Removing Barriers Blog

State Legislatures Convene with Credit Union Charter Enhancements on Agenda
Posted January 08, 2017 by CUNA Advocacy

Legislatures in 17 states convened this week and lawmakers were met with bills that would provide credit unions with the with the clarity, flexibility and powers to effectively serve their members.

The Montana League successfully introduced a prize-linked savings (PLS) measure, S 25. If enacted, Montana credit unions will be permitted to conduct savings promotions in which a minimum deposit in an amount predetermined by the financial institution qualifies for a chance to win prizes. Carin McClain, Political Advocacy Director at the Montana League, testified in support of the measure on Thursday. PLS programs are expressly permitted in 22 other states.

A bill that would permit credit unions to accept public deposits was introduced in New York this week. State and local governments deposit billions of dollars in financial institutions, primarily in banks and if S 286 is passed and signed, New York credit unions would be permitted to accept those deposits as well.

The New York Legislature is also considering a measure, S 436, that would allow credit unions to participate in the state’s Excelsior Linked Deposit Program, which encourages financial institutions to make affordable loans to small companies that have limited access to capital at affordable lending rates. To induce an institution to charge a participating company a lower interest rate, the State “links” a deposit, usually in the form of a certificate of deposit, to a business loan at a participating institution.

Across the country in Washington, lawmakers will return to a bill, H 1053, that would authorize credit unions to create audit committees in lieu of supervisory committees. Supervisory committees are unique to credit unions and have voluntary members that are separate from credit union boards. The key role of supervisory committees is to perform the audit function of credit unions. Because boards have the fiduciary duty to credit unions, many appoint audit committees of the board to perform the audit function as well. This change would reduce the redundancy of having two committees perform the same function. The bill also clarifies the grounds for calling a special membership meeting.

Also this week, a data security measure, A 180, was introduced in New York. The bill would require entities to disclose breaches within five days of discovery. Legislation regulating transportation network companies, H 130 and S 185, was introduced in Missouri as well.