SACRAMENTO, Calif.–Legislation has been introduced in the California Assembly Banking and Finance Committee by Chairman Matt Dababneh (D-Encino) to modernize outdated provisions within the California credit union charter. The bill has the backing of the California CU League.
The legislation (AB 2274) updates and strengthens the state-chartered credit union statute, giving credit unions new options in the way they are organized to better serve their members. It is one of several efforts building momentum in Sacramento as the league’s advocacy team embarks on a busy 2016 state legislative agenda, according to the league.
“The California state charter must be improved to strengthen the dual credit union charter system and stay competitive with the federal charter,” said Bob Arnould, senior vice president of advocacy for the California and Nevada Credit Union Leagues. “This legislation brings to fruition what many state-chartered and federally chartered credit unions deem essential to improving service to members. It’s a positive step forward that will advance the lives of consumers across the state.”
A committee of representatives from 11 state-chartered credit unions in California reviewed the charter over the past year and found seven provisions in the state statute that needed to be updated. AB 2274 includes those seven updates, the league reported. The bill would:
- Allow member business loans to exceed a member's deposits.
- Eliminate board approval of membership applications.
- Allow for an audit committee in lieu of a supervisory committee.
- Allow non-members to act as the co-borrower, surety, or guarantor of a loan made to a member.
- Redefine which credit union officials’ loans are subject to certain limitations and are required to be reviewed by the board.
- Allow credit unions to decide whether their boards need to meet on a monthly basis, or if they should opt to meet less often based on the needs of the credit union.
- Remove unnecessary loan documentation requirements.
As of third-quarter 2015, there were 143 state-chartered credit unions and 210 federally-chartered credit unions headquartered in California (total of 353 credit unions), according to publicly filed data with NCUA.