Iowa's CUs Seek Rule Clarification
Credit unions are asking the state legislature to clarify the parity provision in the state credit union statute purporting to put state charters here on equal footing with federal credit unions.
The issue is probably more important here than in any other of the more than 30 states with parity provisions because all but one of Iowa's 170 credit unions is state chartered.
A bill introduced in the state legislature would amend the credit union statute by ironing out ambiguities in the parity, or wildcard, provision, and do a few other things, according to Justin Hupfer, a lobbyist for the Iowa CU League.
Under the current law, the parity provision allows state charters to exercise all powers and activities exercised by federal charters "as long as it is consistent with state law." But credit union representatives worry that the state credit union supervisor has interpreted the provision to mean all powers exercised under the parity provision must be explicitly provided for in the state statute, said Hupfer. This seeming contradiction has made it difficult to get new powers for state charters, in some instances. "It essentially makes it (the parity provision) useless," he asserted.
The proposed bill would specify that state-chartered credit unions may exercise "any of the powers conferred upon federal credit unions, other than trust powers, if not prohibited" by the state statute.
The bill, which has been introduced in the House Commerce Committee, has already run into opposition by the bankers who are still holding out hope the legislature will act on their credit union tax bill, tabled last year in the first year of the two-year session. "The bankers are opposing anything that would expand our powers until they get some kind of action on their tax bill," said Hupfer.
The tax bill would apply the state's 5% corporate franchise tax to state-chartered credit unions over $100 million in assets and operating in multiple counties. Iowa is already one of only five states to tax credit unions, charging all state charters a 0.5% "Monies and Credit Tax" on legal and special reserves.
The credit union bill would also extend the examination cycle for state-chartered credit unions from once every 18 months to once every 24 months, the same cycle used for state- chartered banks.