12 U.S.C. § 1761b — Board of directors; meetings; powers and

Page 870 TITLE 12—BANKS AND BANKING § 1761a 1978—Pub. L. 95–630 substituted ‘‘Board’’ for ‘‘Admin- istrator’’. 1974—Pub. L. 93–495 inserted proviso relating to com- pensation in the form of health, accident, and similar insurance protection. 1970—Pub. L. 91–206 substituted ‘‘Administration’’ for ‘‘Bureau’’. 1964—Pub. L. 88–353 increased size of supervisory com- mittee from three members to not less than three members nor more than five members. 1959—Pub. L. 86–354 provided for appointment instead of election of members of supervisory committee and for filling of vacancies in such committee, and struck out former subsecs. (b) to (e) relating to officers, direc- tors, credit committee and supervisory committee. See sections 1761a to 1761d of this title, respectively. 1954—Subsecs. (b), (c). Act Aug. 24, 1954, provided ex- press authority for the Director of the Bureau of Fed- eral Credit Unions to regulate the minimum amount and character of surety bonds for officers and employ- ees. Subsec. (c). Act June 30, 1954, inserted provision with respect to interest refunds. 1949—Subsec. (d). Act Oct. 25, 1949, substituted ‘‘$400’’ for ‘‘$300’’ wherever appearing. 1946—Subsec. (c). Act July 31, 1946, struck out ‘‘fix the amount and character of the surety bond required of any officer having custody of funds’’ and inserted ‘‘require any officer or employee having custody of or handling funds to give bond with good and sufficient surety in an amount and character to be determined, from time to time, by the board and authorize the pay- ment of the premium or premiums therefor from the funds of the Federal credit union’’. Subsec. (d). Act July 31, 1946, struck out requirement that notice of meeting of the credit committee must be given by the treasurer and increased the maximum amount of an unsecured loan to a member from $100 to $300. Subsec. (e). Act July 31, 1946, inserted last sentence defining ‘‘passbook’’. 1940—Subsec. (d). Act June 15, 1940, substituted ‘‘$100’’ for ‘‘$50’’ in fourth sentence. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1978 AMENDMENT Amendment by Pub. L. 95–630 effective on expiration of 120 days after Nov. 10, 1978, and transitional provi- sions, see section 509 of Pub. L. 95–630, set out as a note under section 1752 of this title. Executive Documents TRANSFER OF FUNCTIONS Transfer of functions of Farm Credit Administration and Governor thereof, generally, see notes set out under section 1751 of this title. Functions of Governor of Farm Credit Administra- tion under this section transferred to Federal Deposit Insurance Corporation by Reorg. Plan No. 1 of 1947. § 1761a. Officers of the board At their first meeting after the annual meet- ing of the members, the directors shall elect from their number the board officers specified in the bylaws. Only one board officer may be com- pensated as an officer of the board and the by- laws shall specify such position as well as the specific duties of each of the board officers. The board shall elect from their number a financial officer who shall give adequate fidelity coverage in accordance with section 1761b(2) of this title. (June 26, 1934, ch. 750, title I, § 112, formerly § 13, as added Pub. L. 86–354, § 1, Sept. 22, 1959, 73 Stat. 632; amended Pub. L. 88–150, § 2, Oct. 17, 1963, 77 Stat. 270; Pub. L. 91–206, § 2(1), Mar. 10, 1970, 84 Stat. 49; renumbered title I, § 112, Pub. L. 91–468, § 1(2), Oct. 19, 1970, 84 Stat. 994; amended Pub. L. 95–630, title V, § 502(b), Nov. 10, 1978, 92 Stat. 3681; Pub. L. 97–320, title V, § 521, Oct. 15, 1982, 96 Stat. 1531; Pub. L. 100–86, title VII, § 704(a), Aug. 10, 1987, 101 Stat. 652.) Editorial Notes PRIOR PROVISIONS Provisions similar to those comprising this section were contained in section 11(b) of act June 26, 1934, ch. 750, 48 Stat. 1219 (formerly classified to section 1761(b) of this title), prior to the amendment and renumbering of act June 26, 1934, by Pub. L. 86–354. AMENDMENTS 1987—Pub. L. 100–86 inserted third sentence and struck out former third sentence which read as follows: ‘‘The board shall elect from their number a financial officer who shall give bond with good and sufficient surety, in an amount and character to be determined by the board of directors in compliance with regula- tions prescribed from time to time by the Board condi- tioned upon the faithful performance of the officer’s trust.’’ 1982—Pub. L. 97–320 substituted provisions relating to the officers of the board for provisions which read: ‘‘At their first meeting after the annual meeting of the members, the directors shall elect from their number a president, one or more vice presidents, a secretary, and a treasurer, who shall be the executive officers of the corporation. No executive officer, except the treasurer, shall be compensated as such. The offices of secretary and treasurer may be held by the same person. The du- ties of the officers shall be as determined by the by- laws. Before the treasurer shall enter upon his duties he shall give bond with good and sufficient surety, in an amount and character to be determined by the board of directors in compliance with regulations prescribed from time to time by the Board, conditioned upon the faithful performance of his trust.’’ 