12 U.S. Code § 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.
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.
(1) Except as provided in paragraph (2), no insured credit union shall, without the prior approval of the Board—
(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
(2) Conversion of insured credit unions to mutual savings banks.—
(A) In general.— Notwithstanding paragraph (1), an insured credit union may convert to a mutual savings bank or savings association (if the savings association is in mutual form), as those terms are defined in section 1813 of this title, without the prior approval of the Board, subject to the requirements and procedures set forth in the laws and regulations governing mutual savings banks and savings associations.
(B) Conversion proposal.— A proposal for a conversion described in subparagraph (A) shall first be approved, and a date set for a vote thereon by the members (either at a meeting to be held on that date or by written ballot to be filed on or before that date), by a majority of the directors of the insured credit union. Approval of the proposal for conversion shall be by the affirmative vote of a majority of the members of the insured credit union who vote on the proposal.
(C) Notice of proposal to members.— An insured credit union that proposes to convert to a mutual savings bank or savings association under subparagraph (A) shall submit notice to each of its members who is eligible to vote on the matter of its intent to convert—
(D) Notice of proposal to board.— The Board may require an insured credit union that proposes to convert to a mutual savings bank or savings association under subparagraph (A) to submit a notice to the Board of its intent to convert during the 90-day period preceding the date of the completion of the conversion.
(E) Inapplicability of chapter upon conversion.— Upon completion of a conversion described in subparagraph (A), the credit union shall no longer be subject to any of the provisions of this chapter.
(F) Limit on compensation of officials.—
(i) In general.— No director or senior management official of an insured credit union may receive any economic benefit in connection with a conversion of the credit union as described in subparagraph (A), other than—
(ii) Senior management official.— For purposes of this subparagraph, the term “senior management official” means a chief executive officer, an assistant chief executive officer, a chief financial officer, and any other senior executive officer (as defined by the appropriate Federal banking agency pursuant to section 1831i (f) of this title).
(G) Consistent rules.—
(i) In general.— Not later than 6 months after August 7, 1998, the Administration shall promulgate final rules applicable to charter conversions described in this paragraph that are consistent with rules promulgated by other financial regulators, including the Office of the Comptroller of the Currency. The rules required by this clause shall provide that charter conversion by an insured credit union shall be subject to regulation that is no more or less restrictive than that applicable to charter conversions by other financial institutions.
(ii) Oversight of member vote.— The member vote concerning charter conversion under this paragraph shall be administered by the Administration, and shall be verified by the Federal or State regulatory agency that would have jurisdiction over the institution after the conversion. If either the Administration or that regulatory agency disapproves of the methods by which the member vote was taken or procedures applicable to the member vote, the member vote shall be taken again, as directed by the Administration or the agency.
(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) 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
(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,  1014, 1032, 1344, 1517, 1956, or 1957 of title 18; or
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.
(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.
(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;
(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) of this section.
(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
 See References in Text note below.
Source(June 26, 1934, ch. 750, title II, § 205, as added Pub. L. 91–468, § 1(3),Oct. 19, 1970, 84 Stat. 1002; amended Pub. L. 95–630, title V, § 502(b),Nov. 10, 1978, 92 Stat. 3681; Pub. L. 96–221, title III, § 305(d), title V, § 523,Mar. 31, 1980, 94 Stat. 147, 166; Pub. L. 97–320, title I, § 131, 141 (a)(8), title VII, § 706(b),Oct. 15, 1982, 96 Stat. 1486, 1489, 1540; Pub. L. 100–86, title V, § 509(a),Aug. 10, 1987, 101 Stat. 635; Pub. L. 101–73, title IX, § 910(b),Aug. 9, 1989, 103 Stat. 478; Pub. L. 103–322, title XXXII, § 320606,Sept. 13, 1994, 108 Stat. 2119; Pub. L. 105–219, title II, § 202,Aug. 7, 1998, 112 Stat. 919; Pub. L. 109–173, § 2(d)(3),Feb. 15, 2006, 119 Stat. 3604; Pub. L. 109–351, title VI, § 607(b),Oct. 13, 2006, 120 Stat. 1982; Pub. L. 111–203, title III, § 362(2),July 21, 2010, 124 Stat. 1549.)
References in Text
Section 1008 of title 18, referred to in subsec. (d)(2)(A)(i)(I), was repealed by Pub. L. 101–73, title IX, § 961(g)(1),Aug. 9, 1989, 103 Stat. 500.
2010—Subsec. (b)(2)(G)(i). Pub. L. 111–203, § 362(2)(A), struck out “the Office of Thrift Supervision and” before “the Office of the Comptroller”.
Subsec. (i)(1). Pub. L. 111–203, § 362(2)(B), struck out “or the Federal Savings and Loan Insurance Corporation” before “to purchase”.
2006—Subsec. (a). Pub. L. 109–173amended heading and text of subsec. (a) generally. Prior to amendment, text read as follows: “Every insured credit union shall display at each place of business maintained by it a sign or signs indicating that its member accounts are insured by the Board and shall include in all of its advertisements a statement to the effect that its member accounts are insured by the Board. The Board may exempt from this requirement advertisements which do not relate to member accounts or advertisements in which it is impractical to include such a statement. The Board shall prescribe by regulation the forms of such signs, the manner of display, the substance of any such statement, and the manner of use.”
Subsec. (j). Pub. L. 109–351added subsec. (j).
1998—Subsec. (b)(1). Pub. L. 105–219, § 202(1), substituted “Except as provided in paragraph (2), no insured credit union shall, without the prior approval of the Board” for “Except with the prior written approval of the Board, no insured credit union shall”.
