<p>ST. PAUL, Minn. – After nearly a year's worth of work, Minnesota credit unions are just steps away from seeing the state's first new credit union bill in more than 70 years. At press time, the amended bill was scheduled to go back to the state Senate for concurrence on April 9. Cindy Jepsen, vice president, legislative affairs for the Minnesota Credit Union Network said she expected "clear sailing" and the bill to be passed by the Senate easily. From there it will be sent to Gov. Jesse Ventura's desk for his signature and become effective August 1. Jepsen was particularly excited about the imminent passage of the Minnesota Credit Union Protection Act (HF 2751/SF 2650). MCUN has been working on it since August 2001 and finally saw the bill introduced in the state House in January by state Rep. Doug Stang, vice chair of the House Commerce, Jobs, and Economic Development Committee, and in the state Senate by Sen. Don Samuelson (Democratic Labor Party – 12), president of the Senate and a member of the Senate Commerce Committee. Jepsen said the league purposely asked Stang and Samuelson to sponsor the respective bills because "as members of their commerce committees, they are familiar with technical jargon and have the ability to explain the bills and withstand any questioning about them. This is a very technical bill." As the bills worked their way through the legislative process, credit unions had to deal with many obstacles and attempts by the Minnesota Bankers Association, the League of Savings & Community Bankers, and the Minnesota Independent Community Bankers to block CUs' efforts. Jepsen said the fact that the bankers' failed in their efforts makes the bill's success even sweeter. Jepsen said passage of the bill was crucial to stem the number of state-chartered credit unions that have converted to federal charters because of the restrictions in the older version of the credit union act. While Minnesota is still primarily a state-chartered credit union state, the erosion in the numbers of SCCUs due to conversions to federal charters has been ongoing over the past several years. There are currently 187 CUs in the state, 115 of which are state chartered. Last year, there were 123 SCCUs; in 2000, there were 193 CUs and 129 SCCUs; and in 1999, there were 198 CUs and 138 SCCUs. Among the former state chartered credit unions that converted to federal charters in recent years are NWA (formerly Northwest Airlines Employees CU; converted in 1988; $887 million in assets); Teacher FCU (formerly Teachers Federations CU, converted in 1988, $322 million in assets); City-County FCU (formerly City-County CU, converted in 1988, $269 million in assets); St. Cloud FCU (formerly St. Cloud Employees CU, converted in 1996, $45 million in assets); and Central Minnesota FCU (formerly Melrose FCU, converted in 2001, $206 million in assets). Jepsen blamed the field-of-membership restrictions in the former CU act for the numbers of SCCUs that converted to being FCUs. Under the previous CU act, for example SCCUs originally chartered to be occupation or associational based, could not convert to be community-based. In addition, there were "unrealistic" restrictions on the size of select employee groups SCCUs could add to their field-of-membership. Originally the minimum number was 25 employees, but that was later dropped to 15. Jepsen said even that number was too high "because many of the small businesses that wanted to be able to offer credit union membership to their employees had fewer than 15 employees." On the high end, the maximum number of employees a SEG could have was 1,500. "It was tremendously difficult for the state-chartered credit unions to add SEGs and to grow," said Jepsen. MCUN set its sites on January to have the bill introduced in the state House, but even before then league representatives were meeting with legislators to convey the messages that, "Choice is important. Credit unions in Minnesota account for less than 5% of the market share and asset base in the state. They are not competition for the banks." "We always maintained we want a state law that conformed with federal law," said Jepsen. Even though the banks as part of their tactics tried to argue that the proposed new state credit union law went beyond the federal law, Jepsen said bankers' arguments were not convincing. The bankers also tried to argue the credit union tax exemption case. Jepsen said CUs countered by pointing out to legislators the estimated 47 million in sales tax revenue the state stood to lose annually if it did not pass the proposed bills. "In a year of a budget deficit, that was a persuasive argument," said Jepsen. Getting a vote proved to be particularly difficult for MCUN in the House. After the bill was passed by the commerce committee, the banks were successful in their lobbying efforts and had the bill sent to the tax committee, even though there were no tax implications. Once CUs surmounted this obstacle, they then had to face opposition from the House Speaker Steve Sviggum (G-28B), a long-time bank supporter. The first version of the Senate bill, SF 2650 was passed by a 45-16 vote. The House voted on HF 2751 just days before the end of the session, and the bill was passed 109-22. However, because some changes were made in the language of the bill previously passed by the Senate, the bill had to be sent back to the Senate for concurrence. Among some of the key provisions of the Credit Union Protection Act: the minimum number of employees a company is required to have to become a SEG is two, and the maximum is 3,000; the bill includes a definition of "community" and allows for SCCUs originally chartered as occupation or association-based, to convert to community charters. Jepsen said MCUN is also working with the Department of Commerce to streamline the process for adding SEGs. Jepsen admitted that the passage of the Credit Union Protection Act is bittersweet because MCUN had to make some compromises. For example, while the act contains parity language with the Federal Credit Union Act concerning trust services and leasing, Jepsen MCUN wanted it to include language allowing for an expansion of these services beyond what is allowed for FCUs "to keep the door open for credit unions' future needs." That language, though was removed from the bill. In addition, MCUN was hopeful credit unions would have gotten their own division within the Department of Commerce with a separate from the banks, but the bill doesn't include provisions for that either. Jepsen is patient though. "This is the first year of a multi-year effort," she said. -</p> <p>[email protected]</p>