BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 1076
                                                                  Page  1

          Date of Hearing:   May 11, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                  AB 1076 (Achadjian) - As Amended:  April 4, 2011 

          Policy Committee:                              Banking and 
          Finance      Vote:                            11-0

          Urgency:     No                   State Mandated Local Program: 
          Yes    Reimbursable:              No

           SUMMARY  

          This bill makes portions of the California Credit Union Law the 
          same as the Federal Credit Union Act.  Specifically, this bill 
          allows a credit union member who is also a member of the credit 
          union's board of directors to borrow money or have credit 
          extended if specified conditions are met and establishes that 
          obligations in excess of $20,000 must be approved by the board 
          of directors.

           FISCAL EFFECT  

          Negligible.

           COMMENTS  

           1)Purpose.   According to the sponsor, the California Credit 
            Union League, AB 1076 would establish parity between loans to 
            officials of state-licensed and federally chartered credit 
            unions by removing the tiered loan limits that have applied to 
            officials with state-chartered credit unions since the 1970s.  
            AB 1076 would replace the outdated tiered limits with language 
            identical to the limitations established by the federal Credit 
            Union Act.

           2)Background.   In the 1970s the Legislature capped the amount of 
            a loan that can be granted by a state licensed credit union to 
            a credit union member who also serves on that credit union's 
            board of directors. The loan limits are tiered based on the 
            asset size of the credit union.  While the intent to ensure 
            that board members do not receive special treatment of the 
            loan caps was good, in reality the caps have been limiting and 








                                                                  AB 1076
                                                                  Page  2

            provide a disincentive for members to serve on a 
            state-licensed credit union board. The caps have resulted in 
            many credit union board members being unable to obtain loans, 
            especially large loans such as a mortgage, even in cases where 
            they meet the same loan eligibility requirements as other 
            members. 

            Board members of federally chartered credit unions are not 
            subject to these same tiered caps that apply to board members 
            of state licensed credit unions.  Instead, the federal Credit 
            Union Act requires the board of directors of a federally 
            chartered credit union to approve or disapprove a loan of 
            greater than $20,000 to an individual official. 



           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081