What This Bill Does
This bill changes how often boards of directors at federal credit unions (financial institutions similar to banks owned by their members) must meet. The bill modifies the Federal Credit Union Act to allow different meeting frequencies based on the credit union's financial health and management quality. The new rules replace the current requirement that all credit union boards meet monthly.
Who It Affects
Boards of directors at federal credit unions.
Key Provisions
* Brand new credit unions must hold board meetings at least once a month for their first five years of operation (Sec. 2).
* Credit unions with the highest financial health ratings (composite rating of 1 or 2) and strong management must meet at least six times per year, with at least one meeting in each three-month period of their fiscal year (Sec. 2).
* Credit unions with lower financial health ratings (composite rating of 3, 4 or 5) or weaker management capabilities must continue meeting at least once a month (Sec. 2).
What Changes
The bill removes the requirement that all federal credit unions hold monthly board meetings. Instead, well-performing credit unions with strong management can reduce meetings to six times per year. Struggling credit unions must maintain monthly meetings. New credit unions stay on the monthly schedule for five years.
Important Definitions
Composite rating: A financial health score given to credit unions under the Uniform Financial Institutions Rating System. The ratings run from 1 (best) to 5 (worst).
IIB
118TH CONGRESS
1ST SESSION
H. R. 582
IN THE SENATE OF THE UNITED STATES
JANUARY 31, 2023
Received; read twice and referred to the Committee on Banking, Housing, and
Urban Affairs
AN ACT
To amend the Federal Credit Union Act to modify the fre-
quency of board of directors meetings, and for other
purposes.
Be it enacted by the Senate and House of Representa-
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tives of the United States of America in Congress assembled,
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HR 582 RFS
SECTION 1. SHORT TITLE.
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This Act may be cited as the ‘‘Credit Union Board
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Modernization Act’’.
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SEC. 2. FREQUENCY OF BOARD OF DIRECTORS MEETINGS.
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Section 113 of the Federal Credit Union Act (12
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U.S.C. 1761b) is amended—
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(1) by striking ‘‘monthly’’ each place such term
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appears;
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(2) in the matter preceding paragraph (1), by
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striking ‘‘The board of directors’’ and inserting the
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following:
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‘‘(a) IN GENERAL.—The board of directors’’;
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(3) in subsection (a) (as so designated), by
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striking ‘‘shall meet at least once a month and’’; and
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(4) by adding at the end the following:
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‘‘(b) MEETINGS.—The board of directors of a Federal
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credit union shall meet as follows:
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‘‘(1) With respect to a de novo Federal credit
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union, not less frequently than monthly during each
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of the first five years of the existence of such Fed-
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eral credit union.
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‘‘(2) Not less than six times annually, with at
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least one meeting held during each fiscal quarter,
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with respect to a Federal credit union—
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‘‘(A) with composite rating of either 1 or
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2 under the Uniform Financial Institutions
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HR 582 RFS
Rating System (or an equivalent rating under a
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comparable rating system); and
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‘‘(B) with a capability of management rat-
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ing under such composite rating of either 1 or
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2.
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‘‘(3) Not less frequently than once a month,
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with respect to a Federal credit union—
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‘‘(A) with composite rating of either 3, 4,
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or 5 under the Uniform Financial Institutions
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Rating System (or an equivalent rating under a
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comparable rating system); or
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‘‘(B) with a capability of management rat-
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ing under such composite rating of either 3, 4,
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or 5.’’.
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Passed the House of Representatives January 30,
2023.
Attest:
CHERYL L. JOHNSON,
Clerk.
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