Kansas League Moves Swiftly to Prepare State CUs on New FOM Law

WICHITA, Kan. — The Kansas Credit Union Association wasted little time last week in preparing state-chartered credit unions to handle the complex provisions of the state's new field of membership and merger law that takes effect July 1.

The first step, urged the KCUA leadership, is for the 88 CUs to take part in a extensive education package being kicked off with separate overview conferences May 14-15 in Wichita and Lawrence followed by a May 28 Webinar for CUs that can't attend the Wichita-Lawrence sessions.

All state-chartered CUs will be affected by the restrictive aspects of the bill “either immediately or in the future,” warned KCUA, which repeatedly has stressed that while nine of the state's largest CUs face member and branch rollbacks later in 2008, the vast majority will operate business as usual.

“Any talk that the sky is falling is simply untrue,” insisted Marla Marsh, the president/CEO of KCUA, who spoke at the association's annual conference held at the Wichita Marriott Hotel April 25 and 26.

Still, at the receptions and in formal remarks at the conference CU leaders and Kansas legislators loyal to the industry expressed both disappointment and resignation at the outcome of events.

Those events were marked by KCUA agreeing to the compromise bank-sponsored FOM law to curtail statewide branching even though many CU operations are grandfathered and will allow plenty of FOM growth for the vast majority of small CUs, many outside major metro areas.

Touching on the legislative history of the FOM law, the origins of which date back four years to so-called Audit Hearings dominated by bank attacks, the chairman of KCUA, Erich Schaefer of Garden City, said the recent outcome could have been worse with CRA provisions and a rewriting of immediate family definitions.

Moreover, because of the powerful influence of banks in the Kansas legislature, reminiscent of the bank-celebrated juggernaut in Utah, Schaefer said the “cards were always stacked against us.”

“That's an understatement,” added Schaefer, who also is president/CEO of Golden Plains CU, one of the nine CUs hardest hit by the law and forced to cut out new indirect members.

Echoing Schaefer in lamenting the outcome of the bill's passage were a group of Kansas House members, friendly to CUs, who spoke to conference attendees from the podium, all of them receiving standing ovations after making their remarks.

“Bankers simply wanted to restrict competition and harm consumers,” declared Rep. S. Mike Kiegerl, an Olathe Republican in expressing disdain for the banker strategy.

Confessing to making what he said were intemperate remarks during hearings on the FOM-merger bill before the House Insurance and Financial Institutions Committee of which he is a member, he charged banks with hypocrisy as they “nickel and dime consumers” with fees while trying to get rid of a competitor.

The chairman of the House panel, Clark Shultz, a Lindsborg Republican, acknowledged the tense banker-CU feud over the bill but said the new law represented a workable compromise with the issue now put to rest. He said it was well documented that CUs had “never done anything wrong” as the banking lobby pursued the FOM clampdown.

Marsh reminded the CU audience of 400 that this is an election year and that CU employees, volunteers and members are ready to punish at the ballot box those who worked so fiercely against the industry.

Under a stepped up advocacy program using an expanded team approach and a mobilized corps of CU staffers and volunteers, KCUA “intends to raise our voices and make them count,” declared Marsh.

In another KCUA address, John Smith, administrator of the Department of Credit Unions, said some state CUs will need to reconfigure their branch operations to conform with the grandfather statute and get paperwork in order to file for future sites.

The agency, he said, needs to get a handle on the existing branch system of all CUs to “memorialize” their structure.

On that point, he urged CUs to return their forms as quickly as possible well before the July 1 effective date.

Smith said he expects to join some of the KCUA education and information seminars planned in May as well as a series of compliance sessions in June dealing with timelines and application forms.

A major task, said Smith, will be rewriting of CU bylaws to conform to grandfather provisions.

The KCUA said dates and times for the Grandfather Compliance Seminars are: Garden City, June 5; Leavenworth, June 10; Kansas City, June 11; Topeka, June17; Manhattan, June 18; Pittsburg, June 19; Hays, June 24; Salina, June 25; and Wichita, June 26.

Future planning sessions to deal with a second Jan. 1, 2009 effective date on many of the law's branching and grandfather clauses will be held in July in Wichita, Topeka and Great Bend.

Further roundtable discussions on compliance will be held at a KCUL Education Summit Oct. 8 and 9 in Wichita. One session, said the trade group, will be devoted to “successes, challenges and questions regarding SB535 compliance and future growth.”

Turning to the U.S. Treasury Department's Blueprint proposal for national agency reorganization, Smith echoed industry calls to reject the department's plan since it effectively eliminates the credit union charter.

He warned that while the report issued earlier this month by Treasury Secretary Henry Paulson is now on the shelf, those kinds of documents once issued have a way of resurfacing.

“I think we have to be very vigilant” that such proposals do not re-emerge, said Smith.

–jrubenscut@aol.com