BISMARCK, N.D.–An effort to modernize field of membership statues in North Dakota, described as some of the most restrictive in the country for state charters, has failed in the state’s House of Representatives.
The legislation, SB 2266, failed on the House floor by 53-39 vote. It had been strongly supported by the Dakotas Credit Union Association.
As CUToday.info reported earlier, currently, North Dakota’s 18 state-chartered CUs can only serve those residing within 75 miles of a credit union’s home office, or similar limited radius of a branch.
“Disappointed’ doesn’t begin to describe how I, and many or our credit union advocates, felt after months of planning and educating legislators about credit unions and the need for this statute revision, as well as the benefits that North Dakota consumers would realize,” wrote DCUA President and CEO Jeff Olson. “Clearly, the strong-arm and intimidation tactics efforts from the North Dakota banks (and from some lawmakers) worked, and legislators deemed that our credit unions should keep their current limited field of membership restrictions, and like it.”
Olson noted it’s been 40 years since the North Dakota statute was last updated, and that was to allow state charters to accept public deposits.
‘What is Really Distressing’
“The intent of our SB 2266 bill was to modernize statutory language, giving North Dakota state chartered credit unions similarity with federally chartered credit unions on FOM as well as increased geographic boundaries,” Olson wrote. “More importantly, North Dakotans would have had more financial service options, especially in rural underserved communities.
“What was really distressing were the comments made by the Industry Business and Labor (IBL) Committee member that presented the bill during the floor consideration and debate,” Olson continued. “In his comments, he was clearly deceptive in his description of credit unions and what the bill would do, including twisting important data that supported the need to modernize the statute. All one must do is watch the recorded video of the committee hearing before the floor vote took place on March 29, (you can still view it). Within a few minutes of oral testimony, one is able to dispel nearly all the points he shared. For example, the representative failed to mention that credit unions are not-for-profit cooperatives that return their earnings back to their member owners, and that 100% of our earnings stay right here in the state.”
‘It is Abundantly Clear’
Olson said the representative stated CU growth was 9% in North Dakota, but didn’t mention that the figure represented growth from 2005-22.
“And, while he had access to the data, the representative made no mention that credit union growth in our neighboring states over the same time period has left North Dakota far behind,” Olson stated. “We shared in testimony that comparative growth trends in neighboring states and across the U.S. were three to four times higher. Montana and Minnesota for example, have each grown by 25%; Nebraska and South Dakota credit union membership exceeded 335 and 35%; and U.S. credit union membership grew over 35% over the last 18 years.
“For us, it is abundantly clear: The restrictive North Dakota FOM statue is the contributing factor to our credit unions falling behind and not keeping pace with the growth trends in our region and across the country,” Olson wrote. “Thus, North Dakota banks have succeeded in curbing credit union membership growth and limiting North Dakotans access to more affordable financial products and services, which is truly unfortunate.”
Decline in Numbers
He further noted that since 2005 the only way for North Dakota credit unions to expand their geographic area has been to merge with another credit union in another community or location and assume their FOM. The result has been a decline in the total number of credit unions in the state to 31 from 55 to 31.
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