Removing Barriers Blog

CUNA State Government Affairs 2015 Year End Review
Posted December 17, 2015 by CUNA Advocacy

2015 has been a momentous year for us in State Government Affairs! In January we were aligned with our colleagues in Regulatory and Federal Legislative Affairs to form the Advocacy Team. Under the leadership of Chief Advocacy Officer, Ryan Donovan, we have we have tracked and monitored nearly 2000 credit union related bills and over 140 regulations. We’ve also engaged with credit unions, leagues, state lawmakers and stakeholders to protect and promote credit unions in exciting ways. 

Credit Union Act Modernizations

Credit union act modernizations were in full swing this session with updates to state credit union charters in Illinois, Montana, New Hampshire, North Carolina, Oregon, Washington and Virginia. These updates will provide credit unions with increased flexibility and powers to better serve members.

The Illinois Credit Union League-championed an enacted bill, H 2477, that amends a state rule to mirror changes made recently by NCUA that removes an appraisal requirement when renewing, refinancing, or restructuring an existing loan, provided that no new monies are advanced other than funds necessary to cover reasonable closing costs, or there has been no obvious material change in the market conditions or physical aspect of the real estate that threatens the adequacy of the credit union’s real estate collateral protection after the transaction, even with the advancement of new monies. 

In Montana two credit union act updates championed by the Montana Credit Union Network were enacted. H 550 adds definitions and updates to conflicting language on supervisory and credit committees; removes a restriction on loans to employees at favorable rates; includes additional investment options; clarifies merger requirements; revises account verification; and expands the regulator’s rulemaking authority. S 53 clarifies Montana credit union board of director duties and adds a financial literacy component.

A bill that reorganizes and updates New Hampshire’s Credit Union Act was enacted. The legislation, S 188, clarifies and modernizes the application procedure for establishing a new credit union; provides more advantageous parity provisions; establishes new standards for directors and officers; and creates new articles on meetings, branching, and mergers. The Cooperative Credit Union Association (CCUA) vigorously advocated for the measure and worked closely with the New Hampshire Banking Department to ensure state credit unions have a streamlined framework to operate.

In North Carolina, a modernization measure, H 511, permits credit unions to offer escrow accounts upon a ruling by NCUA and clarifies that credit unions can invest in higher education bonds and reimburse directors for reasonable expenses.

A Northwest Credit Union-backed update to the Oregon credit union act was also enacted this summer. The legislation, S 582, permits Oregon state chartered credit unions to compensate directors, removes the membership share requirement for state chartered credit unions, clarifies that foster children are eligible for membership and removes the requirement that the state regulator approve new credit union branches.  

The Northwest Credit Union Association also successfully backed bills in Washington. Senate 5757 addresses credit unions’ corporate governance and investments and S 5300 updates the regulator’s enforcement powers regarding credit unions and CUSOs.

The Virginia Credit Union League successfully enacted S 875, removes the regulators oversight of the placement of credit union automated teller machines.

State Tax Battles

Over the last year, credit unions have faced state tax battles in several states, including Alaska, Illinois, Iowa, Michigan, New Jersey, New Mexico, Vermont and Washington. While no legislation taxing credit unions has been introduced, the battles come in the form of legislative proposals, media stories (earned and paid) and research studies. Joined with the Leagues, we have vigorously responded to these attacks with state action alerts, advertisements, research studies and media responses.


With a coalition of state leagues, we coordinated a targeted and aggressive response to an effort by the retail industry to organize a letter from state attorneys general urging the nation's largest card issuers to speed up chip-and-PIN implementation. Alongside a number of electronic payments stakeholders, we sent a letter to the attorneys general urging them to refrain from signing the letter, and to withhold any support for the retailers’ claims. The letter also reiterated that mandating the use of PIN technology would far from eliminate fraud or single-handedly secure the payments system. When the AG letter was finally sent, it carried only nine of a possible 56 AG signatures.

Transportation Network Company Legislation

Another challenge to credit unions arose from Transportation Network Companies (TNCs). TNCs operate a platform that connects independent drivers, generally using their personal vehicles, to passengers through the use of a mobile application or website. Because TNC drivers are not employees and the vehicles they operate are not owned by the TNC, legitimate concerns exist with respect to whether or not TNC drivers are appropriately insured through all phases of operation.

Credit unions’ interest in TNC operation relates to their role as lienholders on vehicles that could be used by TNC drivers. If not properly insured, credit unions are exposed to losses. To prevent losses, advocates sought the inclusion of language in TNC bills that requires drivers to maintain insurance coverage through all aspects of TNC operation. Bills were introduced in over 40 states and TNCs were resistant to any changes to legislation. Despite the resistance, advocates in the majority of the 26 states that enacted bills were able to insert language that would protect credit unions. Among the protections inserted are requirements that drivers notify credit unions and other lienholders that they are using the vehicle while working for TNCs; requirements that TNCs make drivers aware of their responsibility to be properly insured; and language permitting credit unions to force place insurance to protect their collateral.

We became engaged in the TNC issue early in the session and served as a clearinghouse for expertise, guidance and information regarding TNCs. We also wrote a comment letter expressing credit union concerns to the Federal Trade Commission (FTC) in advance of the agency’s workshop discussing TNCs and other sharing platforms.

Prize-Linked Savings Expansion

This session Arkansas, Illinois, Minnesota, Oregon and Virginia authorized credit unions to sponsor prize-linked savings programs. Other states with prize-linked savings programs are Michigan, Rhode Island, Maine, Washington, North Carolina, Nebraska, Maryland, Connecticut, Indiana and New York.

Interchange Battle

Over the past decade, retailers have made numerous unsuccessful attempts to advance state bills prohibiting interchange fees on state, local and district taxes. During the 2015 session, similar bills were introduced in Arkansas, Colorado and Nebraska and because of our efforts, and that of the the leagues, the measures failed. We worked within a coalition of other financial industry organizations and stakeholders to provide advocacy materials to league staff, who then testified in opposition to these bills and lobbied lawmakers to ensure the measures failed. 

The proposals were rejected in part due, legal deficiencies and operational hurdles. If enacted, credit unions and other financial institutions would have faced increased expenses and the burden of developing systems to distinguish portions of transactions that are eligible and ineligible for interchange fee collection.

Model Credit Union Act Updated

Many leagues relied on CUNA’s Model Credit Union Act as a resource and guide for potential legislative proposals. The Model Credit Union Act serves as a model for all state credit union acts and has been drafted in a general way to allow for specific editing by advocates in various states. The Model Credit Union Act was updated in July to provide greater flexibility for credit unions.

CUNA and League Staff Engage State Lawmaker Organizations

At this year’s Legislative Summit of the National Conference of State Legislatures (NCSL) in Seattle, the Northwest Credit Union Association joined us, the American Association of Credit Union Leagues (AACUL), CUNA Mutual Group, Washington state credit unions and other leagues to raise the awareness of credit unions through marketing and local media outreach.  At the summit, over 900 state legislators representing all 50 states and more than 4,000 other attendees had an opportunity to hear about various credit union issues, including dual chartering, transportation network company insurance, payday lending and data security.  Many of them engaged with us and league staff at the America’s Credit Unions’ exhibit booth.

At the American Legislative Exchange Council’s (ALEC) Annual Meeting in July, we joined 1,300 other attendees as they heard from presidential candidates, Mike Huckabee and Ted Cruz and former candidate Scott Walker.  We also engaged with lawmakers as members of the Commerce Insurance and Economic Development Task Force (CIED) and the Tax and Fiscal Policy Task Force. We also met with lawmakers at ALEC’s Spring Meeting and States and Nation Summit.