BILL NUMBER: AB 2396	CHAPTERED  09/19/00

	CHAPTER   529
	FILED WITH SECRETARY OF STATE   SEPTEMBER 19, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 18, 2000
	PASSED THE SENATE   AUGUST 18, 2000
	PASSED THE ASSEMBLY   MAY 11, 2000

INTRODUCED BY   Assembly Member Longville

                        FEBRUARY 24, 2000

   An act to add Section 14406 to the Financial Code, relating to
credit unions.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2396, Longville.  Credit unions.
   The California Credit Union Law provides for the regulation of
credit unions by the Division of Credit Unions, within the Department
of Financial Institutions, and makes the willful violation of the
provisions of this law a crime.
   This bill would require a credit union to deposit its savings
capital, undivided profits, and reserve funds only in specified
financial institutions or specified financial instruments.  Because
the willful violation of these provisions would be a crime, this bill
would impose a state-mandated local program by creating a new crime.

  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 14406 is added to the Financial Code, to read:

   14406.  The savings capital, undivided profits, and reserve funds
of a credit union shall be deposited only in the following:
   (a) Commercial banks or trust companies, incorporated under the
laws of this state.
   (b) National banks doing business in this state.
   (c) Shares or periodic certificates for funds received by or any
form of evidence of interest or indebtedness issued by any credit
union organized under this division or by any other credit union if
its member accounts are insured as provided for by Subchapter II of
the Federal Credit Union Act (12 U.S.C. Sec. 1781 et seq.), or,
alternatively, are insured by other means determined acceptable by
the commissioner.
   (d) Accounts with, investment certificates or withdrawable shares
of, any savings and loan association doing business in this state
that is an insured institution pursuant to the Federal Deposit
Insurance Corporation Act (12 U.S.C. Sec. 1811 et seq.).
  SEC. 2.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB 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 XIIIB of the California Constitution.