any transfer of money or other property in connection with any qualified financial contract with an insured credit union if the Board determines that the transferee had actual intent to hinder, delay, or defraud such credit union, the creditors of such credit union, or any conservator or liquidating agent appointed for such credit union.
(D) Certain contracts and agreements defined
For purposes of this subsection, the following definitions shall apply:
(i) Qualified financial contract
The term "qualified financial contract" means any securities contract, forward contract, repurchase agreement, and any similar agreement that the Board determines by regulation, resolution, or order to be a qualified financial contract for purposes of this paragraph.
(ii) Securities contract
The term "securities contract"—
(I) means a contract for the purchase, sale, or loan of a security, a certificate of deposit, a mortgage loan, any interest in a mortgage loan, a group or index of securities, certificates of deposit, or mortgage loans or interests therein (including any interest therein or based on the value thereof) or any option on any of the foregoing, including any option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option, and including any repurchase or reverse repurchase transaction on any such security, certificate of deposit, mortgage loan, interest, group or index, or option (whether or not such repurchase or reverse repurchase transaction is a "repurchase agreement", as defined in clause (v));
(II) does not include any purchase, sale, or repurchase obligation under a participation in a commercial mortgage loan unless the Board determines by regulation, resolution, or order to include any such agreement within the meaning of such term;
(III) means any option entered into on a national securities exchange relating to foreign currencies;
(IV) means the guarantee (including by novation) by or to any securities clearing agency of any settlement of cash, securities, certificates of deposit, mortgage loans or interests therein, group or index of securities, certificates of deposit, or mortgage loans or interests therein (including any interest therein or based on the value thereof) or option on any of the foregoing, including any option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option (whether or not such settlement is in connection with any agreement or transaction referred to in subclauses (I) through (XII) (other than subclause (II));
(V) means any margin loan;
(VI) means any extension of credit for the clearance or settlement of securities transactions;
(VII) means any loan transaction coupled with a securities collar transaction, any prepaid securities forward transaction, or any total return swap transaction coupled with a securities sale transaction;
(VIII) means any other agreement or transaction that is similar to any agreement or transaction referred to in this clause;
(IX) means any combination of the agreements or transactions referred to in this clause;
(X) means any option to enter into any agreement or transaction referred to in this clause;
(XI) means a master agreement that provides for an agreement or transaction referred to in subclause (I), (III), (IV), (V), (VI), (VII), (VIII), (IX), or (X), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a securities contract under this clause, except that the master agreement shall be considered to be a securities contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (III), (IV), (V), (VI), (VII), (VIII), (IX), or (X); and
(XII) means any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause.
(iii) Commodity contract
The term "commodity contract" means—
(I) with respect to a futures commission merchant, a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade;
(II) with respect to a foreign futures commission merchant, a foreign future;
(III) with respect to a leverage transaction merchant, a leverage transaction;
(IV) with respect to a clearing organization, a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization, or commodity option traded on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization;
(V) with respect to a commodity options dealer, a commodity option;
(VI) any other agreement or transaction that is similar to any agreement or transaction referred to in this clause;
(VII) any combination of the agreements or transactions referred to in this clause;
(VIII) any option to enter into any agreement or transaction referred to in this clause;
(IX) a master agreement that provides for an agreement or transaction referred to in subclause (I), (II), (III), (IV), (V), (VI), (VII), or (VIII), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a commodity contract under this clause, except that the master agreement shall be considered to be a commodity contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), (III), (IV), (V), (VI), (VII), or (VIII); or
(X) any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause.
(iv) Forward contract
The term "forward contract" means—
(I) a contract (other than a commodity contract) for the purchase, sale, or transfer of a commodity or any similar good, article, service, right, or interest which is presently or in the future becomes the subject of dealing in the forward contract trade, or product or byproduct thereof, with a maturity date more than 2 days after the date the contract is entered into, including,2 a repurchase or reverse repurchase transaction (whether or not such repurchase or reverse repurchase transaction is a "repurchase agreement", as defined in clause (v)), consignment, lease, swap, hedge transaction, deposit, loan, option, allocated transaction, unallocated transaction, or any other similar agreement;
(II) any combination of agreements or transactions referred to in subclauses (I) and (III);
(III) any option to enter into any agreement or transaction referred to in subclause (I) or (II);
(IV) a master agreement that provides for an agreement or transaction referred to in subclauses (I), (II), or (III), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a forward contract under this clause, except that the master agreement shall be considered to be a forward contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), or (III); or
(V) any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in subclause (I), (II), (III), or (IV), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.
