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<p>PLYMOUTH, Mich. – Michigan credit unions are gearing up for a legislative assault to rewrite the state’s credit union act. Delegates to the Michigan Credit Union League’s Annual Convention & Exposition May 30-June 1 will be asked to consider more than 120 changes developed over the last 15 months by the league’s Michigan CU Act Modernization Working Group that are now circulating among credit union executives for comment. The most controversial issue is expected to be the working group’s recommendation to change the way Michigan credit unions can expand their fields of membership. JoAnn Fillwock, who chaired the group, said that issue is controversial “because the recommendation is to dramatically liberalize FOM.” Fillwock is CEO of Financial Health CU in East Lansing, Mich. The working group recommendation on FOM would give credit unions almost unilateral authority to expand their member base by simplifying the approval process. Ken Ross, director of regional affairs for the MCUL, said the recommendation would give a credit union’s board of directors the ability to define its own field of membership. Under the existing law, which was last updated in 1986, a credit union must apply to the state Office of Financial and Insurance Services for approval of all field expansions. “We’d like to put the board of directors in the driver’s seat,” Ross said. OFIS will still be able to raise concerns over the safety and soundness of any expansion. The recommended legislative change, Ross said, reflects concerns from smaller credit unions that FOM requests from larger credit unions, which can afford to hire consultants to insure the approval of their expansions, get approved more easily. The recommendations would also allow credit unions to serve a mix of SEGs and community membership groups. If implemented, a credit union could theoretically include the entire state in its field of membership. More likely, said Fillwock, would be a situation where a common-bond credit union such as a postal credit union might seek to serve all postal workers in the state. “It certainly is a pretty significant expansion that we’re recommending,” Fillwock said. Many of the other recommendations that will be considered at the annual convention simply bring the act into conformity with existing regulatory practice. But some things are new. For example, the working group is recommending that credit unions or their CUSOs be allowed to offer trust services. Another section would allow credit unions to raise alternative forms of capital. A third would allow merged credit unions to do business under their pre-merger names. Fillwock said that once the recommendations are considered by convention delegates, the league’s board would decide exactly what shape the legislation will take at its meeting June 25. Then the league would confer with regulators and spend the summer and early fall preparing the legislation, which might end up being a full rewrite of the credit union section of the state code. Patrick LaPine, MCUL director of governmental affairs, said that OFIS had recently redrafted the bank and insurance sections of the code and that credit unions are next up on the agenda. He said that his group would be sounding out proposed changes with bank lobbyists, to smooth the path to approval, just as trade groups from those industries discussed their legislation with credit union leaders. Though the legislature will be distracted by the November election, Fillwock said she hoped a credit union bill would come before the legislature later in the fall, though she expected that it would not come to a vote in the abbreviated fall session. It would be reintroduced to the new legislature in January. Julie Smith, communications coordinator of OFIS, would not comment on any of the specific recommendations being discussed by MCUL. She said her agency is independently reviewing legislative changes. She said legislation would not be introduced during the fall short session but would likely be introduced in 2003. -</p> <p>[email protected]</p>

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