ST. LOUIS, Mo. -
The bill is the result of more than six months of negotiations between banks and credit unions and clarifies geographic (or community) fields of membership.
"What credit unions gave up are statewide fields of membership," said Peggy Nalls, SVP-public and legislative affairs at the Missouri Credit Union Association. But what they gained, she said, far outweighs what they lost.
"The legislation includes language about the purpose of credit unions. A lot of legislators said they didn't understand the difference between credit unions and banks," Nalls related. "It also gets rid of the language [about community charters] that caused all the lawsuits."
Bankers had sued over 10 different credit unions' community FOM expansions that had been approved by the state regulator using legislation that had been based on the federal CU Membership Access Act, using such vague terminology as "rural communities," for example.
In addition to the 10 CUs involved in the pending suits, another five credit unions' applications for FOM expansion have been in a holding pattern awaiting the outcome of those cases, said MCUA's Amy McLard.
One of the most visible of those lawsuits was over Telcom CU's request to serve nearly 800,000 people in the 417 area code (for a full list of Missouri credit unions involved in banker lawsuits over FOM, see sidebar).
"We had credit unions that were at risk because of the lawsuit. Essentially it negated our field of membership laws, it gutted them," Nalls explained. "If there was no legislative fix in this session, then some of our credit unions may have been forced to roll back their fields of membership."
The new legislation allows geographic-based fields of membership based on counties. A credit union can expand throughout the county in which its headquarters is located, as well as the counties contiguous to that county.
"Most credit unions actually come out ahead," McLard offered. More importantly, the grandfather clause should clean up the pending lawsuits, Nalls suggested.
"We discussed settlement of the lawsuits but agreed that we didn't want to muddy the waters of the legislative process with that, so we agreed we would work on the legislation and wait for the session to end and then settlement discussions can begin," she explained. "We believe the grandfathering included in the legislation sets the stage for settlement."
An added plus: the new legislation more narrowly defines when banks can sue.
"We're happy that we can now redirect our resources and efforts to supporting credit unions in doing what they do best-serving members," said Rosie Holub, MCUA CEO.
Another aspect of the bill that is expected to become law is that the state will closely follow NCUA's lead on membership data gathering.
Blunt had 15 days from the receipt of the bill to either sign it or veto it. If he does not sign it or veto it, it becomes law by default, but MCUA said the governor has indicated he intends to the sign the bill, and Nalls said she is working on putting together a signing ceremony to commemorate the occasion.
CREDIT UNIONS DEFINED
ST. LOUIS-The new statute defines a credit union as: "a not-for-profit corporation organized for the purposes of encouraging thrift among its members, creating a source of credit at a fair and reasonable rate of interest, providing for the mutual benefit and general welfare of its members with the earnings, savings, benefits, and services being distributed to its members, for financial and financially-related services, and for an opportunity for its members to improve their economic and social conditions"
CUS INVOLVED IN FOM LAWSUIT
Alliance Credit Union
Central Communications Credit Union
CU Community Credit Union
First Community Credit Union
First Financial Credit Union
Neighbors Credit Union
South Community Credit Union
TelComm Credit Union
United Community Credit Union
Vantage Credit Union
