SACRAMENTO, Calif.–California’s credit unions are declaring a “huge victory” after having successfully lobbied members of the state Assembly to significantly modify legislation that seeks to create a state bank called “BankCal.”
“As originally drafted several weeks ago, Assembly Bill 1177 would create a high cost, government-run banking system that is completely duplicative of what is offered by credit unions,” said the California and Nevada Credit Union Leagues. “Credit unions had already been fighting against the idea of a public bank over the past few years.”
While the government-run banking system in AB 1177 is different from the public bank concept of year’s past, the California Credit Union League said it and credit unions across the state have contended the newly discussed model represents a “still a risky and perilous endeavor.”
In its statement, the league said credit union leaders share the goal of the bill’s author to bank more of the unbanked and under-banked, but believe the state could spend a fraction of what AB 1177 would cost by partnering with credit unions that “already offer low or no-cost access to financial products and services.”
AB 1177 passed out of the California Assembly Banking and Finance Committee on April 29 after being significantly amended by Chair and Assemblymember Tim Grayson.
‘Huge Victory’
According to the leagues, some of the key themes of what it called a “huge victory” for California’s credit unions included:
• The committee chair, with the help of some key committee members, “was able to convince the author to amend the bill to include a market analysis contracted to one or more third-party entities before any state dollars are spent, with the legislature independently approving the study before BankCal could be implemented.
• Three assemblymembers also brought up concerns that the board-run banking system should have more experts from the banking industry and academia.
• Another assemblymember asked that the study look at less risky methods of banking the unbanked.
• The final committee vote was 7-4-1 (“yes,” “no,” and one “abstention”) — with the bill passing committee, “yet heavily amended due to the efforts of credit unions and their supporters (and other banking industry opposition advocates).”
• The leagues reported it was able to initiate more than 4,500 “NO on AB 1177” messages to state lawmakers from credit union staff, volunteers and supporters in a few short weeks leading up to the bill being heard in committee, helped by the efforts of 177 credit unions across the state.
Reviewing Amendments
The leagues now says it will review the bill’s amendments.
“We want to thank everyone who helped lay the groundwork during GRR,” said League President and CEO Diana Dykstra. “The messages we sent to assemblymembers — as well as credit unions’ participation in GRR — were pivotal in winning this legislative battle.”