Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WEST PALM BEACH, Fla. – State-chartered credit union activity was kicked up several notches in 2002 as NASCUS received signals from Capital Hill that Congress would have its eye on the state-chartered CU system in the 108th session with the possibility of restricting SCCUs’ and state regulators authorities. State-chartered credit unions got their first hint of Congress’ intentions from Rep. Paul Kanjorski (D-Pa.) in February. Speaking at CUNA’s GAC, the key member of the House Financial Services Committee suggested that Congress would likely look at “strengthening the federal charter” and that it might consider “restricting” the state charter to keep a balance between the two. Six months later Kanjorski clarified his position on the issue with NASCUS (CU Times, Aug. 23). He told the association that “a dual chartering system for credit unions will work best when there is experimentation. We should therefore, consistent with principles of safety and soundness, seek to create a regulatory environment that allows credit unions to determine the best way in which to serve their members. Limiting the powers of state-chartered credit unions to those of federally chartered credit unions would generally not allow that experimentation.” But Kanjorski’s remarks weren’t enough to assuage state-chartered credit unions’ and regulators’ concerns. In October, Rep. John LaFalce (D-N.Y.) introduced his Federal Credit Union Services Expansion Act of 2002 bill (H.R. 5621). The measure included provisions limiting the powers of SCCUs to those of FCUs. LaFalce retired at the end of the 107th Congress and the bill saw no action. But NASCUS used the bill to reaffirm its position that restricting the state-chartered credit union system as a way to strengthen the federal charter is the wrong tactic and jeopardizes the dual-chartering system. Also in October, Senate Banking Committee Chairman Paul Sarbanes (D-Md.) directed the Government Accounting Office (GAO) to begin a congressionally mandated study looking into the safety and soundness of the CU industry; the impact of the Credit Union Membership Access Act; and how CUs are carrying out their mission required by the Federal Credit Union Act. The Sarbanes study is also looking into the state regulatory system, state-chartered CUs’ powers and private insurance. NASCUS’ Executive Committee met with the GAO’s Debra Johnson, assistant director of financial markets and community investment and members of her staff to educate them on the safety and soundness of the state credit union system and the importance of dual chartering to the viability of the entire CU system. If that wasn’t enough, state-regulators had to contend with worsening budget crunches. According to a report from the National Conference of State Legislatures that’s based on the organization’s national survey, responses from state legislative fiscal offices from all 50 states found that states have at least a collective $17.5 billion budget gap to fill before fiscal year 2003 ends. For most states that is June 30. That total could rise, NCSL wrote in its report State Budget Update, as states gather additional information on revenue collections in the coming months. Banking groups in several states have tried to leverage this situation to convince state legislators that state-chartered credit unions should be taxed. With states’ budget crises not expected to show signs of improvement any time soon, state-chartered credit unions and regulators are being kept busy keeping an eye on developments on this front in their respective states. -

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?


Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times
Live Chat

Copyright © 2022 ALM Media Properties, LLC. All Rights Reserved.