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Senate Banking Committee members Tina Smith, D-Minn., and Ben Sasse, R-Neb., Thursday introduced a NAFCU-sought, bipartisan bill – the Credit Union Employee and Member Safety Act – that would improve existing language in the Federal Credit Union (FCU) Act related to expulsion in order to protect credit unions, members, and employees.

"NAFCU applauds Senators Tina Smith and Ben Sasse for introducing legislation that will bolster consumer protections at credit unions to defend their employees and their members from abusive, fraudulent, and criminal activity," said NAFCU President and CEO Dan Berger. "Ensuring credit unions have the ability to address illegal activity or threatening behavior at their institutions is paramount so they can continue to safely and soundly serve their members and local communities. NAFCU strongly supports this bipartisan bill, and we will continue to advocate for Congress to pass these important reforms."

Smith and Sasse also introduced the legislation last year; a similar bill has also been re-introduced in the House.

Currently, federal credit unions are required to hold a special vote and obtain two-thirds approval from all members in order to expel a member. The proposed legislation from Smith and Sasse would provide credit unions with flexibility and relief from unnecessary regulatory burden that puts the credit union, its members, and branch employees at risk.

Members can only be expelled for cause and it is a last-resort option credit unions can take to address a member's bad behavior. The bill defines "cause" broadly to include fraud and other illegal behavior and would provide a path for recourse by allowing the member to request reinstatement at a credit union's board of directors meeting shortly after their expulsion.

The proposed legislation would provide parity with several state-chartered credit unions' model or standard bylaws, which often have a "for cause" provision or board-adopted policy for expulsion.

NAFCU has long heard from credit unions that current expulsion regulations make it difficult to expel members who are physically or verbally abusive, and engaged in fraud or other illegal activities. The NCUA in September 2019 finalized a rule that clarified several bylaw provisions but took a strict reading of expulsion under the FCU Act and declined to broaden the definition of nonparticipation.