CREDIT UNIONS

FRIDAY, JANUARY 23, 1931

UNITED STATES SENATE,

COMMITTEE ON THE DISTRICT OF COLUMBIA,

Washington, D. C. The committee met, pursuant to call, at 2.30 o'clock p. m. in the committee room, Capitol Building, Senator Arthur Capper, chairman, presiding.

Present: Senators Capper (chairman), Kean, and Carey.

The committee had under consideration S. 4775, which is here printed in full as follows:

[S. 4775, Seventy-first Congress, second session]

A BILL To provide for the incorporation of credit unions within the District of Columbia

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SHORT TITLE

SECTION 1. This act may be cited as the "District of Columbia credit union act."

DEFINITION

SEC. 2. A credit union is hereby defined to be a cooperative society organized for the purpose of promoting thrift among its members and creating a source of credit for them for provident purposes.

ORGANIZATION CERTIFICATE

SEC 3. Any seven or more persons, who are actual residents of, or do business or are employed within, the District of Columbia, and who desire to form a credit union, shall subscribe before some officer in the District competent to take the acknowledgment of deeds, an organization certificate which shall specifically state

First. The name of the corporation, which shall include the words "credit union" and " District of Columbia."

Second. The names and addresses of the subscribers to the certificate and the number of shares subscribed by each.

Third. The par value of the shares of the credit union, which shall not exceed $10 each.

Fourth. The proposed field of membership, specified in such detail as the Commissioners of the District of Columbia may require.

Fifth. The term of the credit union's existence, which may be perpetual.

POWER OF COMMISSIONERS OF THE DISTRICT

SEC. 4. The organization certificate shall be presented to the Commissioners of the District of Columbia, who are hereby authorized to approve the certificate if in the opinion of the commissioners (1) the certificate conforms to

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the provisions of this act, (2) the proposed field of membership is favorable to the success of the corporation, and (3) the character and general fitness of the subscribers is such as to give assurance that affairs of the corporation will be administered in accordance with law and for the exclusive benefit of the members.

RECORDING CERTIFICATE

SEC. 5. The certificate, if approved by the Commissioners of the District of Columbia, shall be filed for record in the office of the recorder of deeds for the District of Columbia, and shall be recorded by him. At such time as the approved certificate is so filed, the subscribers and their successors shall thereupon become a body corporate and as such shall, subject to the limitations of section 8 (relating to approval of by-laws), be vested with all the powers and charged with all the liabilities conferred and imposed by this act upon corporations organized thereunder as credit unions: Provided, That the last paragraph of section 552 of the Code of Law for the District of Columbia shall have no application to the credit unions.

SUPERVISION BY COMPTROLLER OF THE CURRENCY

SEC. 6. The provisions of sections 713 and 714 of the Code of Law for the District of Columbia, as now or hereafter amended (relating to supervision by the Comptroller of the Currency of banking institutions in the District of Columbia), shall apply to credit unions, except that the Comptroller of the Currency may relieve credit unions from compliance with any such requirements to such extent and in such manner as he deems will not prejudice the proper conduct of the affairs of such credit unions.

POWERS

SEC. 7. A credit union shall have succession in its corporate name during its existence and shall have power

First. To make contracts.

Second. To sue and be sued in its corporate name.

Third. To adopt and use a common seal and alter the same at pleasure. Fourth. To purchase, hold, and dispose of property necessary to enable the corporation to carry on its operations.

Fifth. To make loans to its members for provident purposes upon such terms and conditions as the by-laws provide and as the credit committee may approve at rates of interest not exceeding 1 per cent per month on unpaid balances, inclusive of all charges incident to the making of the loan: Provided, That no loan to a director, officer, or member of a committee shall exceed the amount of his holdings in the company in shares and deposits, nor shall any such director, officer, or member indorse for borrowers. A borrower may prior

to maturity repay his loan in whole or in part on any business day.

Sixth. To receive the savings of its members either as payment on shares or as deposits (including the power to conduct Christmas clubs, vacation clubs, and other such thrift organizations within the membership).

