SACRAMENTO, Calif. -
Ron Fong, the California Credit Union League's director of state government affairs, said the CCUL supported the legislation, which represented the first time in 10 years the Golden State's credit union laws had been updated.
"It is an important step forward," Fong declared. "It gives credit unions the ability to operate in modern times. Some code sections were written in the 1960s and don't apply today."
According the Fong, the California Credit Union League approached State Assemblyman Ted Lieu (D-Torrance) several months ago. Fong said Lieu, the chairman of the Assembly Banking Committee, agreed the statutes needed to be updated.
The entire Assembly Banking Committee was the "author" of AB 1518, which amends the following code sections:
* Financial Codes 14750 and 14950-Nonmember Co-Borrowers: Makes several changes to explicitly allow for nonmembers to act as co-borrowers on members' loans with the credit union.
* Financial Code 14408-Credit Union Gifts/Donations: Increases the dollar threshold for board approval from $1,000 to $25,000, and allows credit unions to approve fixed amounts for broad categories of donations.
* Financial Code 14257-Confidentiality of Investigation and Examination Reports: Authorizes credit unions to share investigation and examination reports with their own attorneys and auditors.
* Financial Code 14405-Participation in Community Development Organizations: Allows credit unions to participate in additional community organizations.
* Financial Code 14453-Credit Union Executive Committees: It allows credit union executive committees to perform all duties designated by the full board of directors.
* Financial Code 14456-Board Approval of New Membership Applications: explicitly authorizes credit union boards of directors to approve reports of new membership.
* Financial Code 14807-Withdrawing from Credit Union Membership: Authorize, rather than mandate, that credit unions require 60-days' notice for a member to withdraw from membership.
"The eight code sections now meet today's operational standards," Fong suggested. "The two most significant changes are the ones relating to co-borrowers and to donations."
Strict Interpretation
Under strict interpretation of the former statute, Fong explained, a person who wanted to borrow money from a credit union could not ask his or her parents to be co-borrowers unless they also joined the credit union.
"Sometimes people live in different states than their parents, or there could be a lot of reasons why the parents might not want to join their child's credit union," he said. "For this limited purpose, a co-borrower no longer has to be a member. It saves credit unions from forcing people to join a credit union who don't want to, and from sending out statements to $5 members."
Fong said under the old code section, a credit union had to get board approval for every $1,000 charitable donation.
"That was fine for years ago, but the $25,000 threshold better reflects today's times. Credit unions make donations of more than $1,000 all the time," Fong said.
