Removing Barriers Blog

Arizona Approves Director Compensation and PLS; Michigan CU Act Recodification Nears Completion
Posted May 20, 2016 by CUNA Advocacy

Arizona recently became the ninth state to enact a credit union act modernization this year. Among the new credit union powers in H 2471 is the authority to compensate directors. Due to the increasing size and regulatory complexity of credit unions, their boards are more important than ever. Many credit unions have therefore been considering expanding board compensation, to ensure they have the most competent directors at the helm.

This modernization bill also permits credit unions to hold saving promotions raffles (also known as prize-linked savings programs,) and grants state-chartered credit unions parity with federal credit unions by removing the 5% cap on fixed assets.

A credit union act modernization is also on the brink of enaction in Michigan, as the Senate unanimously passed an extensive update to the state’s act. The six-bill package amends the Michigan Credit Union Act in a dozen ways, including:

  • Authorizing credit unions to offer trust services through a CUSO
  • Eliminating cap on fixed assets for strongly capitalized credit unions
  • Protecting against enforcement of examiner "best practices"
  • Creating the Credit Union Regulatory Fund, which protects state exam fees
  • Allowing ability to offer loan promotions and provide prize incentives for refinancing loans
  • Reducing number of required board meetings to 6 times a year
  • Allowing anyone to serve as a co-signer, co-borrower or guarantor of a loan
  • Permitting pre-payment penalties for commercial loans

The bills will now return to the House for concurrence. The original package was easily approved by the House earlier this session.