BILL NUMBER: AB 1076 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 4, 2011
INTRODUCED BY Assembly Member Achadjian
FEBRUARY 18, 2011
An act to amend Section 14000 15050
of the Financial Code, relating to credit unions.
LEGISLATIVE COUNSEL'S DIGEST
AB 1076, as amended, 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 rename that law as the California Credit
Union Act. revise these requirements in order for a
credit union to enter into an obligation with an official of the
credit union, directly or indirectly, not fully secured by shares or
certificates for funds. The bill would, among other things, in order
for a credit union to be authorized to enter into these obligations
with an official, require the obligation to be approved by the credit
committee or credit manager of the credit union and require the
approval of the board of directors for an obligation or aggregate of
obligations to an official in excess of $20,000 plus pledged shares
or when an official acts as guarantor or endorser of an obligation or
aggregate of obligations in excess of $20,000 to other members 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.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no
yes .
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, "official" means a
director, officer, or member of the supervisory committee or the
credit committee of a credit union.
(b) No credit union shall enter into any obligation with any
official, directly or indirectly, unless the obligation complies with
all lawful requirements of this division with respect to obligations
permitted for other members of the credit union and is not on terms
more favorable than those extended to other members of the credit
union, and 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, not fully secured by shares or
certificates for funds unless all of the following requirements are
satisfied:
(1) Upon the making of the obligation, the aggregate amount of
obligations outstanding, except obligations fully secured by shares,
to all officials and alternate members of the credit committee will
not exceed 10 percent of the aggregate dollar amount of all savings
capital of the credit union, except that in credit unions whose
aggregate savings capital is five million dollars ($5,000,000) or
more but less than ten million dollars ($10,000,000), the aggregate
amount of obligations outstanding, except obligations fully secured
by shares, to all officials and alternate members of the credit
committee shall not exceed 15 percent of the aggregate dollar amount
of all savings capital of the credit union, and in credit unions
whose aggregate savings capital is less than five million dollars
($5,000,000), the aggregate amount of obligations outstanding, except
obligations fully secured by shares, to all officials and alternate
members of the credit committee 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, does not exceed 1 percent of the aggregate dollar
amount of all savings capital of the credit union, or the maximum
obligation to the credit union prescribed by subdivisions (b) and (c)
of Section 15100, whichever is less, except that in credit unions
whose aggregate savings capital is five million dollars ($5,000,000)
or more but less than ten million dollars ($10,000,000), the
obligation, except any portion of an obligation fully secured by
shares, shall not exceed 3 percent of the aggregate dollar amount of
all savings capital of the credit union, or the maximum obligation to
the credit union prescribed by subdivisions (b) and (c) of Section
15100, whichever is less, and in credit unions whose aggregate
savings capital is less than five million dollars ($5,000,000), the
obligation, except any portion of an obligation fully secured by
shares, shall not exceed 5 percent of the aggregate dollar amount of
all savings capital of the credit union, or the maximum obligation to
the credit union prescribed by subdivisions (b) and (c) of Section
15100, whichever is less.
(3) (A)
(1) The obligation is approved by the credit committee,
or in the alternative the credit manager, and by the board
of directors, except that the credit manager shall not take
part in any credit decision directly or indirectly for his or her
benefit. The board of directors may select a loan officer to prepare
a report and recommendation as to any extension of credit or other
obligation requested by the credit manager.
(B) Subparagraph (A) does not apply to the creation of an
obligation on which an official is a direct obligor or an endorser,
cosigner, or guarantor, if the aggregate of all of the following does
not exceed fifty thousand dollars ($50,000) plus the amount of
shares, if any, that are pledged or will be pledged as collateral by
the official:
(i) The amount of the proposed obligation.
(ii) The outstanding balances of obligations, including the used
portion of any approved line of credit, extended to, or endorsed,
cosigned, or guaranteed by, the official.
(iii) The total unused portion of approved lines of credit
extended to, or endorsed, cosigned, or guaranteed by, the official.
(2) The obligation is approved by the board of directors if either
of the following apply:
(A) The obligation or the aggregate of obligations to the official
is in excess of twenty thousand dollars ($20,000) plus pledged
shares.
(B) The obligation is to be guaranteed or endorsed by the official
and the obligation or the aggregate of obligations guaranteed or
endorsed by the official is in excess of twenty thousand dollars
($20,000).
(4)
(3) The credit union member entering into the obligation
takes no part in the consideration of his or her application and
does not attend any committee or board meeting while his or her
application is under consideration.
(5)
(4) The names of members of the credit committee, or in
the alternative, 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 or the credit manager
to become surety for any obligation created by the credit union for
anyone other than a member of their immediate family.
(e) No credit union shall enter into any obligation with any
credit manager or any officer employed by the credit union, directly
or indirectly, unless the obligation is in compliance with all
requirements of this division with respect to obligations permitted
for other 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.
SECTION 1. Section 14000 of the Financial Code
is amended to read:
14000. This division shall be known as the "California Credit
Union Act."