Almost 175 credit union leaders representing 14.4 million members met with California lawmakers and regulators last week at the state capitol during the 2026 Government Relations Rally in Sacramento, addressing fraud liability legislation and a proposed state-level Community Reinvestment Act framework along with other regulatory and tax issues.
The rally brought together credit union executives and advocates for two days of meetings, panel discussions and strategy sessions focused on legislative priorities and regulatory issues facing the industry.
Robert Wilson, SVP of state advocacy for California's Credit Unions, said the event reinforced the industry's focus on advocacy.
"Once again, this year's GRR renewed our movement's commitment to advocacy," he said.
The discussion centered on California's growing fraud problem and proposed legislation that could shift responsibility for scams onto financial institutions. Advocates urged lawmakers to oppose Assembly Bill 2674 by assembly member Diane Schiavo, which would hold financial institutions liable for fraud-induced transactions originating outside the banking system.
Data from the Federal Trade Commission and the Federal Bureau of Investigation showed Americans lose up to $138 billion annually to scams. In California, more than 723,000 fraud cases have been reported since 2020, totaling more than $3.3 billion in losses.
Advocates said financial institutions should not be held responsible for fraud-driven transactions that happen outside the banking system. They said the focus should be on technology companies, law enforcement and consumer education. They also referenced a recent Little Hoover Commission report that did not recommend holding financial institutions financially liable for fraud-induced authorized transactions.
Credit union leaders also said a state-level Community Reinvestment Act framework is unnecessary, noting that they already outperform banks across most Home Mortgage Disclosure Act data. They said the data shows significant savings for mortgage and auto borrowers who obtain a loan from a credit union, particularly in minority-majority communities and for borrowers with lower credit.
Leaders said credit unions outperform banks in 150 of 159 Home Mortgage Disclosure Act data points. Data shared during the rally showed borrowers in minority-majority communities save about $58,591 on a $225,000 mortgage compared to banks, and that borrowers with lower credit save more than $8,721 on a $40,000 auto loan. They added that field-of-membership restrictions already limit who credit unions can serve, making a state-level Community Reinvestment Act framework futile.
Credit union leaders also opposed a proposal from the legislative analyst's office that would tax certain non-member credit union income, including revenue from ATM fees, interchange and investments. They said that income is returned to members through lower fees and better rates, rather than treated as profit.
They also noted taxing non-member income would be a tax on credit union members, since earnings are returned through better rates and lower fees rather than paid to shareholders. What's more, they said the change could lead some state-chartered institutions to convert to federal charters.
"Credit unions are the original consumer financial protectors, a message that was clearly heard all day as we visited with lawmakers and their aides," Jeremy Empol, president/CEO of California's Credit Unions, said. "Through sharing the stories of more than 14 million members, credit union leaders made sure our industry's perspective remains front and center in California policy discussions."
Joyce Moed can be reached at joyce.moed@arc-network.com.
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