ST. LOUIS -
MCUA CEO Rosie Holub testified before Missouri's State Senate Committee on Financial Institutions, Government Organizations and Elections. She said the president of the state Senate and the chairman of the committee worked to bring bankers and credit unions together to gain resolution on FOM lawsuits that "have been going on since 2000."
A 2006 court decision struck down a rule that had been used by Missouri's Credit Union Commission to define geographic area designations. In the 12 months since the ruling, Holub said the state's CUs have been unable to expand.
"These lawsuits are costly for credit unions," Holub said. "And, because credit unions have no ability to issue stock and can raise additional capital only through expansion, the ruling means the only solution is a legislative solution-which is what we are attempting now."
If legislation fails, Holub said state-chartered CUs may have to consider a switch to a federal charter, which would result in a loss of tax income for Missouri. "Or, they would have to be content with the field of membership they had prior to the lawsuits," she said.
The recent state senate hearing reviewed provisions of Senate Bill 591, which was introduced Feb. 26. Holub was cautiously optimistic, but warned the Missouri CU Association would have to keep a close watch as the bill makes its way through both houses.
"We feel the geographical area definitions-as proposed-can be administered by the regulator without lawsuits," she appraised. "The clarity is there, so there should be no entrée for a lawsuit. Of course, 'should be' and 'could be' are different."
According to Holub, the bankers at the hearing didn't agree with provisions imiting banks' ability to challenge FOM expansion, however both sides agreed on the bill's other provisions, including a definition of a county as a geographic area, and contiguous service areas. Next up for SB 591: a floor substitute bill, which allows legislators to address any language or drafting errors. When all technical amendments are complete, Holub said it will be placed on the floor calendar for the senate. If it passes the senate, it will go to the house for approval. If it passes the house, it will go back to the senate for final approval and reconciliation of any amendments.
"We have to remain very vigilant as it passes the legislature," Holub said. "If it is altered in the house, it would affect our ability to support the bill."
