On January 31st a bill containing multiple credit union charter enhancements was introduced in the state Legislature to help enact positive changes for the industry. This bill, H.B. 780, represents almost a year’s worth of work of the Department of Banking and Finance and others, including the credit union charter review task force that met back in July 2017 (as well as 2016), orchestrated specifically to generate ideas for potential improvements to credit union law. This bill, introduced by Rep. Bruce Williamson (R-Monroe) includes changes for credit unions through:
- Expanding the section of law that protects the use of the words “credit union” to also include the name of a subsidiary of the credit union,
- Creating a process in law for state-chartered credit unions to utilize a federal power offered by the Federal Credit Union Act or NCUA that is presently in effect,
- Strengthening the liability language of directors to ensure that the director oath does not modify the standard of care or legal duties, or create a loophole where directors could be sued under a different standard,
- Outlining in law the ability to protect the ability of credit unions to hold, purchase or fund life insurance plans on any of the directors, officers, employees or others deemed as such that their death would cause a financial loss to the credit union,
- Placing protections in law for credit union director emeritus positions to ensure that they are not subject to liability standards for directors, and outlining in law the ability to create these roles, and
- Removing regulatory burdens for credit unions by eliminating the current requirement in law that all loans to employees of the credit union must be reported to the board of directors (the requirement would still hold for officers, directors, and committee members).
Our thanks to all the credit unions on the task force and the Department of Banking and Finance for this effort to craft ideas for charter improvements. After productive work and dialogue between the task force, GCUA and the Department, we are pleased to see the direct output of those meetings incorporated in this bill to reduce compliance burdens and improve the operational environment for credit unions. However, this bill is at the initial phases with a long road ahead to (hopeful) final passage. Much work will be put forth through the session to ensure that the bill moves forward with the credit union provisions intact.
