Credit union leaders met with state legislators this week to voice support for two bills that would give Washington’s state-chartered credit unions the option to pay their board members and expand investment options.
The Northwest Credit Union Association helped craft House Bill 1582 and Senate Bill 5302 that were reviewed at state committee hearings in Olympia, Wash., on Thursday. If the bills are approved and signed by the state’s governor, Washington will become the ninth state to allow credit unions to compensate board members.
Georgia, Louisiana, Minnesota, Mississippi, New Hampshire, North Dakota, Pennsylvania and Texas permit state-charted credit unions to pay their board members, according to NASCUS and Washington’s Department of Financial Institutions.
In addition to giving Washington credit unions the option to provide board members with “reasonable compensation,” both bills would give credit unions the option to compensate supervisory committee members.
As the proposed law is written, a credit union “may pay its directors and supervisory committee members,” but there is no wording in the proposed law to require credit unions to pay directors.
“These reforms are clearly needed and will help our businesses in a very practical way,” Christina Lethlean, president/CEO of the $1.2 billion Gesa Credit Union in Richland, Wash., told the House Business & Financial Services Committee. “So as CEO of Washington state-chartered credit union, please help me and my members and my community by modernizing and improving our state (credit union) act.”
For the $11 billion, 800,000-member BECU in Seattle, the proposed legislative change will benefit the credit union movement.
“From BECU’s standpoint, we are definitely in support of credit unions to have the option of compensating board members and for credit unions to have that conversation with their board and members to see if it makes sense for them,” said Tom Berquist, BECU’s marketing manager.
“I think given the complexity of board work these days with added regulatory and fiduciary responsibilities,” Berquist said, “credit unions are going to have to attract board members with certain skills, and we think having this (compensation) option available would be very good for the credit union movement in strengthening boards.”
The House and Senate bills also would allow Washington credit unions to make investments with a “registered investment company or collective investment fund, as long as the prospectus of the company or fund restricts the investment portfolio to investments and investment transactions that are permissible for credit unions.”
The bills also include a provision that if an investment later becomes impermissible because of a change in circumstances or law or if it’s determined the investment will have an adverse effect on the safety and soundness of the credit union, the state’s regulator would be authorized to order the credit union to divest.
Earlier versions of the Senate bill contained a provision that would allow credit unions to access supplemental capital. But that provision was removed because of opposition from the Washington Banking Association, the NWCUA said. The supplemental capital provision in the House bill also has been dropped.