(v) Repurchase agreement
The term "repurchase agreement" (which definition also applies to a reverse repurchase agreement)—
(I) means an agreement, including related terms, which provides for the transfer of one or more certificates of deposit, mortgage-related securities (as such term is defined in the Securities Exchange Act of 1934 [
(II) does not include any repurchase obligation under a participation in a commercial mortgage loan unless the Board determines by regulation, resolution, or order to include any such participation within the meaning of such term;
(III) means any combination of agreements or transactions referred to in subclauses (I) and (IV);
(IV) means any option to enter into any agreement or transaction referred to in subclause (I) or (III);
(V) means a master agreement that provides for an agreement or transaction referred to in subclause (I), (III), or (IV), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a repurchase agreement under this clause, except that the master agreement shall be considered to be a repurchase agreement under this subclause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (III), or (IV); and
(VI) means any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in subclause (I), (III), (IV), or (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.
For purposes of this clause, the term "qualified foreign government security" means a security that is a direct obligation of, or that is fully guaranteed by, the central government of a member of the Organization for Economic Cooperation and Development (as determined by regulation or order adopted by the appropriate Federal banking authority).
(vi) Swap agreement
The term "swap agreement" means—
(I) any agreement, including the terms and conditions incorporated by reference in any such agreement, which is an interest rate swap, option, future, or forward agreement, including a rate floor, rate cap, rate collar, cross-currency rate swap, and basis swap; a spot, same day-tomorrow, tomorrow-next, forward, or other foreign exchange, precious metals, or other commodity agreement; a currency swap, option, future, or forward agreement; an equity index or equity swap, option, future, or forward agreement; a debt index or debt swap, option, future, or forward agreement; a total return, credit spread or credit swap, option, future, or forward agreement; a commodity index or commodity swap, option, future, or forward agreement; weather swap, option, future, or forward agreement; an emissions swap, option, future, or forward agreement; or an inflation swap, option, future, or forward agreement;
(II) any agreement or transaction that is similar to any other agreement or transaction referred to in this clause and that is of a type that has been, is presently, or in the future becomes, the subject of recurrent dealings in the swap or other derivatives markets (including terms and conditions incorporated by reference in such agreement) and that is a forward, swap, future, option, or spot transaction on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, quantitative measures associated with an occurrence, extent of an occurrence, or contingency associated with a financial, commercial, or economic consequence, or economic or financial indices or measures of economic or financial risk or value;
(III) any combination of agreements or transactions referred to in this clause;
(IV) any option to enter into any agreement or transaction referred to in this clause;
(V) a master agreement that provides for an agreement or transaction referred to in subclause (I), (II), (III), or (IV), together with all supplements to any such master agreement, without regard to whether the master agreement contains an agreement or transaction that is not a swap agreement under this clause, except that the master agreement shall be considered to be a swap agreement under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), (III), or (IV); and
(VI) any security agreement or arrangement or other credit enhancement related to any agreements or transactions referred to in subclause (I), (II), (III), (IV), or (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.
Such term is applicable for purposes of this subsection only and shall not be construed or applied so as to challenge or affect the characterization, definition, or treatment of any swap agreement under any other statute, regulation, or rule, including the Gramm-Leach-Bliley Act, the Legal Certainty for Bank Products Act of 2000 [
(vii) Treatment of master agreement as one agreement
Any master agreement for any contract or agreement described in any preceding clause of this subparagraph (or any master agreement for such master agreement or agreements), together with all supplements to such master agreement, shall be treated as a single agreement and a single qualified financial contract. If a master agreement contains provisions relating to agreements or transactions that are not themselves qualified financial contracts, the master agreement shall be deemed to be a qualified financial contract only with respect to those transactions that are themselves qualified financial contracts.
(viii) Transfer
The term "transfer" means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with property or with an interest in property, including retention of title as a security interest and foreclosure of the depository institution's equity of redemption.
