Mich. Credit Union Reform Headed for Legislature
The Michigan Credit Union League and regulators there are formulating a bill that would give state-chartered credit unions broad field-of-membership authority.
The bill, which is expected to be introduced in the Legislature within the next month, would let credit union boards determine their fields of membership. Regulators would be able to reject requests only because of safety-and-soundness issues.
The Michigan Office of Financial and Insurance Services has privately endorsed the provision, which is similar to one included in state charters in California.
Frank Fitzgerald, the agency's commissioner, would not discuss the details of its recommendation but confirmed that it agreed with the Michigan Credit Union League on major provisions in a sweeping proposal on credit union reform.
League officials said Mr. Fitzgerald has lent his support to the proposal. "They do not want to be in the business of setting fields of membership anymore," said its chief lobbyist, Patrick LaPine.
The bill is also expected to include items that would permit all state credit unions to offer trust services and to increase their investments in credit union service organizations to 7% of capital, from 5%. They would also be able to offer secondary capital accounts, operate under multiple trade names, retain their original names after a merger, and offer some services, such as check cashing and wire transfers, to nonmembers within their fields of membership.
Mr. Fitzgerald said his agency has been working closely with the Michigan trade group over the past year to draft a proposal to modernize the credit union statute.
He added that he has been discussing the effort with representatives of the banking community to avoid confrontation between the two traditional rivals.
"I think we're going to be able to talk this issue through," Mr. Fitzgerald said. "The relationship in Michigan between the credit union world and the banking world has been a good one. I hope that we can get to the point where we're all on the same page so that the legislation can pass."
In the past year the credit union group has conducted a comprehensive review to draft what would be the first major rewrite of the statute in more than 20 years, and it has lined up sponsors in the House and Senate who have agreed to introduce a bill, according to Mr. LaPine.
The aim, he said, is to move toward more parity with the federal statute to encourage Michigan's 280 state credit unions - two-thirds of the total - to retain their charters.
But the field-of-membership provision is likely to be the big point of contention. "That's the 800-pound gorilla," Mr. LaPine said. "It will be the spark point."