WASHINGTON–The credit union-backed Credit Union Governance Modernization Act has been included in the omnibus package of bills unveiled by House leadership on Wednesday morning.
The House also released a short stopgap funding extension through March 15th, giving the Senate additional time to clear the larger package. Both measures are expected to clear the House today and be considered by the Senate later this week.
The CU Governance Modernization Act, sponsored by Reps. Tom Emmer (R-MN) and Ed Perlmutter (D-CO) would update the member expulsion process.
The legislation was first introduced in 2020. Currently, federal credit unions are required to hold a special vote and obtain two-thirds approval from all members in order to expel a member. The proposed legislation would provide credit unions with flexibility and relief when it comes to expelling a member, according to the credit union trade groups, including members who are engaging in fraudulent or illegal activities or conducting physical or verbal abuse.
“We thank House leaders for including this bipartisan update to the Federal Credit Union Act in the omnibus package, and to Reps. Emmer and Perlmutter, as well as Sens. Tina Smith (D-MN) and Ben Sasse (R-NE) for their work on this bipartisan issue,” said Jim Nussle, CUNA president/CEO, in a statement. “This and other Federal Credit Union Act modernizations are essential to ensuring credit unions can continue to meet the needs of 21st-century consumers.”
The House is expected to vote on the omnibus bill today.
As CUToday.info reported earlier, the Credit Union Member Governance Modernization Act passed the House Financial Services Committee in November, 2021, and a bipartisan Senate version was introduced in May 2021 by Smith and Sasse.
NAFCU Response
"NAFCU applauds Congressional leadership for advancing the Credit Union Governance Modernization Act and commends Senators Tina Smith and Ben Sasse and Representatives Tom Emmer and Ed Perlmutter for their leadership on this issue and continued efforts to further protect credit unions,” said NAFCU Vice President of Legislative Affairs Brad Thaler. “This important legislation will ensure safeguards for credit unions dealing with members who engage in illicit activity that endangers credit union staff and members by allowing federal credit unions establish procedures for expelling members, rather than requiring a member vote.
“NAFCU and our credit union members have pushed hard to advance this bill that provides fundamental reforms for the credit union expulsion process we stand ready to help enact this legislation,” concluded Thaler.
In addition, NAFCU noted the omnibus bill contains the Adjustable Interest S Rate (LIBOR) Act introduced by Rep. Brad Sherman (D-CA), which would provide clear guidance and a consistent federal standard for contracts with interest rates transitioning away from the London Interbank Offered Rate (LIBOR) index for financial products – which ends June 2023.
The legislation would direct the Federal Reserve to determine replacement rates that can be used for contracts lacking fallback language by providing a safe harbor should the contract not specify a non-LIBOR replacement rate, NAFCU said.