Legislation is making its way through the California Assembly that would enable state-chartered credit unions to add members from outside the United States.

The Cross Border Credit Union Services Bill would let credit unions open branches and serve member groups in foreign countries, particularly Mexico and Canada. It is inspired by the North American Free Trade Agreement, which opened the door for many corporations to set up factories and other operations across U.S. borders.

"This bill recognizes the deepening relationships between California and other countries," said David L. Chatfield, president and chief executive officer of the California Credit Union League, which has been lobbying for the bill's passage.

California is the first state to consider such legislation. Under the proposal, a state-chartered credit union would be eligible to expand internationally if it served member groups with facilities in the state as well as in the foreign country. Its application to solicit members would require approval from the state Department of Financial Institutions and the corresponding foreign regulatory authority.

The bill would also permit foreign credit unions to offer services in California.

The legislation was unanimously approved by the Assembly's Banking and Finance Committee and is now before the Appropriations Committee. It would then move to the Assembly floor and, if approved, go to the state Senate Finance Committee.

Credit union officials outside California are watching closely.

Colleen Kelly, director of state government affairs at the Credit Union National Association, said a "number of credit unions" are interested in expanding outside the United States.

Officials at the National Credit Union Administration declined to comment on the legislation. Federal credit unions may serve members outside the United States but only through branches on U.S. military bases or in embassies.

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