Congress recently passed the omnibus funding bill which included the provisions found in HR 2311/S. 1767 which allow credit union board of directors to pass a policy to expel members for cause. The League has been working with Senator Sasse on the issue since 2019 and he introduced the bill for the first time in March of 2020. He reintroduced the bill in this Congress and it was amended to the omnibus bill, passed by Congress, and signed by President Biden.
“This law will provide parity for Nebraska federally chartered credit unions with state-chartered credit unions who have the ability to expel members that threaten the safety of credit union employees and other members,” said Scott Sullivan, President/CEO of the League. “We are grateful to Senator Sasse for introducing the Senate’s bill and to credit union advocates for providing the reasons why this bill was needed.”
The law allows:
- A member may be expelled by a two-thirds vote of a quorum of the Board of Directors for cause pursuant to a policy adopted by the National Credit Union Administration no later than 18 months after the enactment date of the Act.
- An FCU must provide the adopted NCUA policy to all members prior to using the provisions of the Act.
- FCU must provide notice by mail or electronically to expelled member.
- Member has 60 days to request a hearing before the Board of Directors. Member is expelled after the 60-day period.
- If a hearing is requested, the Board of Directors shall hold the hearing and vote in a timely manner on expelling the member.
- If the member is expelled, notification to the member is required by person, by mail, or electronically.
- An expelled member shall be given an opportunity to request re-instatement. The member can be reinstated by 1) a majority vote of a quorum of the Board of Directors 2) a majority vote of the membership present at a meeting. The FCU is not required to allow the expelled member to attend in person any such reinstatement meeting.
- Cause is defined as:
- A substantial or repeated violation of the membership agreement.
- A substantial or repeated disruption, including dangerous or abusive behavior (as defined in NCUA policy) to the operations of the FCU.
- Fraud, attempted fraud, or other illegal conduct that a member has been convicted of in relation to the FCU including credit union employees conducting business on behalf of the FCU.
- An FCU cannot expel a class of members. Only members on an individual basis.
