House File 538 HOUSE FILE BY WISE, HUSER, QUIRK, and MERTZ Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act limiting the investment in banks by credit unions, and 2 making related changes. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 2506YH 80 5 jj/sh/8 PAG LIN 1 1 Section 1. Section 533.48, subsection 1, Code 2003, is 1 2 amended to read as follows: 1 3 1. INVESTMENTS IN BANKS. A credit union may, with the 1 4 prior approval of the superintendent, invest in the capital 1 5 stock, obligations, or other securities of a bank, provided 1 6 that the credit union owns less than one hundred percent of 1 7 all outstanding shares of a single bank. A credit union shall 1 8 not purchase or otherwise acquire a bank as defined in section 1 9 524.103, in whole or in part. The fact that the bank has 1 10 begun or completed a process of dissolution in order to permit 1 11 the acquisition to occur shall not be used by the credit union 1 12 or the bank to suggest that the bank does not formally satisfy 1 13 the definition of a bank and avoid the prohibition on 1 14 acquisition. 1 15 EXPLANATION 1 16 This bill amends Code section 533.48, regarding the ability 1 17 of a credit union to make investments in banks and savings and 1 18 loans. The bill expressly limits the ownership interest of a 1 19 credit union in a bank to less than 100 percent of all 1 20 outstanding shares in a single bank, and further prohibits a 1 21 credit union from purchasing or otherwise acquiring a bank. 1 22 The fact that a bank must change its business form and go 1 23 through a process of dissolution in order to further the 1 24 acquisition process cannot be used to avoid the prohibition on 1 25 acquisition. 1 26 The remainder of Code section 533.48 addresses investment 1 27 by credit unions in savings and loans, as well as the 1 28 requisite findings the superintendent must make regarding the 1 29 state of competition if the investment is allowed, in order to 1 30 grant approval to an investment in either a bank or savings 1 31 and loan. The Code section also addresses subsequent 1 32 incorporation of additional banks or savings and loans in the 1 33 same community and the preservation of competition. 1 34 LSB 2506YH 80 1 35 jj/sh/8