The Credit Union Journal
While a number of state legislatures are considering new taxes on credit unions, Arizona is looking at a regulatory relief bill that would allow credit union boards to make additions to their fields of membership without the state's approval.
Sen. Dean Martin, a Republican from Phoenix, crafted the bill after he sat down with the Arizona Credit Union League and some credit unions in his district. Though boards would be empowered to define their own fields of membership, they would still be required to report to the state regulator on a regular basis - perhaps quarterly - about what they are doing, according to Gary Plank, the credit union league's president.
The bill, which also includes provisions for parity with federal charters, cleared the Senate Commerce Committee in a 5-to-4 vote and is awaiting approval by the Rules Committee before it heads to the Senate floor.
But it will not get there without a fight. The Arizona Bankers Association opposes the bill and has turned some key lawmakers against it, according to Sen. Martin.
Said Kurt Bauer, the bank group's executive vice president: "I used to live in Wisconsin, and there credit unions have to go to the Legislature to" expand their fields of membership. "Here all they have to do is go to the state regulator, and now they're saying they don't even want to have to do that."
Sen. Martin said the level of rhetoric during committee hearings has surprised him. "They're talking like this is the end of the world as we know it, that there will be no regulation at all for credit unions, and they'll be able to just go out there and stick it to consumers as much as they like."
An effort to give credit unions broader authority to expand their fields of membership is also under way in Michigan. A bill expected to be introduced this month would allow credit unions boards to determine fields of membership. State regulators, who support the proposal, would be able to reject requests only because of safety-and-soundness issues.
David Adams, the chief executive officer of the Michigan Credit Union League, said his state's bill, if passed, would be similar to legislation that removed restrictions on banks' authority to branch into new markets.
"Credit union directors ought to be able to determine the markets they're in, just as bank directors determine their markets," Mr. Adams said.
Several states, including Utah, Iowa, and New Mexico, are mulling legislation that would tax their states' largest credit unions - measures that the banking industry supports.
In Arizona, both Mr. Bauer and Sen. Martin said there is still plenty of time left in the legislative session for the bill to pass. "It has a fairly good shot," Sen. Martin said.
But there is no initiative there for imposing a tax on credit unions, and Sen. Martin suggested that banks would have a difficult time pushing such a bill through in Arizona.
"I'm the chairman of the Finance Committee, and I would never let that get through, so I think that's one reason we haven't seen such a bill. If you do that to credit unions, you've created a slippery slope for all not-for-profits," he said. "But on top of that, we have Proposition 108 here in Arizona, and that requires a two-thirds vote [in each house of the Legislature] to raise taxes or anything that raises revenue for the state."