Seventh. To invest in the paid-up shares of building and loan associations and of other credit unions to an extent not to exceed 25 per centum of its capital, and in any investment legal for savings banks or for trust funds in the District of Columbia.

Eighth. To make deposits in national banks.

Ninth. To borrow in an aggregate oustanding amount not exceeding 50 per centum of its paid-in and unimpaired capital.

Tenth. To fine members for failure to meet promptly their obligations to such corporation.

Eleventh. To impress a lien upon the shares and dividends of any member to the extent of any loan made to him and any dues or fines payable to him.

BY-LAWS

SEC. 8. (a) The incorporators shall subscribe, acknowledge, and submit to the Commissioners of the District of Columbia proposed by-laws, and no credit union shall receive deposits or payments on account of shares or make

any loans until such proposed by-laws have been approved by the commissioners as being in conformity with the provisions of this act.

(b) The by-laws shall prescribe the purposes for which the corporation is formed, the qualifications for membership, the date of the annual meeting, the manner of conducting meetings, the methods by which members shall be notified of meetings and the number of members which shall constitute a quorum, the number of directors and the compensation and duties of officers, the number of members of the cred t committee, the fines, if any, to be charged for failure of members to meet promptly obligations to the corporation, the amount of the entrance fee, if any, to be paid, and such other regulations as are deemed necessary.

(c) Amendments of the by-laws may be adopted by a three-fourths vote of the members present at any members' meeting, but the amendments shall not take effect until approved by the Commissioners of the District of Columbia as being duly adopted and in conformity with the provisions of this act. The meeting shall be duly called for the purpose and the proposed amendments shall be set forth in the call.

MEMBERSHIP

SEC. 9. Credit-union membership shall consist of the incorporators and such other persons or organizations as may be elected to membership and subscribe to at least one share, pay the initial installment thereon, and the entrance fee, if any; except that credit-union membership shall be limited to groups the members of which are actual residents of or do business or are employed within the District of Columbia, and either have a common bond of occupation or association or reside within a well-defined neighborhood or community.

MEMBERS' MEETINGS

SEC. 10. The fiscal year of all credit unions shall end December 31. The annual meeting of the corporation shall be held at such time during the month of January and at such place as the by-laws shall prescribe. Special meetings may be held in the manner indicated in the by-laws. No member shall be entitled to vote by proxy, but a member other than a natural person may vote through an agent delegated for the purpose. No member shall, irrespective of the number of shares held by him, have more than one vote; and, after a credit union has been incorporated one year, no member thereof shall be entitled to vote until he has been a member for more than three months. All offices * of a credit union shall be in the District of Columbia.

MANAGEMENT

SEC. 11. (a) GENERAL.-The business affairs of a credit union shall be managed by a board of not less than five directors, a credit committee of not less than three members, and a supervisory committee of three members, to be elected at the annual meeting, and to hold office for such terms, respectively, as the by-laws may provide and until successors qualify; except that prior to the first annual meeting all the business affairs of a credit union shall be managed by the subscribers to the certificate of incorporation. A record of the names and addresses of the members of the board and committees and the officers shall be filed with the Commissioners of the District of Columbia within ten days of their election. No member of the board or of either committee shall, as such, be compensated.

(b) OFFICERS.-At their first meeting after the annual meeting the directors shall elect from their own number a president, a vice president, a clerk and a treasurer, who shall be the executive officers of the corporation. The offices of clerk and treasurer may be held by the same person. The duties of the officers

shall be as determined in the by-laws, except that the treasurer shall be the general manager of the corporation.

(c) DIRECTORS.-The board of directors shall have the general direction of the affairs of the corporation. They shall act upon application for membership; fix the amount of the surety bond required of any officer having custody of funds; recommend declaration of dividends; determine interest rates on loans and deposits; fill vacancies in the board and in the credit committee until successors to be elected at the next annual meeting have qualified; have charge of investments other than loans to members; determine the maximum loans other than