HSB 35 (LSB 1104YC (10) 90)

HOUSE FILE _____ 

BY  (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON LUNDGREN)

A BILL FOR

An Act relating to matters under the purview of the credit union division of the department of commerce.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 12C.16, subsection 1, paragraph b, subparagraph (1), unnumbered paragraph 1, Code 2023, is amended to read as follows:
   The credit union may deposit, maintain, pledge and assign for the benefit of the public officer in the manner provided in this chapter, securities approved by the public officer, the market value of which is not less than one hundred ten one hundred percent of the total deposits of public funds placed by that public officer in the credit union, less the amount of deposits that are federally insured. The securities shall consist of any of the following:
    Sec. 2.  Section 12C.16, subsection 1, paragraph b, subparagraph (1), subparagraph division (d), Code 2023, is amended to read as follows:
   (d)  To the extent of the guarantee, loans, obligations, or nontransferable Nontransferable letters of credit upon which the payment of principal and interest is fully secured or guaranteed by the United States of America, or an agency or instrumentality of the United States of America, a corporate central credit union organized under section 533.213 the national cooperative bank, the federal home loan bank, or a any corporate credit union whose activities are subject to regulation by the national credit union administration, and the rating of any one of such credit unions remains within the two highest classifications of prime established by at least one of the standard rating services approved by the superintendent of banking by rule pursuant to chapter 17A and whose capital level remains well-capitalized pursuant to 12 C.F.R. pt. 704, or any other entity approved by the treasurer of state. The treasurer of state shall may adopt rules pursuant to chapter 17A to implement this section.
    Sec. 3.  Section 533.205, subsection 8, Code 2023, is amended to read as follows:
   8.  A credit union director shall not receive compensation for service as a director. However, a director may be reimbursed Subject to its bylaws, a credit union may provide compensation to directors for their service and reimburse directors for reasonable expenses directly related to such service.
    Sec. 4.  Section 533.206, Code 2023, is amended to read as follows:
   533.206  Meetings of the board.
   1.  The board of directors shall hold at least six regular board meetings each calendar year. No more than one regular meeting shall be held in any one calendar month, nor shall a credit union go longer than two consecutive months without holding a board meeting. If a credit union has an individual rating of a four or five, or a composite rating of three, four, or five under the Iowa regulatory risk rating system, the board shall meet monthly.
   2.  With respect to a newly chartered credit union, the board of directors shall meet not less frequently than monthly during each of the first five years of the credit union’s existence.
   3.  Unless the bylaws provide otherwise, the board of directors may permit any and all directors to participate in all except one meeting per year of the board of directors through the use of any means of communication by which all directors participating in the meeting may simultaneously hear each other and communicate during the meeting. A director participating in a meeting by this means is deemed to be present at the meeting.
    Sec. 5.  Section 533.210, subsections 1 and 2, Code 2023, are amended to read as follows:
   1.  The board of directors may expel any a member of a state credit union who has failed to do either engaged in any of the following:
   a.  Carry Failing to carry out the member’s obligations to the state credit union.
   b.  Comply Failing to comply with the state credit union’s bylaws or policies.
   c.  Being physically or verbally abusive to credit union members or staff.
   d.  Committing fraud, attempted fraud, or other illegal conduct that a member has been convicted of in relation to the credit union.
   2.  A member of a state credit union may be expelled by a majority vote of the board of directors at a regular or special meeting of the board.
   a.  An expelled member may request a hearing before the membership of the state credit union superintendent, which shall be held within sixty ninety days of an expelled member’s request.
   b.  At the hearing, the membership superintendent may reinstate the expelled member by majority vote, upon terms and conditions prescribed at the hearing if the credit union fails to prove the member was noncompliant with the obligations in this section.
    Sec. 6.  Section 533.304, subsection 2, Code 2023, is amended to read as follows:
   2.  A state credit union may invest in either any of the following to the extent that the total investments under this section shall not be more than five percent of the state credit union’s assets:
   a.  Shares or equity interests in venture capital funds that agree to invest an amount equal to at least fifty percent of the state credit union’s investment in small businesses having their principal offices within this state and having either more than one-half of their assets within this state or more than one-half of their employees employed within this state.
   b.  Shares or equity interests in small businesses having their principal offices within this state and having either more than one-half of their assets within this state or more than one-half of their employees employed within this state. A state credit union shall not invest in more than twenty percent of the total capital and surplus of any one small business under this paragraph.
   c.  Any other investment instrument as authorized by the superintendent.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to matters under the purview of the credit union division of the department of commerce.
   The bill modifies the amount of securities that a credit union may manage for the benefit of a public officer from 110 percent to 100 percent of the total deposits of public funds, less the amount of deposits that are federally insured.
   The bill provides that a public officer shall obtain security for a deposit in excess of the amount federally insured by acquiring a nontransferable letter of credit from the United States, an agency or instrumentality of the United States, a national cooperative bank, federal home loan bank, any corporate credit union whose capital level remains well-capitalized, or any other entity approved by the treasurer of the state.
   The bill modifies language to allow a credit union director compensation subject to the bylaws of a credit union. Current law does not allow compensation to a credit union director for service.
   The bill requires credit union boards to hold regular meetings. A credit union with an individual rating of a four or five, or a composite rating of three, four, or five under the Iowa regulatory risk rating system is required to meet monthly. A new credit union is required to meet monthly for the first five years.
   The bill expands activity that may constitute expulsion from a credit union to include failing to participate in the affairs of the credit union, being physically abusive to a credit union member or staff, being verbally abusive to a credit union member or staff, or committing fraud, attempted fraud, or other illegal conduct resulting in a conviction in relation to the credit union.
   The bill modifies the expulsion hearing procedure. A member may request a hearing before the credit union superintendent, which shall occur 90 days after the member’s request. The superintendent of credit unions may reinstate the expelled member if the credit union fails to prove the member was noncompliant with the requirements of Code section 533.205. Current law provides that the membership of a credit union may reinstate an expelled member by majority vote upon the terms and conditions prescribed at the hearing.
   The bill provides that a credit union may invest in investment instruments as authorized by the superintendent.