§ 1781. — Insurance of member accounts.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1781]
TITLE 12--BANKS AND BANKING
CHAPTER 14--FEDERAL CREDIT UNIONS
SUBCHAPTER II--SHARE INSURANCE
Sec. 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 section 1762
\1\ of this title, in the case of a Federal credit union;
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\1\ See References in Text note below.
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(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. Pub. L. 95-22, title III, Sec. 301, Apr. 19, 1977, 91
Stat. 49.
(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, Sec. 201, as added Pub. L. 91-468,
Sec. 1(3), Oct. 19, 1970, 84 Stat. 994; amended Pub. L. 92-221, Secs. 1,
2, Dec. 23, 1971, 85 Stat. 796, 797; Pub. L. 95-22, title III, Sec. 301,
Apr. 19, 1977, 91 Stat. 49; Pub. L. 95-630, title V, Secs. 502(b), 504,
Nov. 10, 1978, 92 Stat. 3681, 3682; Pub. L. 98-369, div. B, title VIII,
Sec. 2801, July 18, 1984, 98 Stat. 1203; Pub. L. 104-208, div. A, title
II, Sec. 2615(a), Sept. 30, 1996, 110 Stat. 3009-478.)
References in Text
For definition of Canal Zone, referred to in text, see section
3602(b) of Title 22, Foreign Relations and Intercourse.
Section 1762 of this title, referred to in subsec. (b)(5), was
repealed by Pub. L. 105-219, title III, Sec. 301(g)(3), Aug. 7, 1998,
112 Stat. 931.
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 Pub. L. 101-73, which is set out as a note
under section 1811 of this title.
Amendments
1996--Subsec. (e). Pub. L. 104-208 added subsec. (e).
1984--Subsec. (b)(8). Pub. L. 98-369 inserted provisions relating to
payment and maintenance of the deposit.
1978--Subsec. (a). Pub. L. 95-630, Secs. 502(b), 504(a), substituted
``Board'' for ``Administrator'' and ``it'' for ``he'', and inserted ``,
including the trust territories,'' after ``the several territories''.
Subsec. (b). Pub. L. 95-630, Secs. 502(b), 504(b), substituted
``Board'' for ``Administrator'' wherever appearing and inserted in par.
(7) ``except for accounts authorized by State law for State credit
unions'' after ``by the Board''.
Subsec. (c). Pub. L. 95-630, Sec. 502(b), substituted ``Board'' for
``Administrator'' wherever appearing, and in par. (2) substituted ``it''
for ``he'' before ``finds''.
Subsecs. (d), (e). Pub. L. 95-630, Secs. 502(b), 504(c), struck out
subsec. (d), redesignated subsec. (e) as (d) and substituted ``Board''
for ``Administrator''.
1977--Subsec. (c)(3) Pub. L. 95-22 struck out par. (3) which
provided for approval by Administrator of applications of State credit
unions for insurance of its member accounts where credit union meets
requirements of this chapter and where in the event of liquidation of
the credit union, the claims with respect to demand deposit accounts
shall be subordinate to the claims with respect to member accounts.
1971--Subsec. (c)(2). Pub. L. 92-221, Sec. 1(a), substituted
``disapproved'' for ``reject''.
Subsec. (c)(3). Pub. L. 92-221, Sec. 2, added par. (3).
Subsec. (d). Pub. L. 92-221, Sec. 1(b), substituted provisions
allowing, in certain cases, a two-year period to meet the requirements
for insurance following the disapproval of an application for insurance
by a Federal credit union, for provisions mandating the suspension or
revocation of the charter of a Federal credit union unless the credit
union met the requirements for insurance and became an insured credit
union within one year of the rejection of its application for insurance.
Effective Date of 1996 Amendment
Section 2615(c) of div. A of Pub. L. 104-208 provided that: ``The
amendments made by this section [amending this section and section 1828
of this title] shall apply on and after January 1, 1996.''
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.
Section Referred to in Other Sections
This section is referred to in sections 461, 1782 of this title.
