Raining on the H.R. 1151 Parade

The credit union industry has been celebrating the 20th anniversary of the enactment of H.R. 1151, the Credit Union Membership Access Act of 1998.

H.R. 1151 was signed into law on August 7, 1998.

While H.R. 1151 overturned the Supreme Court decision, a careful review of the law suggests that there are a number of provisions that have been a sore point for credit unions and their trade associations.

H.R. 1151 capped business lending for credit unions at 12.25 percent of assets. Before the bill was enactment, there was not a statutory cap. Over the last twenty years, credit unions and their trade associations have failed in their attempts to raise the cap.

The bill defined net worth and subjected credit unions to statutory net worth requirement and prompt corrective action. It also required complex credit unions to be subject to risk-based net worth requirements.

The bill also imposed the requirement that a well-defined community must be local. Prior to the bill, there was not a local requirement.

The bill gave credit unions the authority to convert to a mutual savings bank charter. Unfortunately, the National Credit Union Administration has erected numerous obstacles to deny credit unions the ability to exercise this authority.