JEFFERSON CITY, Mo. — Field of membership has been a bone of contention between banks and credit unions across the country for ages, but the rivals in Missouri are working through it. "This entire bill has been six months of negotiations. So far, so good," MCUA Spokesperson Amy McLard said. "You always hope for the best and plan for the worst." While negotiations appear to be going well, the association has launched its missouricreditunions.org Web site to try to sign up credit union supporters just in case. In the most recent court ruling in a series of banker-instigated suits, a circuit court judge said he did not agree with the Missouri Division of Credit Unions' definition of "geographic area", but provided no alternate meaning in his opinion. Now, legislation is being hammered out between the banks and credit unions to stop the constant court battles.
Back in 1998 when the Credit Union Membership Access Act was being legislated in Washington, D.C., Missouri passed legislation of its own permitting credit unions to expand their fields of membership, leaving implementation to the Credit Union Commission. However, a Cole County Circuit Court decision about a year ago has taken the authority of the director of the Missouri Division of Credit Unions to approve geographic fields of membership.
Missouri Credit Union League CEO Rosie Holub testified before the Missouri Senate March 5 to make the case for the legislation. She pointed out that credit unions have been unable to expand geographically for the past year because of the court decision. "By law, credit unions cannot issue stock," she explained in her written testimony. "Our only source of capital is from earnings. Without growth of members, earnings cannot be generated. It is the members that lose. Without sufficient capital the credit union cannot offer the services the members want, nor can they provide the convenience through additional locations."
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Without change, Holub argued, Missouri credit unions will likely flip to a federal charter. One large one already has, costing the state about $146,000 annually.
A series of field of membership cases in Missouri go back to 2001 when the Missouri Bankers Association challenged the approval of a membership expansion for TelComm Credit Union in Springfield. "The point of the legislation is to have a definition of geographic area," McLard explained.
Though some technical amendments are still being made to S.B. 591, essentially, it would define a geographic area as including persons who reside or work in a city not within a county or a county in which the main office of the credit union is located. Additionally, employer groups under 3,000 could be added to a credit union's field of membership. Credit union mergers would have to be assessed as being consistent with field of membership terms and reasonable in size, service area and geographic location.
"Negotiations are done. We have agreed to a bill," Missouri Bankers Association President Max Cook agreed. "There shouldn't be any controversy."
The bill is a solid compromise, according to Cook. "With the draft, did we get everything we wanted? Of course not, but I think they would answer much the same way," he said of the outcome of the negotiations.
There is still no guarantee that there will not be litigation again, either. "It goes a long way toward ending any future legislation," Cook said. However, there was not talk of settlement during negotiations, despite a $200,000 price tag on a previous pursuit that landed in the Missouri Supreme Court for standing and then to argue the substance of the case.
S.B. 591 would restrict federal parity powers; only allow credit unions to serve the county where it is headquartered and those contiguous counties, including in mergers; if an employer group credit union adopts a geographic area, it can no longer accept new members from outside the geographic field of membership; employee groups of 3,000 or more must consider the feasibility of starting another credit union before joining an existing one; service to low-income areas are restricted to those nearby; field of membership expansions will be posted weekly on the Division of Credit Unions' Web site to speed the process; the division must consider income and loan usage of current members before granting a geographic area expansion; grandfathers expansions before 1998, but restricts others approved since then; and prohibits credit unions from establishing a branch outside its geographic area.
However, the legislation is down the list of items for the Missouri Senate to consider; the senate was mid-filibuster last week. Similar legislation has not been introduced in the Missouri House. –[email protected]
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