What is the Federal Credit Union Act?

The Federal Credit Union Act, also known as the Federal Credit Union Act of 1934, is a federal law that governs the operations and activities of credit unions. Credit unions are financial institutions, owned by members and organized around a common bond such as a group of employees of a single employer, neighborhood, or religious affiliation. The law was enacted to put regulations in place in order to protect members of the credit union from predatory lending practices and help ensure the safety and soundness of credit union operations. The Federal Credit Union Act gives the National Credit Union Administration (NCUA) the authority to grant charters to credit unions, set rules for credit union operations, and examine credit unions for compliance with the rules. It also provides for federal deposit insurance and other consumer protection services. NCUA enforced the Federal Credit Union Act in Delaware until June 30, 2019 when the Delaware State Credit Union Administration (DSCUA) took over enforcement. The Federal Credit Union Act also sets the minimum standards that credit unions must meet in order to remain in good standing. This includes having a valid Board of Directors, adopting and following member policies and regulations, and filing timely financial reports with the NCUA. Credit unions in Delaware must also have a minimum net worth requirement and meet specific capital requirements. Additionally, the law prohibits credit unions from making loans for more than a certain percentage of the total value of the property they are securing. The Federal Credit Union Act has been amended several times since its enactment, most recently in 2019 with the Economic Growth, Regulatory Relief, and Consumer Protection Act. The amendments provide more flexibility to credit unions, helping them better serve their members and stay competitive with banks and other financial institutions.

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What is the Federal Credit Union Act?

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