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Credit Union Common Bond Ruling: NCUA v. First National Bank

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On February 25, 1998, the Supreme Court ruled that federal credit unions may not consist of more than one occupational group having a single common bond. On April 1, the House passed H.R. 1151 (H.Rept. 105-472), which grandfathers existing credit unions and sets standards for future multi-group credit unions. On July 28, the Senate passed an amended version (S.Rept. 105-193), which became P. L. 105-219, having been passed by the House on August 4. It preserves existing multiple group, occupational common bond credit unions and restricts the initial size of a group having that may be added to a credit union that has a different common bond. It includes Senate Banking Committee amendments limiting credit union commercial loans and establishing standards for prompt corrective action.

It makes no changes in the tax-exempt status of credit unions. Although the House Banking Committee version contained provisions similar to the Community Reinvestment Act requirements imposed on other federally insured depository institutions, these were deleted in the Senate by a floor amendment sponsored by Senator Gramm.


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