RALEIGH, N.C.–A new effort to overhaul North Carolina’s 50-year-old credit union statutes “promises a high-stakes, big-money fight between traditional banks and credit unions looking to expand,” according to a new report.
At the center of that fight is House Bill 410, which has become the “focal point of some long-simmering back-and-forth over just what a credit union should be and whether banks provide enough services to rural customers,” WRAL is reporting.
The bill is scheduled for its first committee later this week, when changes to the current language likely will be unveiled, WRAL reported.
As CUToday.info has previously reported, the banking industry in North Carolina, home to a number of big banks, has in the past worked to squash credit union interests in the capital.
“Both sides have power players lined up for the fight,” WRAL said. “The bill started life as a wholesale, 80-page rewrite of credit union rules. Over the past year it shrunk to nine pages.”
Provisions in the proposed legislation would, among other things, allow CUs to serve more members, particularly low income individuals.
‘Some Real Problems’
“There are some real problems that we’re trying to solve for the state of North Carolina,” Dan Schline, president and chief executive of the Carolinas Credit Union League, told WRAL. “We’re putting forward ideas about how to serve low-income communities.”
However, North Carolina’s bankers association told WRAL credit unions are trying to pull a fast one with a complicated bill.
“We believe that the portrayal of this bill by its proponents is completely at odds with what the bill is actually engineered to do,” the association told lawmakers in a one-page memo on the bill, as reported by WRAL. “Key terms are carefully left undefined, new powers are subtly added. ... This bill is bad for North Carolina.”
What Legislation Would Do
The proposed legislation would expand state chartered CUs’ fields of membership to serve additional people, including those below the federal poverty line, women- and minority-owned businesses and people who live in poorer parts of the state, regardless of whether they have a traditional connection to a credit union.
“We’d like the opportunity to serve some of these folks and see where it takes us,” Schline told WRAL.
The Carolinas CU League told the news outlet that people in those categories “have been acutely impacted by the 600-plus bank branch closures that have occurred over the past 10 years.”
Map of Bank Closures
WRAL noted the CCUL has also published a map of bank closures as part of a public relations offensive on the bill, arguing that banks are leaving “financial services deserts” by pulling back into cities, where there’s more money to be made.
But, the WRAL report added, banks “say the credit unions want to have their cake and eat it too by keeping their tax breaks and nonprofit status but losing key rules that differentiate them from banks without picking up regulations that banks face. The NC Bankers Association told lawmakers that the bill grants credit unions “expansive new powers” with no requirement that customer deposits be used to make loans or investments in North Carolina and no promise that the credit unions will actually put branches in rural areas.”
One CU Voice Disagrees
One well-known voice in credit unions has actually spoken out against the bill. On his blog, former State Employees Credit Union CEO Jim Blaine called House Bill 410 "The Anything Goes Credit Union Act."
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