State legislators in Washington will be reviewing two bills thatwould give state-chartered credit unions the option to paytheir board members, gain access to supplemental capital and expandinvestment options.

The Northwest Credit Union Association helped craft House Bill 1582, which will be discussed in a hearing scheduledThursday in the state legislature's House Business & FinancialServices Committee.

The NWCUA also is behind Senate Bill 5302, which is similar to the House bill. However,S.B. 5302 does not include the supplemental capitalprovision. The Senate bill also is scheduled for a hearingThursday before the Senate's Housing and Insurance Committee.

In addition to giving Washington credit unions the option toprovide board members with “reasonable compensation,” both billswould give credit unions the option to compensate supervisorycommittee members as well.

Marvin Umholtz, president/CEO of Umholtz Strategic Planning andConsulting Services in Olympia, Wash., said the option topay board members is long overdue. He also acknowledged, however,that not everyone in the credit union industry would think it is agood idea because of the long-standing history of volunteer boardmembers.

As the proposed law is written, a credit union “may pay itsdirectors and supervisory committee members,” but there is nowording in the proposed law to require credit unions to paydirectors.

The option to compensate board members has been discussed andresearched at the NWCUA since 2009, said Lynn Heider, theassociation's vice president of public relations andcommunications. The association's Evolution Task Forceand Government Affairs Committee earlier recommended the option topay board members under rules that would be set by the state'sregulator.

“This may help some CUs to attract and retain a more diverseboard,” said Heider.

Meanwhile, the House bill's provision that would enablestate-chartered credit unions to pursue supplemental capital wouldonly take effect if federal legislation opening supplementalcapital to credit unions would be enacted. The proposed statelegislation refers to supplemental capital as “accounts orinstruments that are not shares or deposits, are not insured … andare included in the credit union's net worth.”

“Should credit unions have access to additional capital beyondearnings, they could grow faster and still meet prompt correctiveaction well capitalized expectations,” said Umholtz.

What's more, the House and Senate bills would allow Washingtoncredit unions to make investments with a “registered investmentcompany or collective investment fund, as long as the prospectus ofthe company or fund restricts the investment portfolio toinvestments and investment transactions that are permissible forcredit unions.”

The bills also include a provision that if an investment laterbecomes impermissible because of a change in circumstances or lawor if it's determined the investment will have an adverse effect onthe safety and soundness of the credit union, the state's regulatorwould be authorized to order the credit union to pullthe plug on the investment.