Subsec. (b)(2), (3). Pub. L. 105–219, § 202(2), (3), added par. (2) and redesignated former par. (2) as (3).
1994—Subsec. (d). Pub. L. 103–322amended heading and text of subsec. (d) generally. Prior to amendment, text read as follows:
“(1) Prohibition.—Except with the prior written consent of the Board—
“(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) Penalty.—Whoever knowingly violates paragraph (1) 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.”
1989—Subsec. (d). Pub. L. 101–73amended subsec. (d) generally. Prior to amendment, subsec. (d) read as follows: “Except with the written consent of the Board, no person shall serve as a director, officer, committee member, or employee of an insured credit union who has been convicted, or who is hereafter convicted, of any criminal offense involving dishonesty or a breach of trust. For each willful violation of this prohibition, the credit union involved shall be subject to a penalty of not more than $100 for each day this prohibition is violated, which the Board may recover for its use.”
1982—Subsec. (f)(2). Pub. L. 97–320, § 706(b), inserted provisions relating to deposits of public funds.
Subsecs. (h), (i). Pub. L. 97–320, § 131, added subsecs. (h) and (i).
Pub. L. 97–320, § 141(a)(8), which directed that, effective Oct. 13, 1986, the provisions of law amended by section 131 ofPub. L. 97–320shall be amended to read as they would without such amendment, was repealed by Pub. L. 100–86, § 509(a). See Effective and Termination Dates of 1982 Amendment note and Extension of Emergency Acquisition and Net Worth Guarantee Provisions of Pub. L. 97–320note set out under section 1464 of this title.
1980—Subsec. (f). Pub. L. 96–221, § 305(d), added subsec. (f).
Subsec. (g). Pub. L. 96–221, § 523, added subsec. (g).
1978—Pub. L. 95–630substituted “Board” for “Administrator” wherever appearing, and “its” for “his” where appropriate.
Effective Date of 2010 Amendment
Amendment by Pub. L. 111–203effective on the transfer date, see section 351 ofPub. L. 111–203, set out as a note under section 906 of Title 2, The Congress.
Effective Date of 2006 Amendment
Pub. L. 109–173, § 2(e),Feb. 15, 2006, 119 Stat. 3605, provided that: “This section [amending this section and sections 1787, 1817, 1821, 1828, 1831t, and 3104 of this title] and the amendments made by this section shall take effect on the date on which the final regulations required under section 2109(a)(2) of the Federal Deposit Insurance Reform Act of 2005 [Pub. L. 109–171, set out as a Regulations note under section 1817 of this title] take effect [Apr. 1, 2006, see 71 F.R. 14629].”
Effective Date of 1980 Amendment
Enactment of subsec. (f) by Pub. L. 96–221effective at the close of Mar. 31, 1980, see section 306 ofPub. L. 96–221, set out as a note under section 1464 of this title.
Pub. L. 96–221, title V, § 525,Mar. 31, 1980, 94 Stat. 167, provided that: “The amendments made by sections 521 through 523 of this title [amending this section and enacting sections 1730g and 1831d of this title] shall apply only with respect to loans made in any State during the period beginning on April 1, 1980, and ending on the date, on or after April 1, 1980, on which such State adopts a law or certifies that the voters of such State have voted in favor of any provision, constitutional or otherwise, which states explicitly and by its terms that such State does not want the amendments made by such sections to apply with respect to loans made in such State, except that such amendments shall apply to a loan made on or after the date such law is adopted or such certification is made if such loan is made pursuant to a commitment to make such loan which was entered into on or after April 1, 1980, and prior to the date on which such law is adopted or such certification is made.”
Effective Date of 1978 Amendment
Amendment by Pub. L. 95–630effective on expiration of 120 days after Nov. 10, 1978, and transitional provisions, see section 509 ofPub. L. 95–630, set out as a note under section 1752 of this title.
Extension of Emergency Acquisition and Net Worth Guarantee Provisions of Pub. L. 97–320
No amendment made by section 141(a) ofPub. L. 97–320, set out as a note under section 1464 of this title, as in effect before Aug. 10, 1987, to any other provision of law to be deemed to have taken effect before such date and any such provision of law to be in effect as if no such amendment had been made before such date, see section 509(c) ofPub. L. 100–86, set out as a note under section 1464 of this title.
No amendment made by section 141(a) ofPub. L. 97–320, set out as a note under section 1464 of this title, as in effect on the day before Oct. 8, 1986, to any other provision of law to be deemed to have taken effect before such date and any such provision of law to be in effect as if no such amendment had taken effect before such date, see section 1(c) ofPub. L. 99–452, set out as a note under section 1464 of this title.
Section 141(a) ofPub. L. 97–320, set out as a note under section 1464 of this title, as in effect on the day after Aug. 27, 1986, applicable as if included in Pub. L. 97–320on Oct. 15, 1982, with no amendment made by such section to any other provision of law to be deemed to have taken effect before Aug. 27, 1986, and any such provision of law to be in effect as if no such amendment had taken effect before Aug. 27, 1986, see section 1(c) ofPub. L. 99–400, set out as a note under section 1464 of this title.
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 ofPub. L. 96–221, set out as a note under section 1735f–7a of this title.
Choice of Highest Applicable Interest Rate
In any case in which one or more provisions of, or amendments made by, title V of Pub. L. 96–221, section 1735f–7 of this title, or any other provisions of law, including section 85 of this title, apply with respect to the same loan, mortgage, credit sale, or advance, such loan, mortgage, credit sale, or advance may be made at the highest applicable rate, see section 528 ofPub. L. 96–221, set out as a note under section 1735f–7a of this title.
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