(ix) Person
The term "person" includes any governmental entity in addition to any entity included in the definition of such term in
(E) Certain protections in event of appointment of conservator
Notwithstanding any other provision of this chapter (other than subsections (b)(9) and (c)(10) of this section, and
(i) any right such person has to cause the termination, liquidation, or acceleration of any qualified financial contract with a credit union in a conservatorship based upon a default under such financial contract which is enforceable under applicable noninsolvency law;
(ii) any right under any security agreement or arrangement or other credit enhancement related to 1 or more qualified financial contracts described in clause (i); 1
(iii) any right to offset or net out any termination values, payment amounts, or other transfer obligations arising under or in connection with such qualified financial contracts.
(F) Clarification
No provision of law shall be construed as limiting the right or power of the Board, or authorizing any court or agency to limit or delay, in any manner, the right or power of the Board to transfer any qualified financial contract in accordance with paragraphs (9) and (10) of this subsection or to disaffirm or repudiate any such contract in accordance with subsection (c)(1) of this section.
(G) Walkaway clauses not effective
(i) In general
Notwithstanding the provisions of subparagraphs (A) and (E), and
(ii) Limited suspension of certain obligations
In the case of a qualified financial contract referred to in clause (i), any payment or delivery obligations otherwise due from a party pursuant to the qualified financial contract shall be suspended from the time the liquidating agent is appointed until the earlier of—
(I) the time such party receives notice that such contract has been transferred pursuant to subparagraph (A); or
(II) 5:00 p.m. (eastern time) on the business day following the date of the appointment of the liquidating agent.
(iii) Walkaway clause defined
For purposes of this subparagraph, the term "walkaway clause" means any provision in a qualified financial contract that suspends, conditions, or extinguishes a payment obligation of a party, in whole or in part, or does not create a payment obligation of a party that would otherwise exist, solely because of such party's status as a nondefaulting party in connection with the insolvency of an insured credit union or the appointment of or the exercise of rights or powers by a conservator or liquidating agent of such credit union, and not as a result of a party's exercise of any right to offset, setoff, or net obligations that exist under the contract, any other contract between those parties, or applicable law.
(H) Recordkeeping requirements
The Board, in consultation with the appropriate Federal banking agencies, may prescribe regulations requiring more detailed recordkeeping by any insured credit union with respect to qualified financial contracts (including market valuations) only if such insured credit union is in a troubled condition (as such term is defined by the Board pursuant to
(9) Transfer of qualified financial contracts
(A) In general
In making any transfer of assets or liabilities of a credit union in default which includes any qualified financial contract, the conservator or liquidating agent for such credit union shall either—
(i) transfer to 1 financial institution, other than a financial institution for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed or which is otherwise the subject of a bankruptcy or insolvency proceeding—
(I) all qualified financial contracts between any person or any affiliate of such person and the credit union in default;
(II) all claims of such person or any affiliate of such person against such credit union under any such contract (other than any claim which, under the terms of any such contract, is subordinated to the claims of general unsecured creditors of such credit union);
(III) all claims of such credit union against such person or any affiliate of such person under any such contract; and
(IV) all property securing or any other credit enhancement for any contract described in subclause (I) or any claim described in subclause (II) or (III) under any such contract; or
(ii) transfer none of the qualified financial contracts, claims, property or other credit enhancement referred to in clause (i) (with respect to such person and any affiliate of such person).
(B) Transfer to foreign bank, foreign financial institution, or branch or agency of a foreign bank or financial institution
In transferring any qualified financial contracts and related claims and property under subparagraph (A)(i), the conservator or liquidating agent for the credit union shall not make such transfer to a foreign bank, financial institution organized under the laws of a foreign country, or a branch or agency of a foreign bank or financial institution unless, under the law applicable to such bank, financial institution, branch or agency, to the qualified financial contracts, and to any netting contract, any security agreement or arrangement or other credit enhancement related to 1 or more qualified financial contracts, the contractual rights of the parties to such qualified financial contracts, netting contracts, security agreements or arrangements, or other credit enhancements are enforceable substantially to the same extent as permitted under this section.
(C) Transfer of contracts subject to the rules of a clearing organization
In the event that a conservator or liquidating agent transfers any qualified financial contract and related claims, property, and credit enhancements pursuant to subparagraph (A)(i) and such contract is cleared by or subject to the rules of a clearing organization, the clearing organization shall not be required to accept the transferee as a member by virtue of the transfer.
