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