Washington State CU regulator affirms SCUs' incidental powers parity with FCUs

OLYMPIA, Wash. – Citing chapter and verse of the Washington State Credit Union Act (WSCUA) that “grants Washington State-chartered credit unions the powers and authorities (powers) that federally-chartered credit unions (FCUs) possessed on December 31, 1993 or a subsequent date not later than July 22, 2001,” the director of the state Division of Credit Unions determined that Washington State-chartered CUs have the same powers granted to federal credit unions by NCUA’s amended incidental powers rule. This includes, wrote Director Parker Cann in a Nov. 8 DCU Opinion Number 01-8, “incidental powers and authorities granted to a FCU in the future through application to the NCUA or opinion of its General Counsel.” Cann’s opinion was written in response to an inquiry from the Washington Credit Union League concerning whether Washington State-chartered credit unions “enjoy the same incidental powers that were granted to FCUs by the NCUA’s amended IP rule.” According to the State Parity Provision (RCW 31.12.404) of the WSCUA, “the Director of the Department of Financial Institutions (DFI) may grant WaSCUs the powers and authorities that FCUs have subsequent to July 22, 2001.if the director finds that the exercise of the power and authority serves the convenience and advantage of members of credit unions, and maintains the fairness of competition and parity between credit unions and federal or out-of-state credit unions.” Even though NCUA’s amended IP rule took effect on Sept. 5, 2001, Cann stated that the incidental power provision in the Federal Credit Union Act was in effect on July 22, 2001. In addition, according to RCW 31.12.404(1), “A finding by the Director is not required to grant WaSCUs any FCU power unless it took effect after July 22, 2001.” Cann cautioned WaSCUs that as is the case with the exercise of any parity power, a CU should: * Consider whether board of directors’ approval of the exercise is necessary; * Maintain legal citations and other documentation “evidencing” the FCU power and the restrictions and limitations on the power; and * Comply with NCUA restrictions and limitations on the power. In addition, Cann wrote that a WaSCU should obtain the DCU’s written approval before undertaking any new activity in the exercise of its incidental powers under either the state parity provision or the state incidental powers provision. He also advised CUs to take safety and soundness precautions when undertaking any new activity. [email protected]