(D) Definitions
For purposes of this paragraph—
(i) the term "financial institution" means a broker or dealer, a depository institution, a futures commission merchant, a credit union, or any other institution, as determined by the Board by regulation to be a financial institution; and
(ii) the term "clearing organization" has the same meaning as in
(10) Notification of transfer
(A) In general
If—
(i) the conservator or liquidating agent for an insured credit union in default makes any transfer of the assets and liabilities of such credit union; and
(ii) the transfer includes any qualified financial contract,
the conservator or liquidating agent shall notify any person who is a party to any such contract of such transfer by 5:00 p.m. (eastern time) on the business day following the date of the appointment of the liquidating agent in the case of a liquidation, or the business day following such transfer in the case of a conservatorship.
(B) Certain rights not enforceable
(i) Liquidation
A person who is a party to a qualified financial contract with an insured credit union may not exercise any right that such person has to terminate, liquidate, or net such contract under paragraph (8)(A) of this subsection or
(I) until 5:00 p.m. (eastern time) on the business day following the date of the appointment of the liquidating agent; or
(II) after the person has received notice that the contract has been transferred pursuant to paragraph (9)(A).
(ii) Conservatorship
A person who is a party to a qualified financial contract with an insured credit union may not exercise any right that such person has to terminate, liquidate, or net such contract under paragraph (8)(E) of this subsection or
(iii) Notice
For purposes of this paragraph, the Board as conservator or liquidating agent of an insured credit union shall be deemed to have notified a person who is a party to a qualified financial contract with such credit union if the Board has taken steps reasonably calculated to provide notice to such person by the time specified in subparagraph (A).
(C) Treatment of bridge banks 4
The following institutions shall not be considered to be a financial institution for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed or which is otherwise the subject of a bankruptcy or insolvency proceeding for purposes of paragraph (9):
(i) A bridge depository institution.
(ii) A credit union organized by the Board, for which a conservator is appointed either—
(I) immediately upon the organization of the credit union; or
(II) at the time of a purchase and assumption transaction between the credit union and the Board as receiver for a credit union in default.
(D) "Business day" defined
For purposes of this paragraph, the term "business day" means any day other than any Saturday, Sunday, or any day on which either the New York Stock Exchange or the Federal Reserve Bank of New York is closed.
(11) Disaffirmance or repudiation of qualified financial contracts
In exercising the rights of disaffirmance or repudiation of a conservator or liquidating agent with respect to any qualified financial contract to which an insured credit union is a party, the conservator or liquidating agent for such credit union shall either—
(A) disaffirm or repudiate all qualified financial contracts between—
(i) any person or any affiliate of such person; and
(ii) the credit union in default; or
(B) disaffirm or repudiate none of the qualified financial contracts referred to in subparagraph (A) (with respect to such person or any affiliate of such person).
(12) Certain security interests not avoidable
No provision of this subsection shall be construed as permitting the avoidance of any legally enforceable or perfected security interest in any of the assets of any credit union except where such an interest is taken in contemplation of the credit union's insolvency or with the intent to hinder, delay, or defraud the credit union or the creditors of such credit union.
(13) Authority to enforce contracts
(A) In general
The conservator or liquidating agent may enforce any contract, other than a director's or officer's liability insurance contract or a credit union bond, entered into by the credit union notwithstanding any provision of the contract providing for termination, default, acceleration, or exercise of rights upon, or solely by reason of, insolvency or the appointment of or the exercise of rights or powers by a conservator or liquidating agent.
(B) Certain rights not affected
No provision of this paragraph may be construed as impairing or affecting any right of the conservator or liquidating agent to enforce or recover under a directors or officers liability insurance contract or credit union bond under other applicable law.
(C) Consent requirement
(i) In general
Except as otherwise provided by this section, no person may exercise any right or power to terminate, accelerate, or declare a default under any contract to which the credit union is a party, or to obtain possession of or exercise control over any property of the credit union or affect any contractual rights of the credit union, without the consent of the conservator or liquidating agent, as appropriate, during the 45-day period beginning on the date of the appointment of the conservator, or during the 90-day period beginning on the date of the appointment of the liquidating agent, as applicable.
(ii) Certain exceptions
No provision of this subparagraph shall apply to a director or officer liability insurance contract or a credit union bond, or to the rights of parties to certain qualified financial contracts pursuant to paragraph (8), or shall be construed as permitting the conservator or liquidating agent to fail to comply with otherwise enforceable provisions of such contract.
