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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
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
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
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
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
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.
Champion for the Credit Union Movement
Credit Union National Association is the most influential financial services trade association and the only national association that advocates on behalf of all of America's credit unions. We work tirelessly to protect your best interests in Washington and all 50 states. We fuel your professional growth at every level and champion the credit union story at every turn.
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