April 02, 2021

NAFCU-supported bill to reform CU governance policies introduced in House

Capitol HillHouse Financial Services Committee members Tom Emmer, R-Minn., and Ed Perlmutter, D-Colo., Thursday introduced NAFCU-sought legislation that would improve existing language in the Federal Credit Union (FCU) Act related to expulsion in order to protect credit unions, members, and employees.

"NAFCU applauds Representatives Tom Emmer and Ed Perlmutter for introducing legislation that will help protect credit unions and their members from abusive, fraudulent, and criminal activity," said NAFCU President and CEO Dan Berger. "Ensuring credit unions have the ability to address illegal activity or threatening behavior at their institutions is paramount so they can continue to safely and soundly serve their members and local communities. NAFCU strongly supports this bipartisan bill, and we will continue to advocate for Congress to pass these important reforms."

Emmer and Perlmutter introduced similar legislation last year, and similar legislation was also introduced in the Senate.

As proposed, the legislation would allow credit unions to adopt an expulsion policy to expel members who engage in abusive or illegal behavior, while allowing for an appeal process that would provide due process for the accused member. 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.

It would also provide parity with several state-chartered credit unions' model or standard bylaws, which often have a "for cause" provision or board-adopted policy for expulsion.

NAFCU has long heard from credit unions that current expulsion regulations make it difficult to expel members who are physically or verbally abusive, and engaged in fraud or other illegal activities. The NCUA in September 2019 finalized a rule that clarified several bylaw provisions but took a strict reading of expulsion under the FCU Act and declined to broaden the definition of nonparticipation.