(iii) Rule of construction
Nothing in this subparagraph shall be construed to limit or otherwise affect the applicability of title 11.
(14) Exception for Federal Reserve and Federal home loan banks
No provision of this subsection shall apply with respect to—
(A) any extension of credit from any Federal home loan bank or Federal Reserve bank to any insured depository institution; or
(B) any security interest in the assets of the institution securing any such extension of credit.
(15) Savings clause
The meanings of terms used in this subsection are applicable for purposes of this subsection only, and shall not be construed or applied so as to challenge or affect the characterization, definition, or treatment of any similar terms under any other statute, regulation, or rule, including the Gramm-Leach-Bliley Act, the Legal Certainty for Bank Products Act of 2000 [
(d) Payment of insured deposits
(1) In general
In case of the liquidation of any insured credit union, payment of the insured deposits in such credit union shall be made by the Board as soon as possible, subject to the provisions of subsection (e) of this section, either by cash or by making available to each accountholder a transferred deposit in a new credit union in the same community or in another insured credit union in an amount equal to the insured deposit of such accountholder.
(2) Proof of claims
The Board, in its discretion, may require proof of claims to be filed and may approve or reject such claims for insured deposits.
(3) Resolution of disputes
A determination by the Administration regarding any claim for insurance coverage shall be treated as a final determination for purposes of this section. In its discretion, the Board may promulgate regulations prescribing procedures for resolving any disputed claim relating to any insured deposit or any determination of insurance coverage with respect to any deposit. A final determination made by the Board regarding any claim for insurance coverage shall be a final agency action reviewable in accordance with
(4) Statute of limitations
Any request for review of a final determination by the Board regarding any claim for insurance coverage shall be filed with the appropriate United States district court not later than 60 days after the date on which such determination is issued.
(e) Subrogation of Board
(1) In general
Notwithstanding any other provision of Federal law, the law of any State, or the constitution of any State, the Board, upon the payment to any accountholder as provided in subsection (d) in connection with any insured credit union described in such subsection or the assumption of any deposit in such credit union by another insured credit union pursuant to this section, shall be subrogated to all rights of the accountholder against such credit union to the extent of such payment or assumption.
(2) Dividends on subrogated amounts
The subrogation of the Board under paragraph (1) with respect to any insured credit union shall include the right on the part of the Board to receive the same dividends from the proceeds of the assets of such credit union as would have been payable to the accountholder on a claim for the insured deposit, but such accountholder shall retain such claim for any uninsured or unassumed portion of the deposit.
(f) Valuation of claims in default
(1) In general
Notwithstanding any other provision of Federal law or the law of any State, this subsection shall govern the rights of the creditors (other than insured accountholders) of such credit union.
(2) Maximum liability
The maximum liability of the Board, acting as liquidating agent or in any other capacity, to any person having a claim against the liquidating agent or the insured credit union for which such liquidating agent is appointed shall equal the amount such claimant would have received if the Board had liquidated the assets and liabilities of such credit union without exercising the Board's authority under subsection (n) of this section.
(3) Additional payments authorized
(A) In general
The Board may, in its discretion and in the interests of minimizing its losses, use its own resources to make additional payments or credit additional amounts to or with respect to or for the account of any claimant or category of claimants. The Board shall not be obligated, as a result of having made any such payment or credited any such amount to or with respect to or for the account of any claimant or category of claimants, to make payments to any other claimant or category of claimants.
(B) Manner of payment
The Board may make the payments or credit the amounts specified in subparagraph (A) directly to the claimants or may make such payments or credit such amounts to an open insured credit union to induce the open insured credit union to accept liability for such claims.
(g) Limitation on court action
Except as provided in this section, no court may take any action, except at the request of the Board of Directors by regulation or order, to restrain or affect the exercise of powers or functions of the Board as a conservator or a liquidating agent.
(h) Liability of directors and officers
A director or officer of an insured credit union may be held personally liable for monetary damages in any civil action by, on behalf of, or at the request or direction of the Board, which action is prosecuted wholly or partially for the benefit of the Board—
(1) acting as conservator or liquidating agent of such insured credit union,
(2) acting based upon a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed by such liquidating agent or conservator, or
(3) acting based upon a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed in whole or in part by an insured credit union or its affiliate in connection with assistance provided under
for gross negligence, including any similar conduct or conduct that demonstrates a greater disregard of a duty of care (than gross negligence) including intentional tortious conduct, as such terms are defined and determined under applicable State law. Nothing in this paragraph shall impair or affect any right, if any, of the Board under other applicable law.
