WEST PALM BEACH, Fla.-The following is a round-up of credit union-related action that took place in state legislatures during their most recent sessions and is based on interviews with the respective state leagues:
Connecticut
The Connecticut legislature passed a bill making various changes to the state's banking law that affects credit unions, including: changing the reporting requirements for banks, CUs and CUSOs that outsource electronic data processing services; expanding the types of agreements the banking commissioner can enter into with CUs, CUSOs and other agencies that are insolvent or meet a determined criteria; and gives CU management the authority to require fingerprints for criminal background checks of key personnel.
The legislature also made changes to the state's foreclosure law, adding further protections for consumers.
District of Columbia
Legislators in the District of Columbia made further revisions to the District's mortgage mediation laws as the result of federal insurers pulling out of D.C. markets and citing their belief the law was written too broadly and could lead to too much litigation, according to Maryland/D.C. League represenatives.
As the mediation law stands now, all D.C. credit unions must go through some mediation process with homeowners prior to foreclosure, but must use government-approved mediators.
Hawaii
Hawaii Governor Neil Abercrombie signed into law two bills, both of which were opposed by the state league.
The state currently allows for one judicial process or two non-judicial processes on mortgage foreclosures. The new law imposes mandatory mediation for owner-occupants during the foreclosure process, and the new law places a one-year moratorium on certain non-judicial foreclosures. Consequently, some national lenders—including Fannie Mae—have said that all future foreclosures will use the judicial process. League President & CEO Dennis Tanimoto noted that this has created a backlog of court cases, with next year's legislature likely to attempt further amendments to the state's foreclosure law.
The second new law imposes a temporary suspension on Hawaii CUs' exemption from paying the general excise tax as a way to fight the state's budget deficit. The suspension is scheduled to sunset at the end of June 2013.
Idaho
The Idaho legislature passed bills relating to vehicle towing and salvage, and the governor signed into law a bill that would require notice "when a sale upon foreclosure of a trust deed on consumer residences is postponed," according to the Idaho CU League.
Illinois
A pair of CU-related bills passed both chambers of the state legislature and were sent to the governor's desk to be signed. The first would amend the Illinois Credit Union Act, including requiring an independent state Department of Financial Institutions with its own director. The second bill makes clear that counties do have the authority to invest funds with credit unions.
The Illinois General Assembly also created a task force to monitor the foreclosure issue. More than 50 bills relating to foreclosures were presented during the session, however none passed.
Iowa
Iowa Gov. Terry Branstad signed into law a House File 405, which included a provision reducing record retention liability—the amount of time before which FIs can destroy checks, records, negotiable instruments, etc.—from 11 to seven years. A bill to allow prize-linked savings made it through the Senate and out of the House committee, but stalled due to opposition from the Iowa State Bankers' Association. The legislature may revisit the topic in its next session.
Maine
Maine legislators vetoed a bill brought forward by state merchants that would have imposed Durbin Amendment-like interchange regulations at the state level and allowed different interchange fees for Maine merchants versus out-of-state merchants. Additionally, the legislature passed a bill that allows borrowers to recover court costs and attorney fees should they prevail in a foreclosure. A Truth-In-Lending bill also passed, bringing Maine's consumer credit code into conformity with federal code, including Dodd-Frank.
Maryland
A new law will go into effect in October allowing state-chartered CUs to conduct board elections with electronic balloting, but CU boards must first vote in favor of electronic balloting and amend bylaws to reflect that. Also starting October 1, any newly-purchased ATM must have a video equipment capable of recording and storing all transactional activity for a minimum of 45 days.
Massachusetts
The legislature here is in the middle of a two-year session and most bills are in the early stages. The Massachusetts CU League has testified in favor of bills that would mandate financial education in schools throughout the Commonwealth, allow interstate branching for state-chartered CUs and allow CUs to accept the deposit of public funds.
