The credit union lobby is bracing for a legislative onslaught this week when representatives from the Vermont Bankers Association testify before the state legislature on a bill to reform the state's credit union statute.
The bill would modify the state's 40-year-old credit union law by allowing state-chartered credit unions to engage in business lending for the first time, to branch across state lines, and by clarifying the parity, or wildcard, provision in the statute allowing state charters to do anything that federally chartered credit unions can do upon notification to the Department of Banking, the chief credit union regulator.
"It's really a clarification and modernization of the language to put state charters on equal footing with the federal law," said Joseph Bergeron, president of the Vermont CU League. "Most legislators recognize that if we don't have parity with federal law than we won't have state charters."
The bill, which was drafted by the banking department, would also set up a provision expressly allowing CU Service Organizations, or CUSOs, for the first time. While several state charters in Vermont operate CUSOs, there is no defined allowances in the state statute.
The proposal would also amend several provisions covering credit union governance, like authorizing a subset, an executive committee, of the board of directors to meet and make policy on behalf of the whole board.
The bill is scheduled to be heard by, then voted by the House Commerce Committee this week.
Vermont has 32 state-chartered credit unions to which the bill would apply, and only six federal charters.