1978—Pub. L. 95–630 substituted ‘‘Board’’ for ‘‘Admin- istrator’’. 1970—Pub. L. 91–206 substituted ‘‘Administrator’’ for ‘‘Director’’. 1963—Pub. L. 88–150 struck out ‘‘, except that the treasurer shall be the general manager of the corpora- tion’’ after ‘‘bylaws’’ in fourth sentence. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1978 AMENDMENT Amendment by Pub. L. 95–630 effective on expiration of 120 days after Nov. 10, 1978, and transitional provi- sions, see section 509 of Pub. L. 95–630, set out as a note under section 1752 of this title. § 1761b. Board of directors; meetings; powers and duties; executive committee; membership of- ficers; membership application The board of directors shall meet at least once a month and shall have the general direction and control of the affairs of the Federal credit union. Minutes of all meetings shall be kept. Among other things, the board of directors shall— (1) act upon applications for membership or appoint membership officers from among the members of the credit union, other than the board member paid as an officer, the financial board officer, any assistant to the paid officer of the board or to the financial officer, or any loan officer; Page 871 TITLE 12—BANKS AND BANKING § 1761b 1 See References in Text note below. (2) provide adequate fidelity coverage for of- ficers and employees having custody of or han- dling funds according to regulations issued by the Board; (3) fill vacancies on the board of directors until successors elected at the next annual meeting have qualified; (4) if the bylaws provide for an elected credit committee, fill vacancies on the credit com- mittee until successors elected at the next an- nual meeting have qualified; (5) appoint the members of the supervisory committee and, if the bylaws so provide, ap- point the members of the credit committee; (6) have charge of investments including the right to designate an investment committee of not less than two to act on its behalf; (7) determine the maximum number of shares, share certificates, and share draft ac- counts, and the classes of shares, share certifi- cates, and share draft accounts; (8) subject to any limitations of this sub- chapter,1 determine the interest rates on loans, the security, and the maximum amount which may be loaned and provided in lines of credit; (9) authorize interest refunds to members of record at the close of business on the last day of any dividend period from income earned and received in proportion to the interest paid by them during that dividend period; (10) if the bylaws so provide, appoint one or more loan officers and delegate to these offi- cers the power to approve or disapprove loans, lines of credit, or advances from lines of cred- it; (11) establish the par value of the share; (12) subject to the limitations of this sub- chapter and the bylaws of the credit union, provide for the hiring and compensation of of- ficers and employees; (13) if the bylaws so provide, appoint an ex- ecutive committee of not less than three di- rectors to act on its behalf and any other com- mittees to which it can delegate specific func- tions; (14) prescribe conditions and limitations for any committee which it appoints; (15) review at each monthly meeting a list of approved or pending applications for member- ship received since the previous monthly meeting together with such other related in- formation as it or the bylaws require; (16) provide for the furnishing of the written reasons for any denial of a membership appli- cation to the applicant upon the written re- quest of the applicant; (17) in the absence of a credit committee, and upon the written request of a member, re- view a loan application denied by a loan offi- cer; (18) declare the dividend rate to be paid on shares, share certificates, and share draft ac- counts pursuant to the terms and conditions of section 1763 of this title; (19) establish and maintain a system of in- ternal controls consistent with the regulations of the Board; (20) establish lending policies; and (21) do all other things that are necessary and proper to carry out all the purposes and powers of the Federal credit union, subject to regulations issued by the Board. (June 26, 1934, ch. 750, title I, § 113, formerly § 14, as added Pub. L. 86–354, § 1, Sept. 22, 1959, 73 Stat. 632; amended Pub. L. 88–353, § 3, July 2, 1964, 78 Stat. 269; Pub. L. 90–375, § 1(4), July 5, 1968, 82 Stat. 284; Pub. L. 91–206, § 2(1), Mar. 10, 1970, 84 Stat. 49; renumbered title I, § 113, Pub. L. 91–468, § 1(2), Oct. 19, 1970, 84 Stat. 994; amended Pub. L. 93–383, title VII, § 723, Aug. 22, 1974, 88 Stat. 719; Pub. L. 95–22, title III, § 309, Apr. 