Connecticut CU modernization bill moves to governor's desk

<p>HARTFORD, Conn. – For the first time in 44 years, Connecticut state-chartered credit unions are facing the likelihood of doing business under a modernized state credit union act. “An Act Concerning Credit Union Modernization” which updates the Connecticut credit union statute, was passed unanimously by a vote of 36-0 and is on its way to Gov. John Rowland’s desk for signing. sHB 5316 was passed by the House on April 24. Gov. Rowland has 15 days to sign sHB 5316 once it reaches his desk, and the Connecticut Credit Union Association said he is expected to do so. The new law becomes effective Oct. 1, 2002. Among the highlights of the Act regarding field-of-membership, it: amends current law to allow a Connecticut CU that serves a community to expand its service beyond its local community, with the approval of the Commissioner of Banking. removes the current restriction on SCCUs that prohibit the addition of a group to a CU’s FOM if the group is larger than 3,000 people. A CU that adds a group larger than 500 people to its FOM must obtain the commissioner’s approval. clarifies that a current member of a Connecticut CU remains a member of the CU even through they are no longer a part of the group the CU is authorized to serve. Concerning charter conversions and mergers, the bill describes and clarifies the authority of Connecticut CUs to merge with other CUs, including federal and out-of-state CUs. It also describes and clarifies their authority to convert to a federal credit union, including the conversion requirement process, and does the same for a federal credit union converting to a Connecticut state-charter. SHB 5316 further clarifies the procedure for establishing CUSOs; the services a corporate CU can provide to CUs; and the process for establishing branches. It also: includes provisions that give the commissioner greater authority and flexibility to address violations of state banking laws by officials of a Connecticut CUSO, as well as violations of law or practices that threaten the financial stability of CUs and CUSOs; allows Connecticut credit unions and CUSOs to enter into contracts with electronic data service companies as long as the contracts allow the Commissioner of Banking to examine each service company to make sure they don’t pose a safety and soundness risk to the CU or CUSO. Connecticut law already allows state banks to do this. The Connecticut Credit Union Association aggressively lobbied to secure passage of the bill. It met with members of the General Assembly and was successful in removing several potentially harmful amendments that were originally in the bill, and securing additional protections for CUs and their members. CCUA plans to hold informational meetings with CUs, with the assistance of the Banking Department, to inform credit unions of how the legislation will affect them. -</p> <p>[email protected]</p>