(i) Damages
In any proceeding related to any claim against an insured credit union's director, officer, employee, agent, attorney, accountant, appraiser, or any other party employed by or providing services to an insured credit union, recoverable damages determined to result from the improvident or otherwise improper use or investment of any insured credit union's assets shall include principal losses and appropriate interest.
(j) Board as liquidating agent of State-chartered credit unions
Whenever any insured State-chartered credit union shall have been closed by action of its board of directors or by the commission, board, or authority having supervision of such credit union, as the case may be, or by a court of competent jurisdiction, on account of bankruptcy or insolvency, the Board shall accept appointment as liquidating agent therefor, if such appointment is tendered by the commission, board, or authority having supervision of such credit union, or by a court of competent jurisdiction, and is authorized or permitted by State law. With respect to any such State-chartered credit union, the Board as such liquidating agent shall possess all the rights, powers, and privileges granted by State law to a liquidating agent of a State-chartered credit union. For the purposes of this subsection, the term "liquidating agent" includes a liquidating agent, receiver, conservator, commission, person, or other agency charged by law with the duty of winding up the affairs of a credit union.
(k) Insured amounts payable
(1) Net insured amount
(A) In general
Subject to the provisions of paragraph (2), the net amount of share insurance payable to any member, or to any person with funds lawfully held in a member account, at an insured credit union shall not exceed the total amount of the shares or deposits in the name of the member (after deducting offsets), less any part thereof which is in excess of the standard maximum share insurance amount, as determined in accordance with this paragraph, and consistently with actions taken by the Federal Deposit Insurance Corporation under
(B) Aggregation
Determination of the net amount of share insurance under subparagraph (A), shall be in accordance with such regulations as the Board may prescribe, and, in determining the amount payable to any member, there shall be added together all accounts in the credit union maintained by that member for that member's own benefit, either in the member's own name or in the names of others.
(C) Authority to define the extent of coverage
The Board may define, with such classifications and exceptions as it may prescribe, the extent of the share insurance coverage provided for member accounts, including member accounts in the name of a minor, in trust, or in joint tenancy.
(2) Government depositors or members
(A) In general
Notwithstanding any limitation in this chapter or in any other provision of law relating to the amount of insurance available to any 1 depositor or member, deposits or shares of a government depositor or member shall be insured in an amount equal to the standard maximum share insurance amount, subject to subparagraph (C).
(B) Government depositor
In this paragraph, the term "government depositor" means a depositor that is—
(i) an officer, employee, or agent of the United States having official custody of public funds and lawfully investing the same in a credit union insured in accordance with this subchapter;
(ii) an officer, employee, or agent of any State of the United States, or of any county, municipality, or political subdivision thereof having official custody of public funds and lawfully investing the same in a credit union insured in accordance with this subchapter in such State;
(iii) an officer, employee, or agent of the District of Columbia having official custody of public funds and lawfully investing the same in a credit union insured in accordance with this subchapter in the District of Columbia;
(iv) an officer, employee, or agent of the Commonwealth of Puerto Rico, of the Panama Canal Zone, or of any territory or possession of the United States, or of any county, municipality, or political subdivision thereof having official custody of public funds and lawfully investing the same in a credit union insured in accordance with this subchapter in the Commonwealth of Puerto Rico, the Panama Canal Zone, or any such territory or possession, respectively; or
(v) an officer, employee, or agent of any Indian tribe (as defined in
(C) Authority to limit deposits
The Board may limit the aggregate amount of funds that may be invested or deposited in any credit union insured in accordance with this subchapter by any government depositor or member on the basis of the size of any such credit union in terms of its assets.
(3) Notwithstanding any limitation in this subchapter or in any other provision of law relating to the amount of insurance available for the account of any one depositor or member, funds invested in a credit union insured in accordance with this subchapter pursuant to a pension or profit-sharing plan described in
(4) Coverage for certain employee benefit plan deposits
(A) Pass-through insurance
The Administration shall provide pass-through share insurance for the deposits or shares of any employee benefit plan.
(B) Prohibition on acceptance of deposits
An insured credit union that is not well capitalized or adequately capitalized may not accept employee benefit plan deposits.
