H-4304              _______________________________________________

                                                   HOUSE BILL NO. 1923

                        _______________________________________________

State of Washington                              50th Legislature                              1988 Regular Session

By Representatives Holm, Vekich and Grant

Read first time 1/29/88 and referred to Committee on Financial Institutions & Insurance. Referred to Committee on Trade & Economic Development 2/3/88.

AN ACT Relating to the deposit or investment of capital or surplus funds by credit unions; and amending RCW 31.12.425.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

        Sec. 1.  Section 44, chapter 31, Laws of 1984 as amended by section 7, chapter 338, Laws of 1987 and RCW 31.12.425 are each amended to read as follows:

          (1) The capital or surplus funds in excess of the amount for which loans are approved may be deposited or invested in any of the following ways, so long as the investment has not been in default as to principal or interest within five years prior to the date of purchase:

          (a) Accounts in banks or trust companies, including national banks located in this state, or other states, the accounts of which are insured by the federal deposit insurance corporation.  The deposits made by a credit union under this subsection may exceed the insurance limits established by the federal deposit insurance corporation;

          (b) Bonds, securities, or other investments that are fully guaranteed as to principal and interest by the United States government, and general obligations of this state and its political subdivisions;

          (c) Obligations issued by corporations designated under Section 9101 of Title 31 U.S.C., or obligations, participations or other instruments issued and guaranteed by the federal national mortgage association;

          (d) Participations or obligations which have been subjected by one or more government agencies to a trust or trusts for which an executive department, agency, or instrumentality of the United States has been named to act as trustee;

          (e) Shares, share certificates, or share deposits of other credit unions or savings and loan associations organized or authorized to do business under the laws of this state, other states, or the United States, the accounts of which are insured or guaranteed by the federal savings and loan insurance corporation, the national credit union administration, the Washington credit union share guaranty association, or another insurer approved by the supervisor.  The deposits made by a credit union under this subsection may exceed the insurance or guarantee limits established by the organization insuring or guaranteeing the institution into which the deposits are made;

          (f) Common trust funds whose investment portfolios consist of securities issued or guaranteed by the federal government or an agency of the government;

          (g) Up to two percent of a corporation owned by the Washington credit union league;

          (h) Shares, stocks, loans, or other obligations of an organization of which the membership or ownership is confined primarily to credit unions and the purpose of which is to strengthen, advance, or provide services to the credit union industry.  An investment under subsection (1)(h) of this section shall be limited to one percent of the total paid-in and unimpaired capital and surplus of the credit union, but a credit union may, in addition to the investment, lend to the organization an amount not exceeding an additional one percent of the total paid-in and unimpaired capital and surplus of the credit union;

          (i) Loans to other credit unions organized or authorized to do business under the laws of this state, other states, or the United States.  The aggregate of loans issued under this subsection shall be limited to twenty-five percent of the paid-in and unimpaired capital of the lending credit union; ((or))

          (j) Participation in the risk liability and income of loans or guarantees with the national cooperative bank established pursuant to the act of congress known as the national consumer cooperative bank act of 1978, and any amendments thereto.  Such loans may be made to any eligible borrower under such act of congress and may be made jointly with any financial institution, agency, instrumentality, or foundation authorized to do so under such act; or

(k) Other investments authorized in accordance with rules adopted by the supervisor consistent with this chapter.

          (2) The board may appoint an investment committee to make and manage the investments under this section.  An investment committee shall remain subject to the supervision of the board.