19, 1977, 91 Stat. 53; Pub. L. 95–630, title V, § 502(b), Nov. 10, 1978, 92 Stat. 3681; Pub. L. 97–320, title V, § 522, Oct. 15, 1982, 96 Stat. 1532; Pub. L. 97–457, § 28, Jan. 12, 1983, 96 Stat. 2510; Pub. L. 100–86, title VII, §§ 704(b), 705, Aug. 10, 1987, 101 Stat. 652.) Editorial Notes REFERENCES IN TEXT This subchapter, referred to in par. (8), probably should have been a reference to this title in the origi- nal, meaning title I of act June 26, 1934, ch. 750, which is classified generally to this subchapter. PRIOR PROVISIONS Provisions similar to those comprising this section were contained in section 11(c) of act June 26, 1934, ch. 750, 48 Stat. 1219 (formerly classified to section 1761(c) of this title), prior to the amendment and renumbering of act June 26, 1934, by Pub. L. 86–354. AMENDMENTS 1987—Par. (1). Pub. L. 100–86, § 705, substituted ‘‘of the credit union’’ for ‘‘of the board of directors’’. Par. (2). Pub. L. 100–86, § 704(b), amended par. (2) gen- erally. Prior to amendment, par. (2) read as follows: ‘‘require any officer or employee having custody of or handling funds to give bond with good and sufficient surety in an amount and character in compliance with regulations of the Board, and authorize the payment of the premium or premiums therefor from the funds of the Federal credit union;’’. 1983—Pub. L. 97–457, § 28(1), substituted ‘‘direction’’ for ‘‘directions’’ after ‘‘shall have the general’’. Par. (2). Pub. L. 97–457, § 28(2), substituted ‘‘union’’ for ‘‘unions’’ after ‘‘Federal credit’’. Par. (9). Pub. L. 97–457, § 28(3), inserted ‘‘by’’ after ‘‘in- terest paid’’. Par. (15). Pub. L. 97–457, § 28(4), substituted ‘‘meeting’’ for ‘‘meetings’’ after ‘‘previous monthly’’. 1982—Pub. L. 97–320, § 522, substituted provisions re- lating to the board of directors, its meetings, powers, and duties, membership officers and membership appli- cations, for provisions which read as follows: ‘‘The board of directors shall meet at least once a month and shall have the general direction and control of the af- fairs of the corporation. Minutes of all such meetings shall be kept. Among other things they shall act upon applications for membership; require any officer or em- ployee having custody of or handling funds to give bond with good and sufficient surety in an amount and char- acter to be determined by the board of directors in compliance with regulations prescribed from time to time by the Board, and authorize the payment of the premium or premiums therefor from the funds of the Federal credit union; fill vacancies in the board and in the credit committee until successors elected at the next annual meeting have qualified; have charge of in- vestments other than loans to members, except that the board may designate a committee of not less than two to act as an investment committee, such invest- ment committee to have charge of making investments under rules and procedures established by the board of Page 872 TITLE 12—BANKS AND BANKING § 1761c directors; determine from time to time the maximum number of shares and share certificates and the classes of shares and share certificates that may be held; sub- ject to the limitations of this chapter, determine the interest rates on loans, the security, and the maximum amount which may be loaned or provided in lines of credit; subject to such regulations as may be issued by the Board, authorized an interest refund to members of record at the close of business on the last day of any dividend period in proportion to the interest paid by them during that dividend period; and provide for com- pensation of necessary clerical and auditing assistance requested by the supervisory committee, and of loan of- ficers appointed by the credit committee. The board may appoint an executive committee of not less than three directors to exercise such authority as may be delegated to it subject to such conditions and limita- tions as may be prescribed by the board. Such execu- tive committee or one or more membership officers ap- pointed by the board from among the members of the credit union, other than the treasurer, an assistant treasurer, or a loan officer, may be authorized by the board to approve applications for membership under such conditions as the board may prescribe; except that such committee or membership officer so authorized shall submit to the board at each monthly meeting a list of approved or pending applications for membership received since the previous monthly meeting, together with such other related information as the bylaws or the board may require. If a membership application is denied, the reasons therefor shall be furnished in writ- ing to the person whose application is denied, upon written request.’’ 1978—Pub. L. 95–630 substituted ‘‘Board’’ for ‘‘Admin- istrator’’ in two places. 