Michigan
In 2009, Michigan's legislature added a 90-day work-out period to the foreclosure process, which was planned to sunset in July 2011. During the most recent session, the legislature extended that sunset period by another six months to allow time to reanalyze the foreclosure process.
Missouri
The legislature here approved an update to the Missouri CU Act that allowed for electronic balloting for merger and charter conversion votes; lifted a $25,000 cap on loans to volunteers unsecured by mortgages or vehicles, and included new confidentiality provisions to protect information collected in CU examinations.
Montana
During its most recent session, which ended in April, the legislature expanded consumer protection to allow security freezes on credit reports for minors and incapacitated individuals to protect against identity theft. Additionally, the state's medicinal marijuana laws were amended, repealing the ability for credit unions in Big Sky Country to hold business accounts for dispensaries. The legislature also voted down an amendment to the state's concealed carry law that would have allowed licensed citizens to carry weapons into bars and financial institutions.
Nebraska
The state legislature here passed—and the governor signed—a prize-linked savings bill, which will go into effect in September.
New Jersey
Governor Chris Christie signed into law a bill that will allow CUs to serve as depositories for public monies, including funds from counties, municipalities and school boards. The legislation went into effect immediately, however the state's Department of Banking & Insurance still has to adopt the rules and make system adjustments for implementation. That process is expected to take a few months.
New Mexico
A bill to allow prize-linked savings was defeated in the legislature after the New Mexico Credit Union League withdrew its support because of changes demanded by the bill's sponsor. The league is currently working on a pilot program that will work within existing state law.
New York
The New York Assembly and Senate unanimously passed a bill—later signed by Gov. Cuomo—that establishes more rigorous guidelines for creditors serving information subpoenas, requiring them to keep records of good-faith determinations for sending such subpoenas to CUs. It also allows CUs to sue creditors that send out more than 50 information subpoenas a month without properly keeping a record. The bill was strongly supported by the CU Association of New York.
North Carolina
Both chambers of the North Carolina legislature unanimously passed a pair of bills relating to credit unions. The first allows CUs to implement prize-linked savings programs, while the second—a bill put forth by State Employees' CU—amended the state's credit union statute and insurance laws to allow a credit union to own an insurance company.
Oregon
Governor John Kitzhaber signed a bill updating Oregon's Credit Union Act. Among other things, the new law outlines new procedures for members to communicate support or opposition to CU mergers; clarifies member voting rules for mergers to maximize member participation; increases loan limits to and investment in CUSOs from 2% of assets to 5%; and clarifies requirements regarding board approval of mortgage loans to directors and senior managers.
The bill will go into effect in June 2012
Rhode Island
Governor Lincoln Chafee signed into law a bill sponsored by the CU Association of Rhode Island that streamlines and modernizes CU operations including CUSO investments, branch relocations and credit committees.
Texas
Texas Governor Rick Perry signed a law mandating Electronic Lien and Title for vehicles. CUs with more than 200 auto loans per year are affected by the law immediately; CUs with less than 200 auto loans per year must comply by the end of 2013.
Virginia
The Virginia CU League fought against bills that would have further postponed requiring high school graduates to pass a course on financial literacy. The state's CUs pressed the legislature not to delay the requirement, which is set to go into effect with 2011's incoming freshmen class.
Washington
After making it through the House, the Senate Financial Institutions, Housing & Insurance Committee considered a bill which would allow public entities to deposit public funds into federally-chartered CUs and increase the amount that can be deposited up to the maximum for NCUSIF insurance (State-chartered CUs can currently accept deposits of public funds up to $100,000). The Chair of the committee chose to wait to pursue the bill until 2012.
In other news, Governor Chris Gregoire also signed into law a measure allowing state FIs to participate in prize-linked savings promotions.
Wisconsin
Gov. Scott Walker signed into law a budget bill which included a provision making it easier for CUs to convert to a banking charter. The Wisconsin CU League lobbied hard against the provision but was unsuccessful. (See "