(C) Definitions
For purposes of this paragraph, the following definitions shall apply:
(i) Capital standards
The terms "well capitalized" and "adequately capitalized" have the same meanings as in
(ii) Employee benefit plan
The term "employee benefit plan"—
(I) has the meaning given to such term in
(II) includes any plan described in
(III) includes any eligible deferred compensation plan described in
(iii) Pass-through share insurance
The term "pass-through share insurance" means, with respect to an employee benefit plan, insurance coverage based on the interest of each participant, in accordance with regulations issued by the Administration.
(D) Rule of construction
No provision of this paragraph shall be construed as authorizing an insured credit union to accept the deposits of an employee benefit plan in an amount greater than such credit union is authorized to accept under any other provision of Federal or State law.
(5) Coverage for interest on lawyers trust accounts (IOLTA) and other similar escrow accounts
(A) Pass-through insurance
The Administration shall provide pass-through share insurance for the deposits or shares of any interest on lawyers trust account (IOLTA) or other similar escrow accounts.
(B) Treatment of IOLTAs
(i) Treatment as escrow accounts
For share insurance purposes, IOLTAs are treated as escrow accounts.
(ii) Treatment as member accounts
IOLTAs and other similar escrow accounts are considered member accounts for purposes of paragraph (1), if the attorney administering the IOLTA or the escrow agent administering the escrow account is a member of the insured credit union in which the funds are held.
(C) Definitions
For purposes of this paragraph:
(i) Interest on lawyers trust account
The terms "interest on lawyers trust account" and "IOLTA" mean a system in which lawyers place certain client funds in interest-bearing or dividend-bearing accounts, with the interest or dividends then used to fund programs such as legal service organizations who provide services to clients in need.
(ii) Pass-through share insurance
The term "pass-through share insurance" means, with respect to IOLTAs and other similar escrow accounts, insurance coverage based on the interest of each person on whose behalf funds are held in such accounts by the attorney administering the IOLTA or the escrow agent administering a similar escrow account, in accordance with regulations issued by the Administration.
(D) Rule of construction
No provision of this paragraph shall be construed as authorizing an insured credit union to accept the deposits of an IOLTA or similar escrow account in an amount greater than such credit union is authorized to accept under any other provision of Federal or State law.
(6) Standard maximum share insurance amount defined
For purposes of this chapter, the term "standard maximum share insurance amount" means $250,000, adjusted as provided under
(l) Payment; discharge of liability
Payment of an insured account to any person by the Board shall discharge the Board to the same extent that payment to such person by the closed insured credit union would have discharged it from liability for the insured account.
(m) Undisclosed names
Except as otherwise prescribed by the Board, the Board shall not be required to recognize as the owner of any portion of an account appearing on the records of the closed credit union under a name other than that of the claimant any person whose name or interest as such owner is not disclosed on the records of such closed credit union as part owner of such account, if such recognition would increase the aggregate amount of the insured accounts in such closed credit union.
(n) Withholding of payment due to liability of credit union member
The Board may withhold payment of such portion of the insured account of any member of a closed credit union as may be required to provide for the payment of any direct or indirect liability of such member to the closed credit union or its liquidating agent, which is not offset against a claim due from such credit union, pending the determination and payment of such liability by such member or any other person liable therefor.
(o) Unclaimed insured accounts; limitations
If, after the Board shall have given at least four months' notice to the member by mailing a copy thereof to his last-known address appearing on the records of the closed credit union, any member of the closed credit union shall fail to claim his insured account from the Board within 18 months after the appointment of the liquidating agent for the closed credit union, all rights of the member against the Board with respect to the insured accounts shall be barred, and all rights of the member against the closed credit union, or the estate to which the Board may have become subrogated, shall thereupon revert to the member.
(p) Sale of assets; security for loans; approval of court; agreements affecting interest of Board in any asset acquired by it
(1) Liquidating agents of insured credit unions closed for liquidation on account of bankruptcy or insolvency may offer the assets of such credit unions for sale to the Board or as security for loans from the Board, upon receiving permission from the commission, board, or authority having supervision of such credit union, in the case of an insured State-chartered credit union, in accordance with express provisions of State law. The proceeds of every such sale or loan shall be utilized for the same purposes and in the same manner as other funds realized from the liquidation of the assets of such credit unions. The Board, in its discretion, may make loans on the security of or may purchase and liquidate or sell any part of the assets of an insured credit union closed for liquidation on account of bankruptcy or insolvency, but in any case in which the Board is acting as liquidating agent of a closed insured credit union, no such loan or purchase shall be made without the approval of a court of competent jurisdiction.