1977—Pub. L. 95–22 substituted ‘‘and share certificates and the classes of shares and share certificates that may be held’’ for ‘‘that may be held by an individual’’ and ‘‘, the security, and the maximum amount which may be loaned or provided in lines of credit’’ for ‘‘and the maximum amount which may be loaned with or without security to any member’’. 1974—Pub. L. 93–383 inserted provisions authorizing designation of a committee of not less than two to act as an investment committee and provisions relating to denial of a membership application, substituted ‘‘one or more membership officers’’ for ‘‘a membership offi- cer’’, and substituted provisions relating to exercise of authority by the executive committee for provisions setting forth specified functions of the executive com- mittee. 1970—Pub. L. 91–206 substituted ‘‘Administrator’’ for ‘‘Director’’ in two places. 1968—Pub. L. 90–375 substituted ‘‘the purchase and sale of securities, the borrowing of funds, and the mak- ing of loans to other credit unions’’ for ‘‘the purchase and sale of securities or the making of loans to other credit unions, or both’’. 1964—Pub. L. 88–353 substituted ‘‘the last day of any dividend period in proportion to the interest paid by them during that dividend period’’ for ‘‘December 31 in proportion to the interest paid by them during that year’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1978 AMENDMENT Amendment by Pub. L. 95–630 effective on expiration of 120 days after Nov. 10, 1978, and transitional provi- sions, see section 509 of Pub. L. 95–630, set out as a note under section 1752 of this title. § 1761c. Credit committee (a) Members; meetings; lines of credit and ap- proval of loans; delegation to loan officers If the bylaws provide for a credit committee, then pursuant to the provisions of the bylaws, the board of directors may appoint or the mem- bers may elect a credit committee which shall consist of an odd number of members of the credit union, but which shall not include more than one loan officer. The method used shall be set forth in the bylaws. The credit committee shall hold such meetings as the business of the Federal credit union may require, not less fre- quently than once a month, to consider applica- tions for loans or lines of credit. Reasonable no- tice of such meetings shall be given to all mem- bers of the committee. Except for those loans or lines of credit required to be approved by the board of directors in section 1757(5) of this title, approval of an application shall be by majority of the committee who are present at the meet- ing at which it is considered provided that a ma- jority of the full committee is present. The cred- it committee may appoint and delegate to loan officers the authority to approve applications. (b) Review and reversal of loan refusals; review by board in lieu of committee; limitation on disbursements by loan officers If the bylaws provide for a credit committee, all applications not approved by the loan officer shall be reviewed by the credit committee, and the approval of a majority of the members who are present at the meeting when such review is undertaken shall be required to reverse the loan officer’s decision provided a majority of the full committee is present. If there is not a credit committee, a member shall have the right upon written request of review by the board of direc- tors of a loan application which has been denied. No individual shall have authority to disburse funds of the Federal credit union with respect to any loan or line of credit for which the applica- tion has been approved by him in his capacity as a loan officer. (June 26, 1934, ch. 750, title I, § 114, formerly § 15, as added Pub. L. 86–354, § 1, Sept. 22, 1959, 73 Stat. 633; amended Pub. L. 88–353, § 4, July 2, 1964, 78 Stat. 269; Pub. L. 90–188, § 1, Dec. 13, 1967, 81 Stat. 567; Pub. L. 90–375, § 1(5), July 5, 1968, 82 Stat. 284; Pub. L. 91–206, § 2(1), Mar. 10, 1970, 84 Stat. 49; re- numbered title I, § 114, Pub. L. 91–468, § 1(2), Oct. 19, 1970, 84 Stat. 994; amended Pub. L. 95–22, title III, § 304, Apr. 19, 1977, 91 Stat. 51; Pub. L. 95–630, title V, § 502(b), Nov. 10, 1978, 92 Stat. 3681; Pub. L. 97–320, title V, § 523, Oct. 15, 1982, 96 Stat. 1533.) Editorial Notes PRIOR PROVISIONS Provisions similar to those comprising this section were contained in section 11(d) of act June 26, 1934, ch. 750, 48 Stat. 1219 (formerly classified to section 1761(d) of this title), prior to the amendment and renumbering of act June 26, 1934 by Pub. L. 86–354. AMENDMENTS 1982—Pub. L. 97–320 designated existing provisions as subsecs. (a) and (b), in subsec. (a) as so designated, in- serted provisions relating to the membership of the committee and provisions requiring the majority of the full committee to be present for votes on lines of cred- it, struck out provision requiring each loan officer to report his action on an application in seven days of its filing, in subsec. (b) as so designated, inserted provi- sions relating to the number of members needed to re- verse a loan officer’s decision and provision for the case where there is no credit committee, and thereafter