US LAWS, STATUTES & CODES ON-LINE

US Supreme Court Decisions On-Line | US Laws



§ 1759. —  Membership.



[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
  January 24, 2002 and December 19, 2002]
[CITE: 12USC1759]

 
                       TITLE 12--BANKS AND BANKING
 
                    CHAPTER 14--FEDERAL CREDIT UNIONS
 
                    SUBCHAPTER I--GENERAL PROVISIONS
 
Sec. 1759. Membership


(a) In general

    Subject to subsection (b) of this section, 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) of this 
        section.

                     (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) of this section--
                (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) of this section, in the case of a 
    Federal credit union, the field of membership category of which is 
    described in subsection (b)(2) of this section, 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 section 
            4702(16) of this title, and meets such additional 
            requirements as the Board may impose; and
                (ii) is underserved, based on data of the Board and the 
            Federal banking agencies (as defined in section 1813 of this 
            title), by other depository institutions (as defined in 
            section 461(b)(1)(A) of this title); and

            (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) 
    of this section.

                           (2) Exceptions

        In the case of any Federal credit union, the field of membership 
    category of which is described in subsection (b)(2) of this section, 
    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) of this 
        section 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) 
    of this section.

(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 section 1764 of this title, once a person 
    becomes a member of a credit union in accordance with this 
    subchapter, that person or organization may remain a member of that 
    credit union until the person or organization chooses to withdraw 
    from the membership of the credit union.

(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) of this section 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) 
    of this section to include an additional group and become a credit 
    union described in subsection (b)(2) of this section), unless the 
    Board determines, in writing, that--
            (A) the credit union has not engaged in any unsafe or 
        unsound practice (as defined in section 1786(b) of this title) 
        that is material during the 1-year period preceding the date of 
        filing of the application;
            (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) of 
        this section; 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, Sec. 109, formerly Sec. 9, 48 Stat. 
1219; July 31, 1946, ch. 711, Sec. 2, 60 Stat. 744; 1947 Reorg. Plan No. 
1, Sec. 401, eff. July 1, 1947, 12 F.R. 4534, 61 Stat. 952; June 29, 
1948, ch. 711, Secs. 1, 2, 62 Stat. 1091; renumbered Sec. 10 and amended 
Pub. L. 86-354, Sec. 1, Sept. 22, 1959, 73 Stat. 631; Pub. L. 91-206, 
Sec. 2(1), Mar. 10, 1970, 84 Stat. 49; renumbered title I, Sec. 109, 
Pub. L. 91-468, Sec. 1(2), Oct. 19, 1970, 84 Stat. 994; amended Pub. L. 
93-383, title VII, Sec. 722, Aug. 22, 1974, 88 Stat. 719; Pub. L. 95-
630, title V, Sec. 502(b), Nov. 10, 1978, 92 Stat. 3681; Pub. L. 105-
219, title I, Secs. 101-103, Aug. 7, 1998, 112 Stat. 914-917.)


                               Amendments

    1998--Subsec. (a). Pub. L. 105-219, Sec. 101(1)(A), designated 
existing provisions as subsec. (a) and inserted heading and ``Subject to 
subsection (b) of this section,'' before ``Federal credit union 
membership shall consist of''.
    Pub. L. 105-219, Sec. 101(1)(B), which directed the amendment of 
subsec. (a) by striking out ``, except that Federal credit union 
membership shall be limited to groups having a common bond of occupation 
or association, or to groups within a well-defined neighborhood, 
community, or rural district'' after ``directors'', was executed by 
striking out such language which began with a semicolon rather than a 
comma after ``directors'' to reflect the probable intent of Congress.
    Subsecs. (b) to (e). Pub. L. 105-219, Sec. 101(2), added subsecs. 
(b) to (e).
    Subsec. (f). Pub. L. 105-219, Sec. 102, added subsec. (f).
    Subsec. (g). Pub. L. 105-219, Sec. 103, added subsec. (g).
    1978--Pub. L. 95-630 substituted ``Board'' for ``Administrator''.
    1974--Pub. L. 93-383 substituted ``a uniform entrance fee if 
required by the board of directors'' for ``the entrance fee''.
    1970--Pub. L. 91-206 substituted ``Administrator'' for ``Director''.
    1959--Pub. L. 86-354 substituted ``persons'' for ``person'' before 
``designated''.
    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.


                    Effective Date of 1978 Amendment

    Amendment by Pub. L. 95-630 effective on expiration of 120 days 
after Nov. 10, 1978, and transitional provisions, see section 509 of 
Pub. L. 95-630, set out as a note under section 1752 of this title.

                          Transfer of Functions

    Transfer of functions of Farm Credit Administration and Governor 
thereof, generally, see notes set out under section 1751 of this title.
    Functions of Governor of Farm Credit Administration under this 
section transferred to Federal Deposit Insurance Corporation by Reorg. 
Plan No. 1 of 1947.


   Report and Congressional Review Requirement for Certain Regulations

    Pub. L. 105-219, title II, Sec. 205, Aug. 7, 1998, 112 Stat. 923, 
provided that: ``A regulation prescribed by the Board [National Credit 
Union Administration Board] shall be treated as a major rule for 
purposes of chapter 8 of title 5, United States Code, if the regulation 
defines, or amends the definition of--
        ``(1) the term `immediate family or household' for purposes of 
    section 109(e)(1) of the Federal Credit Union Act [12 U.S.C. 
    1759(e)(1)] (as added by section 101 of this Act); or
        ``(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).''



chanrobles.com





ChanRobles Legal Resources:

ChanRobles On-Line Bar Review

ChanRobles Internet Bar Review : www.chanroblesbar.com

ChanRobles MCLE On-line

ChanRobles Lawnet Inc. - ChanRobles MCLE On-line : www.chanroblesmcleonline.com