BILL NUMBER: AB 1076	ENROLLED
	BILL TEXT

	PASSED THE SENATE  AUGUST 30, 2011
	PASSED THE ASSEMBLY  SEPTEMBER 2, 2011
	AMENDED IN SENATE  JUNE 6, 2011
	AMENDED IN ASSEMBLY  APRIL 4, 2011

INTRODUCED BY   Assembly Member Achadjian

                        FEBRUARY 18, 2011

   An act to amend Section 15050 of the Financial Code, relating to
credit unions.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1076, Achadjian. Credit unions.
   Existing law, the California Credit Union Law, provides for the
regulation and certification of credit unions by the Commissioner of
Financial Institutions. Existing law regulates loans to officials of
a credit union and defines an official as a director, officer, or
member of the supervisory committee or the credit committee of a
credit union. Existing law prohibits a credit union from entering
into any obligation with an official of the credit union, directly or
indirectly, not fully secured by shares or certificates for funds
unless specified requirements are satisfied. Existing law makes it a
crime for specified employees of a credit union to knowingly permit,
or participate in, the creation of an obligation that is not in
conformity with the requirements of the Credit Union Law, except as
specified.
   This bill would revise these requirements in order for a credit
union to enter into an obligation, as defined, with an official of
the credit union, directly or indirectly. The bill would, among other
things, in order for a credit union to be authorized to enter into
these obligations with an official, prohibit the aggregate amount of
obligations outstanding to all officials, except obligations fully
secured by shares, from exceeding 20% of the aggregate dollar amount
of all savings capital of the credit union and would require that any
obligation which would cause the aggregate amount of obligations
outstanding to the official to exceed $50,000, excluding any portion
fully secured by shares, be approved by the credit committee or
credit manager, and by the board of directors of the credit union.
   Because knowingly creating or participating in the creation of an
obligation in violation of these provisions by an employee of a
credit union would be a crime, this bill would impose a
state-mandated local program.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 15050 of the Financial Code is amended to read:

   15050.  (a) For purposes of this section, the following
definitions shall apply:
   (1) "Credit manager" means any individual, regardless of title,
designated pursuant to Section 14600 to fulfill the duties of a
credit manager.
   (2) "Obligation" means any loan or approved line of credit,
including both used and unused portions, on which the official is a
borrower, coborrower, cosigner, endorser, or guarantor.
   (3) "Official" means a director, officer, or member of the
supervisory committee, or member of the credit committee of a credit
union.
   (b) No credit union shall enter into any obligation with any
official, directly or indirectly, unless (1) the obligation complies
with all lawful requirements of this division with respect to
obligations permitted for other members of the credit union, (2) the
obligation is not on terms more favorable than those extended to
other members of the credit union, and (3) the obligation is entered
into in accordance with a written policy adopted by the directors
establishing that all officials shall have an equal opportunity to
enter into obligations with the credit union.
   (c) No credit union shall enter into any obligation with any
official, directly or indirectly, unless all of the following
requirements are satisfied:
   (1) Upon the making of the obligation, the aggregate amount of
obligations outstanding to all officials, except obligations fully
secured by shares, shall not exceed 20 percent of the aggregate
dollar amount of all savings capital of the credit union.
   (2) The obligation, except any portion of an obligation fully
secured by shares, shall not exceed the maximum obligation to the
credit union set forth in subdivisions (b) and (c) of Section 15100.
   (3) Any obligation that would cause the aggregate amount of
obligations outstanding to the official to exceed fifty thousand
dollars ($50,000), excluding any portion fully secured by shares,
shall be approved by the credit committee or the credit manager, and
by the board of directors. An official shall not take part in any
credit decision, directly or indirectly, for his or her benefit and
shall not be present during any portion of any committee or board
meeting where his or her credit application is under consideration.
   (4) The names of members of the credit committee, the credit
manager, and board of directors who voted to authorize or ratify the
obligation shall be entered in their respective minutes.
   (d) No credit union shall permit an official to become surety for
any obligation created by the credit union for anyone other than a
member of his or her immediate family.
   (e) No credit union shall enter into any obligation with any
credit manager or any officer employed by the credit union unless the
obligation is in compliance with all requirements of this division
with respect to obligations permitted for other nonemployee members,
and not on terms more favorable than those extended to other
employees, and approved by the board of directors.
  SEC. 2.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.