SACRAMENTO, Calif. - The state Assembly Banking and Finance Committee Monday April 24 unanimously passed a bill A.B. 2503 that amends sections of the state credit union code and one section of the state Insurance Code relating to financial institutions. Sponsored by the California Credit Union League and introduced in February by state Assemblyman Darrell Steinberg (D-Sacramento), A.B. 2503 originally included language dealing with electronic signatures. Bob Arnould, vice president state government affairs for the league said that provision was taken out of the bill because "it would have required additional work and held things up." He noted the league is thinking about introducing a separate bill on e-signatures before the legislature adjourns Aug. 31. If the league doesn't get to an e-signatures bill this year, it plans to revisit it next year. The amended version of A.B. 2503: * gives the commissioner of the Department of Financial Institutions "super wild card authority" to allow state-chartered credit unions to engage in any activity allowed other licensees under the commissioner's authority-banks, thrifts, trust companies-and for state-chartered credit unions in any other state. (Existing CU law gives the commissioner "wildcard authority" to permit state-chartered credit unions to engage in any activity authorized by law or regulation for federal credit unions.) * expands the types of funds the DFI commissioner can consider as equity capital to include member entrance fees, dues, fees and assessments paid by the member to the credit union excluding fees charged in connection with member share accounts or loans by the CU's board of directors or approved by the DFI commissioner. * gives state chartered credit unions the authority to sell the same types of insurance products now allowed banks to sell as a result of the passage of the Gramm-Leach-Bliley Act, including fire, casualty and individual life insurance (state chartered CUS can currently sell health, accident and group life insurance.) A.B. 2503 further allows a credit union to become a member of any organization(s) composed of financial institutions or nonprofit organizations (existing law permits a state-chartered credit union to become a member of any organization(s) composed of credit unions, credit associations or chambers of commerce.) It also permits a credit union to accept as a member those persons who purchase a membership in the CU as provided in the CU's bylaws. (Existing law allows a credit union to admit to membership anyone who qualifies for membership by payment of either an entrance fee or the purchase of one or more shares of the CU.) Bob Arnould, vice president of state government affairs, CCUL described A.B. 2503 as "an update bill," not a housecleaning bill. He explained that late last year the league asked credit unions to send in their ideas about those items of the credit union code that needed to be updated. Among the diverse ideas the league collected were those concerning credit unions in the state having parity with banks' ability to sell insurance as a result of passage of S.900. A.B. 2503 now goes to the state Assembly Appropriations Committee. At press time, Mark Lowe of the league said not date had been set for a hearing on the bill. Arnould does not expect any opposition to the bill in the Appropriations Committee and described the hearing as "perfunctory." Looking down the pike, he said there are signs the equity capital provisions of the bill could run into obstacles when it reaches the Assembly and Senate banking committees. Arnould said the California Bankers Association sent a letter to both committees expressing its opposition to the portions of A.B. 2503 concerning equity capital and "super wildcard authority" Specifically the CBA said credit unions shouldn't be able to go beyond their member base to get capital because their not-for-profit and don't pay taxes. -
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