ROBERT B. KIMMETT
‘An important bill’
State-chartered credit unions could soon gain the ability to offer credit cards and safety deposit boxes to members without prior written consent, act as bill-paying agencies and adopt some practices intended to streamline businesses for the institutions.
The Senate two weeks ago gave initial approval to Senate Bill 2288, which would allow credit union members to vote by mail or by sending in faxes; board of director meetings to be held via conference calls; utility bills to be paid on site by members; and credit cards and safety deposit box options to be given to members without prior written consent from the Division of Banks.
“What this legislation does is allow additional flexibility for credit unions,” said Andrea Nuciforo, Senate chairman of the Financial Services Committee. “I hope that it will become law.”
Robert B. Kimmett, senior vice president of marketing and public relations of the Massachusetts Credit Union League, said the changes would have the greatest effect on back-office operations. And, he added, those capabilities have been offered to federal credit unions for years.
Some of the changes are definitely bringing credit unions up to speed with today’s lifestyles. Conference calls take place in almost every business, and as credit unions grow and branch out into more and more communities, directors’ meetings should be able to take place using the technology that is designed to make such aspects of business easier, said Kimmett.
“We don’t necessarily live our lives within a 10-mile radius anymore,” he said.
As far as consumer-based service changes are concerned, not much is expected to change. Kimmett said he does not think there will be a slew of credit unions now offering credit cards or safety deposit boxes. Since the option has been around for institutions that sought DOB approval, many credit unions already have decided if they want to offer such services. Kimmett added that he does not believe all credit unions will take advantage of doubling as a bill-paying center even if the option becomes available. Select credit unions that have received requests from their members are likely to consider it, but not all of them will take on the new operation, he noted.
“It is an important bill with a lot of useful changes to the law. It will allow credit unions to operate more efficiently,” said Kimmett. “These initiatives have been in the works for years.”
Steady Progress
The bill, which was originally drafted in the 2001-2002 House session, is making a strong comeback, getting further through the legislative process than it has in the past. It requires another round of approvals by both the House and Senate and the governor’s signature before state-chartered credit unions will be able to take advantage of the opportunities their federally chartered counterparts have had available to them for years.
“One reason we did this bill is this is part of an effort to give Massachusetts credit unions parity to their federal counterparts,” said Nuciforo. “I am very optimistic.”
Carl Abate, a policy analyst in the House, said the bill was approved by the House in 2002 and 2004, but never made it to the Senate floor until now. He said it was redrafted in November and since then has been making steady progress.
Although there is no date set for the next time the bill comes up for the remaining approval needed to pass it into law, Nuciforo said he thinks it could make it through this year.
Abate said the intention of the bill is to bring state-chartered credit unions up to speed with the capabilities of other financial institutions.
However, not everyone wants to see credit unions receive a leg up that could make them more competitive players in the industry. For years, banks and credit unions have battled over whether credit unions have strayed from their initial purpose and become too bank-like while continuing to enjoy a tax-exempt status. By allowing credit unions the power to issue credit cards and take utility payments, bankers argue, the limits of what should be allowed for a tax-exempted financial institution would again be stretched.
Nuciforo said he is aware there is some resistance from the banking community to allow the change. “‘Grumbling’ might be a better word,” he said. But he added, “I am not unsympathetic to some of the arguments made by the banks.”
However, Nuciforo said he does support the bill. He said putting the state-chartered institutions on the same level playing field as federal intuitions is important. He also said he believes consumers benefit from having the option of local credit unions and should have access to certain products and services through them.
Frederick D. Healey, president and chief executive officer of Workers’ Credit Union, said he was pleased to hear the bill was moving along.
“The legislative process runs in cycles. There is a lot going on on [Beacon] Hill,” he said. He added, however, “We need the legislators to realize there are many outdated rules and regulations.”
When Workers’ prepares for its annual meeting, chairs and tables are set up at its headquarters in Fitchburg. Healey said he does not always know how many members will show up to vote for things such as new board of director appointments, but there is no way every member fit in the space. The current law requires all members to vote in person, a requirement that makes it nearly impossible to encourage high voter turnout at an institution such as Workers’, which has approximately 62,000 members.
“Right now we are limited to those workers who can be here physically,” said Healey.
But the ability to have workers vote by mail would make the process easier and lead to more members having a say in internal decisions, he said.
Workers’ also has 10 branches, stretching as far east as Orange and as far west as Chelmsford. Holding monthly meetings results in quite a bit of travel time, Healey said, but it is state law.
“It requires our board to meet face to face every month of every year,” he said, adding that updating the law to allow conference calls would be a huge help.
