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ARLINGTON, Va. – NAFCU President Fred Becker argued that the precedent-setting nature of a California credit card statute, combined with its anti-constitutional elements and negative impact on federally chartered credit unions demanded that the association join a lawsuit challenging it in court. Set to go into effect on July 1, the law mandates any national bank or credit union with members/customers in California to either make them pay 10% of their balance each month or face a series of complicated and expensive disclosure requirements. A coalition of national bank trade associations, national banks, credit card issuers and NAFCU has filed suit to stay the law before its July 1 deadline. The Consumer Federation of America has gone on record supporting the measure. “As a lawyer I viewed this law in terms of its Constitutional issues,” Becker said. “Here is a state trying to tell federally chartered credit unions what to do,” he noted. “A state’s ability to do that is controlled by the U.S. Constitution as well as the Credit Union Act itself,” he said. NAFCU is also concerned about the precedent-setting nature of the law. “Suppose a credit union changes its policies to conform to the California law,” he said, “and suppose Colorado passes a different law, and another state another law. What’s the use of having a federal charter then?” NAFCU members had also contacted him about the “marked, negative” impact the law would have on their operations, Becker said. As an example he described what the law would mean to a 30,000 member federally chartered credit union that had contacted him. Becker said the credit union has 60 members in California with credit cards and the law would make the credit union single out, calculate and print different statements for those 60 members while the others remained the same. Further, even if the credit union complied with the law and told the 60 members that they had to pay 10% of their card balance each month, at the very least that would require recalculations of their bills, Becker said. In addition the law requires the credit union, which Becker stressed was not based on the West Coast, to set up a call center to take phone calls about their balances from their members, a call center which was operational during West Coast working hours. “They are not sure they can comply,” Becker said, and may face as their only alternative writing their 60 California card holders to tell them their accounts have been involuntarily closed, he added. [email protected]

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