Credit Union Board Modernization Act

Floor Speech

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Mr. HILL of Arkansas. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 975) to amend the Federal Credit Union Act to modify the frequency of board of directors meetings, and for other purposes.

The Clerk read the title of the bill.

The text of the bill is as follows: H.R. 975

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.

This Act may be cited as the ``Credit Union Board Modernization Act''. SEC. 2. FREQUENCY OF BOARD OF DIRECTORS MEETINGS.

Section 113 of the Federal Credit Union Act (12 U.S.C. 1761b) is amended--

(1) by striking ``monthly'' each place such term appears;

(2) in the matter preceding paragraph (1), by striking ``The board of directors'' and inserting the following:

``(a) In General.--The board of directors'';

(3) in subsection (a) (as so designated), by striking ``shall meet at least once a month and''; and

(4) by adding at the end the following:

``(b) Meetings.--The board of directors of a Federal credit union shall meet as follows:

``(1) With respect to a de novo Federal credit union, not less frequently than monthly during each of the first five years of the existence of such Federal credit union.

``(2) Not less than six times annually, with at least one meeting held during each fiscal quarter, with respect to a Federal credit union--

``(A) with composite rating of either 1 or 2 under the Uniform Financial Institutions Rating System (or an equivalent rating under a comparable rating system); and

``(B) with a capability of management rating under such composite rating of either 1 or 2.

``(3) Not less frequently than once a month, with respect to a Federal credit union--

``(A) with composite rating of either 3, 4, or 5 under the Uniform Financial Institutions Rating System (or an equivalent rating under a comparable rating system); or

``(B) with a capability of management rating under such composite rating of either 3, 4, or 5.''.
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Mr. HILL of Arkansas.

Mr. Speaker, I rise in strong support of H.R. 975, the Credit Union Board Modernization Act.

I applaud my Committee on Financial Services colleagues, Representatives Vargas and Huizenga, for introducing it. This bipartisan bill will help focus credit unions' time and resources where it really matters, which is serving their members.

Federal credit unions are governed by boards of directors who are currently required by law, Mr. Speaker, to meet at least once a month. This outdated requirement prevents credit unions from attracting talented volunteers and professionals to a credit union's board due to the time commitment of a monthly board meeting.

Under H.R. 975, certain well-functioning credit unions are provided with the option to meet at least six times annually with at least one meeting held during each fiscal quarter of the year.

This crucial change frees up the time and resources used for meetings to put toward the critical mission of providing financial services to their credit union members. Importantly, this bill has guardrails to ensure the safety and soundness of our financial system. Only credit unions with a CAMELS composite rating of a one or two will be permitted to meet at this less frequent rate.

All credit unions, just like commercial banks, are subject to a supervisory rating scale. It is called the CAMELS rating. A credit union is assessed at each of the six categories under that acronym, and they are assigned a composite rating on a scale of one, the best, to five, the worst, based on: capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk, hence the acronym CAMELS.

Therefore, this bill provides an incentive to achieve the strongest supervisory rating so that a credit union might access the flexibility offered by this bill.

Furthermore, by reducing the mandated number of board meetings for federally chartered credit unions, this legislation would promote parity between Federal and State-chartered credit unions as 17 States currently allow for meetings less frequently than monthly.

As I say, fewer mandated board meetings are especially helpful for rural credit unions who struggle to attract talent to their boards and also operate with significant regulatory burden and sometimes long travel. Of course, nothing in this legislation prevents credit union boards from meeting more frequently if they determine that is necessary.

Credit unions play an essential role in our communities across this country, and H.R. 975 will ensure that they are able to operate more efficiently. I thank the gentleman from California's 52nd District, Mr. Vargas, for introducing this important bipartisan bill.

Mr. Speaker, I encourage all of my colleagues to support it, and I reserve the balance of my time.

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Mr. HILL of Arkansas. Mr. Speaker, I urge all my colleagues to support H.R. 975. I appreciate Mr. Vargas sponsoring this good bill and Mrs. Kim speaking on it. They represent the State of California, and the State of California has some of the largest Federal credit unions active and headquartered in their State.

This will be a great service to those credit unions particularly and their home State of California to be able to focus on their members and have a few less meetings. I thank the gentleman from California for his sponsorship.

Mr. Speaker, I urge a ``yes'' vote, and I yield back the balance of my time.

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