A league president and six credit union CEOs testified before the Massachusetts state legislature about legislation aimed at making state-chartered credit unions more competitive and allowing CUs to receive public funds, the Cooperative Credit Union Association announced today.
The CU leaders testified before the state’s Joint Committee on Financial Services about a credit union modernization bill and public funds authority legislation.
An Act Modernizing the Credit Union Laws (Senate 577/House 2966) would allow the Massachusetts Commissioner of Banks to recognize the credit union low-income designation for state-chartered credit unions. An Act Relative to Public Funds (Senate 587/House 2956) would allow municipalities and government to place public funds in state- and federally chartered CUs.
“I think smart lawmakers want a competitive chartering system,” said Paul Gentile, president and CEO of the Cooperative Credit Union Association, the state league which represents credit unions in Massachusetts, New Hampshire, Delaware and Rhode Island. “We should have a strong state charter system and federal charter system. We are modernizing the state charters to be more reflective of the times that credit unions are doing business in.”
The Association and CU leaders have done “all the backwork” with the committee so lawmakers are familiar with the needs related to the bills’ provisions, Gentile said. The league president expects the legislation to be voted on next year.
Two panels of member credit unions delivered the Association’s oral testimony on the modernization bill and public funds bill.
Advocates for the modernization legislation included:
· Paul Gentile, president and CEO of the Cooperative Credit Union Association;
· Robert Cashman, CEO of Chelsea-based Metro Credit Union;
· Michael Ostrowski, president and CEO of Springfield-based Arrha Credit Union; and
· Bernie Winne, CEO of Dorchester-based Boston Firefighters Credit Union.
Advocates for the public funds bill included:
· Paul Gentile, president and CEO of the Cooperative Credit Union Association;
· Lloyd Hamm, CEO of Grafton-based Homefield Credit Union;
· Ed Lopes, CEO of Braintree-based Liberty Bay Credit Union, Braintree; and
· Glenn Welch, president and CEO of Springfield-based Freedom Credit Union.
Michael Ostrowski, president and CEO of $131 million Arrha Credit Union, testified on allowing technological advances; increasing transactional authority for chartering and merging credit unions; and increasing in state authority for low-income designation.
“A top priority of Arrha Credit Union is to be able to fully utilize today’s advances in technology,” Ostrowski said, according to a press release from the CU. “We are not allowed to offer electronic loan applications, along with other credit unions. Our members want technological convenience in today’s advanced electronic world. Also, mail was meaningful during the time this law was enacted; however, today’s electronic voting has largely taken the place of mail ballot voting, and is more easily accessible for members to actively participate in our governance. Such technological advances will provide convenience, time-saving opportunities, and cost-saving opportunities. It is important for Arrha Credit Union to stay as technically advanced as possible to best serve our membership and communities.”
CUs given the “low income designation” have at least half of their member base made up of members who have a family income of 80% or less than the median family income for the metropolitan area where they live or national metropolitan area, whichever is greater.
This authority will allow CUs to get grant money for additional staff training, for creating new products that better serve a low-income base and other improvements.
Low-income designated CUs will also be able to be recognized faster and easier for credit for Community Reinvestment Act purposes.
“Arrha Credit Union is considered a low-income designated credit union and has used its low-income designated in the area of auto lending with 100% loan-to-value ratios, which allows us to better and more timely serve our members,” Ostrowski said, according to the release. “It is clear that values and general banking business dynamics change very quickly in this day and age; as a result, it is necessary that our laws are also kept up-to-date, modernized, with today’s needs.”
