D.C. Council hears testimony on credit union charter bill

WASHINGTON, D.C. – The District of Columbia City Council Consumer and Regulatory Affairs Committee heard testimony November 28 from credit union trade association representatives in support of a bill, Bill 14-353, that would allow for D.C. state-chartered credit unions. Among those testifying, NASCUS Director of State Regulatory Services Brian Knight assured the committee that the dual chartering system is still a viable system, and he advised them that, “The number of state charters compared to the number of federal charters in a state is not indicative of the success of that state’s regulatory program.” Six states-Alaska, Hawaii, Maryland, Nevada, Rhode Island and West Virginia-have fewer than 15 SCCUs. NASCUS was also invited to review and comment on the proposed act. Knight offered recommendations to strengthen the Department of Banking and Financial Institution’s ability to examine and regulate credit unions. Knight told Credit Union Times he thought it important that the credit union charter act provide the Department the regulatory flexibility to adapt to changing times. For example, he said it contains a provision that would leave open the possibility of alternative insurance for D.C. state-chartered credit unions. “The Department may not want to allow them to do that now, but perhaps sometime in the future, and it’s better that it has that regulatory flexibility rather than having to go through the legislative process later,” said Knight. Colleen Kelly, CUNA Vice President for State Government also testified before the committee. She too focused her testimony on the dual chartering system and told the committee that CUNA’s reason for supporting a District of Columbia credit union charter had nothing to do with the fact that the association promotes one charter over another. “And our support for a District of Columbia charter should not in any way suggest that the federally chartered credit unions in the area are dissatisfied with their federal charter, or that they are currently looking for an alternative.” Instead, Kelly said the existence of a D.C. credit union charter would allow for choice for credit unions in D.C. and promote competition and “nourish the development of a greater diversity among credit unions” within the dual chartering system. “The interplay between the federal and each of the state systems has provided credit unions with the benefits to be derived from the competition between the federal and state regulators to provide the best systems of examination, supervision and regulation (or deregulation).,” said Kelly. There are 47 state credit union acts in the U.S. Delaware, South Dakota, Wyoming, and the District of Columbia are the only jurisdictions that do not have state credit union charters. The District had a state CU charter until 1964, but it was repealed. There are currently 80 D.C. credit unions, and they’re all federal credit unions. The D.C. Credit Union League has had a management agreement with the Virginia League since 1998, but the D.C. League remains a separate entity. – [email protected]