(2) No agreement which tends to diminish or defeat the right, title, or interest of the Board in any asset acquired by it under this subsection, either as security for a loan or by purchase, shall be valid against the Board unless such agreement—
(A) shall be in writing;
(B) shall have been executed by the credit union and the person or persons claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the credit union;
(C) shall have been approved by the board of directors of the credit union, which approval shall be reflected in the minutes of such board; and
(D) shall have been, continuously, from the time of its execution, an official record of the credit union.
(q) Prohibition on certain acquisitions of assets
(1) Convicted debtors
Except as provided in paragraph (2), any individual who—
(A) has been convicted of an offense under
(B) is in default on any loan or other extension of credit from such insured credit union which, if not paid, will cause substantial loss to the credit union, the National Credit Union Share Insurance Fund, or the Board,
may not purchase any asset of such credit union from the conservator or liquidating agent.
(2) Settlement of claims
Paragraph (1) shall not apply to the sale or transfer by the Board of any asset of any insured credit union to any individual if the sale or transfer of the asset resolves or settles, or is part of the resolution or settlement, of—
(A) 1 or more claims that have been, or could have been, asserted by the Board against the individual; or
(B) obligations owed by the individual to the insured credit union or the Board.
(r) Foreign investigations
The Board, as conservator or liquidating agent of any insured credit union and for purposes of carrying out any power, authority, or duty with respect to an insured credit union—
(1) may request the assistance of any foreign banking authority and provide assistance to any foreign banking authority in accordance with
(2) may maintain an office to coordinate foreign investigations or investigations on behalf of foreign banking authorities.
(June 26, 1934, ch. 750, title II, §207, as added
Editorial Notes
References in Text
The Federal Rules of Civil Procedure, referred to in subsec. (b)(2)(G), (H), are set out in the Appendix to Title 28, Judiciary and Judicial Procedure.
The Securities Exchange Act of 1934, referred to in subsec. (c)(8)(D)(v)(I), is act June 6, 1934, ch. 404,
The Gramm-Leach-Bliley Act, referred to in subsec. (c)(8)(D)(vi), (15), is
The Legal Certainty for Bank Products Act of 2000, referred to in subsec. (c)(8)(D)(vi), (15), is title IV of H.R. 5660, as enacted by
The Commodity Exchange Act, referred to in subsec. (c)(8)(D)(vi), (15), is act Sept. 21, 1922, ch. 369,
For definition of Canal Zone, referred to in subsec. (k)(2)(B)(iv), see
Amendments
2014—Subsec. (k)(1)(A).
Subsec. (k)(2)(A).
Subsec. (k)(5), (6).
2010—Subsec. (k)(1)(A).
Subsec. (k)(1)(B).
Subsec. (k)(5).
2008—Subsec. (c)(10)(C)(i).
2006—Subsec. (b)(2)(K).
Subsec. (b)(15)(D).
Subsec. (c)(5)(B)(i)(I).
Subsec. (c)(8)(D)(ii)(I).
Subsec. (c)(8)(D)(ii)(IV).
Subsec. (c)(8)(D)(ii)(VI) to (VIII).
Subsec. (c)(8)(D)(ii)(IX).
Subsec. (c)(8)(D)(ii)(X) to (XII).
Subsec. (c)(8)(D)(iv)(I).
Subsec. (c)(8)(D)(vi).
Subsec. (c)(8)(D)(vi)(I).
Subsec. (c)(8)(D)(vi)(II).
Subsec. (c)(8)(D)(ix).
Subsec. (c)(8)(G)(ii), (iii).
Subsec. (c)(13)(C).
Subsec. (d)(3).
Subsec. (d)(3)(A).
Subsec. (d)(4), (5).
Subsec. (f)(3)(A).
Subsec. (k).
Subsec. (k)(1).
Subsec. (k)(2).
Subsec. (k)(2)(A).
Subsec. (k)(3).
Subsec. (k)(4), (5).
2005—Subsec. (c)(8)(A).
Subsec. (c)(8)(A)(i).
Subsec. (c)(8)(A)(ii).
Subsec. (c)(8)(C)(i).
Subsec. (c)(8)(D).
Subse