BILL NUMBER: AB 1076 AMENDED
BILL TEXT
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, 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 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
, 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, 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
the that any obligation to
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 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: yes.
State-mandated local program: 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"
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
, 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 and , (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, not fully secured by
shares or certificates for funds unless all of the
following requirements are satisfied:
(1) The obligation is approved by the credit committee, or in the
alternative the credit manager, 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.
(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).
(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
(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, 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
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 ,
directly or indirectly, 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.