A bill that could lead to substantial field of membership restrictions on state-chartered credit unions in Kansas has overwhelmingly passed the state Senate and is headed to the House.
The Kansas Bankers Association introduced the legislation, which would limit the geographical area that could be served by a single credit union as well as create regulatory standards for branching, mergers, and field of membership changes. The bill was extensively amended before its approval by a Senate committee to reflect language agreed upon by the Kansas Credit Union Association.
If the bill becomes law, nine state-chartered credit unions would immediately be required to restrict their current geographical fields of membership.
The bill passed the Senate by a 35-2 margin on Wednesday.
Marla Marsh, the president of the state credit union association, said she expects the legislation to get a hearing in the House this week.
The banker-proposed initial version of the bill was "very, very restrictive," Ms. Marsh said, comparing the field of membership sections to the original Federal Credit Union Act. "We sat down and worked on compromise language."
Kansas' bankers were hailing the Senate's passage of the bill. The Kansas Bankers Association said legislators recognize that some credit unions are abusing the "common bond" basis for membership. Some have claimed all of Kansas as a "neighborhood," the association said.
"We don't have a problem with a credit union that says we're going to have state employees be our common bond group, and they could have state employees in all 105 counties," an association spokesman said. "Where we have a problem is when they say the common bond is the entire geography of the state."
