PLYMOUTH, Mich. – A push to modernize the Michigan credit union act, 18 months in the planning, should hit the legislature by this spring. The Michigan Credit Union League and the state credit union division are drafting legislation, which the credit union division will offer to the legislature, that Patrick LaPine, MCUL director of government affairs, called "a major modernization of the credit union act." The principal changes would make it easier for state-chartered credit unions to expand their fields of membership and compete with payday lenders. It would also give credit unions greater investment powers. The legislation also includes other changes, such as stretching the examination cycle to 18 months. The changes incorporate most of 126 recommended changes developed by the league and approved by credit union delegates at the league's convention last spring. The credit union division also brought 60 changes to the process though, LaPine said, some of them covered the same ground. "We threw everything and the kitchen sink into the draft, that's the best way to go," he said. "You don't start with, `What do you think we can get?' We started from, `What do we want . and what are our members willing to fight for.'" Because the legislation is still in the draft stage, neither LaPine nor Frank Fitzgerald, director of the state Office of Financial and Insurance Services, which supervises state-chartered credit unions, would discuss the legislation in great detail. Fitzgerald said he wants to work out contentious issues as much as possible before going to the legislature. "We're trying to minimize the issues with different viewpoints before presenting" the legislation to the lawmakers, he said. LaPine said he expects the legislation to be ready by early March. Fitzgerald was less specific about a completion date, but said he expects passage before the end of this year. "It's a priority with us," he said. LaPine said the Michigan Bankers Association is reviewing the draft. The most controversial issue is expected to be the recommendation to change the way Michigan credit unions can expand their fields of membership. A working group of the MCUL reported to the league convention last spring a recommendation that 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 FOM expansions. The recommendation was a response to 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. OFIS would still be able to raise concerns over the safety and soundness of any expansion. At the time the proposal was presented to the credit union convention JoAnn Fillwock, CEO of Financial Health CU in East Lansing and chair of the working group that developed the plan, described the plan as a "recommendation to dramatically liberalize FOM." The payday lending provision would allow credit unions to offer small loans to nonmembers who fall within their fields of membership. LaPine said the loan limit would be $1,000 and would not be able to be rolled over, as payday loans are. LaPine was confident the legislation would be well received in the legislature, in particular by the Senate Banking Committee and the House Commerce Committee, which he expects will get the bill first. "We have two chairmen who are very open to the issue and who are looking forward to the debate and dialogue and who will work with us to see what is agreeable to the rest of the committees," LaPine said. Though the bill's supporters will enlist the support of the bankers association, LaPine said he doesn't expect their unqualified support. "A major modernization of the credit union act is going to have some issues in it that our banking friends are going to be less inclined to support," he said. -

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