Credit unions.

The California Credit Union Law (CCUL) provides for the licensure and regulation of credit unions by the Commissioner of Financial Protection and Innovation and makes a willful violation of that law a crime. The law prohibits a member of the board of directors, supervisory committee, or credit committee from receiving compensation for services as a member of the board of directors or those committees, subject to an exception for reasonable health, accident, and similar insurance and specified expense reimbursement. Existing law requires credit unions to obtain a bond or insurance coverage for each director, officer, supervisory committee member, and employee, among others, of the credit union. This bill would prohibit a member of the audit committee from receiving compensation for services as a member of those committees. The bill would require credit unions to obtain a bond or insurance coverage for an audit committee member. The Nonprofit Mutual Benefit Corporation Law prohibits a credit union from expelling a member without providing that member a fair and reasonable process, as specified. The CCUL authorizes the board of directors of a credit union to expel a member for specified causes, including conviction for a criminal offense involving moral turpitude, unless the bylaws of the credit union expressly reserve that duty to members and entitles an expelled member to appeal the expulsion to the members, as specified. Existing law authorizes the board of directors to delegate the power to expel members to the chairperson of a membership committee or an executive committee, as specified. This bill would authorize the board of directors to expel a member for abusive, threatening, or harassing behavior toward credit union staff, volunteers, or members, or the abuse of credit union systems or property and would authorize that expulsion to take effect immediately and without advance notice or an opportunity to be heard, if the board of directors or its designee determines that immediate expulsion is reasonably necessary for the protection of the credit union or its staff, volunteers, or members. The bill would require a member expelled in that manner be provided written notice within 5 days after the effective date of that expulsion and would entitle the member, and a member expelled by the board of directors for any of the other specified causes, to appeal that expulsion to the board of directors pursuant to reasonable procedures adopted by the board that meet a certain minimum standard. The bill would define a membership committee for purposes of acting on applications for new membership and expelling members for cause. The bill would provide that this process is fair and reasonable for purposes of the Nonprofit Mutual Benefit Corporation Law. Existing law authorizes the board of directors of a credit union to establish an audit committee in lieu of a supervisory committee, and an audit committee that meets specified requirements is deemed to satisfy certain provisions relating to a supervisory committee. Existing law prescribes procedural requirements for the establishment of an audit committee, prescribes requirements for its membership, and requires that an audit committee carry out specified responsibilities. This bill would prescribe the means by which a membership vote for establishing an audit committee may be satisfied and additional requirements for the subsequent dissolution of a supervisory committee. The bill would authorize an audit committee member to be appointed or removed by the board of directors, as specified, and would authorize the Commissioner of Financial Protection and Innovation to direct removal of audit committee members, as specified. The bill would identify additional responsibilities for an audit committee. The CCUL authorizes a credit union to purchase a promissory note upon which a member is the primary obligor, authorizes a credit union to issue shares to specified entities, and prohibits a credit union from entering into any loan or approved line of credit, including both used and unused portions, on which the official is a borrower, coborrower, cosigner, endorser, or guarantor with an official, as defined, of the credit union. This bill would revise and recast those provisions, including by repealing the authorization to purchase a promissory note upon which a member is the primary obligor and would authorize a credit union to issue shares to a member or nonmember state or federal credit union. The CCUL authorizes a member to withdraw from membership in the credit union at any time, as specified, and authorizes a credit union to transfer a member who has no outstanding obligations with the credit union and whose share account is below the amount established by the bylaws to inactive status. This bill would authorize a credit union to deem an inactive member to have withdrawn from membership, subject to specified notice and other conditions. By expanding the scope of the crime of willfully violating the provisions of the CCUL, this bill would create a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.