Removing Barriers Blog

Leagues Continue to Seek State Credit Union Act Improvements
Posted February 26, 2016 by CUNA Advocacy

As in the first month of the legislative session, credit union act modernization bills were introduced in multiple states this month. A charter reorganization bill was introduced in Alabama, and a bill in California would give credit unions new organization options. Also, a Colorado bill would permit credit union directors to be compensated and an Illinois measure would allow for formation of network credit unions.

The League of Southeastern Credit Unions is championing S. 209 in Alabama, which would increase the efficiency and effectiveness of Alabama’s state chartered credit unions. Some of the measures include updated investment language, a streamlined credit committee, additional parity provisions, and increased protections.

Similarly the California Credit Union League is spearheading a credit union act modernization bill (A. 2274) that would:

  • Allow member business loans to exceed a member's deposits;
  • Eliminate board approval of membership applications;
  • Allow an audit committee in lieu of a supervisory committee;
  • Permit non-members to act as the co-borrower, surety, or guarantor of a loan made to a member;
  • Clarify the rules regarding loans to credit union officials;
  • Provide flexibility for credit union director meetings; and
  • Remove unnecessary loan documentation requirements.

A bill in Colorado (S.125) would also give credit unions new powers by permitting credit unions to substitute an audit committee for supervisory committee and granting them authority to compensate directors. 

In Illinois, a bill that allows merging credit unions to form network credit unions (H. 5755) was introduced.  The legislation defines a network credit union as a cooperative business structure comprised of 2 or more merging credit unions with a collective goal of efficiently serving their combined membership and gaining economies of sale through common vision, strategy and initiative.