Will Wisconsin's "Financial Modernization Bill" become law this year? CUs, bankers hopeful

<p>MADISON, Wis. – Despite an unprecedented level of cooperation between Wisconsin’s banking and credit union industries and broad bipartisan support, A.B. 299, dubbed the “Financial Modernization Bill,” remains mired in committee, although banking and credit union representatives are still hopeful the bill will become law before the Wisconsin Legislature adjourns in May. An identical bill was almost passed in 2000, but died when the state Legislature adjourned. A.B. 299 modernizes credit union statutes by expanding their branching opportunities and allowing them to make memberships available in multi-county regions, among other provisions. “The current statutes are 40 years old and not reflective of what today’s world is like,” said Georgia Maxwell, director of government affairs for the Wisconsin Credit Union League. For example, one old regulation restricts a credit union from being established within a dozen or so miles of a state border, Maxwell said. That restriction might not have posed any problem several decades ago, she said, but today the state is home to cities such as Beloit in south-central Wisconsin, which has grown over the years and now basically extends across the border into Illinois. Effectively serving such an area under current state restrictions is impossible. The bill also allows Wisconsin’s credit unions some of the same powers enjoyed by other credit unions across the nation, such as the ability to create certain types of CUSOs. If Wisconsin’s credit unions are mired in the past and can’t do what others across the nation can, Maxwell said Wisconsin will see a shift away from state chartered credit unions to federally chartered ones, which isn’t desirable. For those in the banking industry, A.B. 299 establishes a universal bank that gives state-chartered institutions the same powers ceded to federally-chartered banks through the 1999 Gramm-Leach-Bliley Act. This is critical, said Kurt Bauer, vice president of government relations for the Wisconsin Bankers Association, because federally-chartered banks can currently offer consumers a wealth of new products and services that state-chartered banks cannot. “If we don’t have the same access to new products and services,” he said, “state charters will become obsolete.” A.B. 299, co-authored by state Rep. Suzanne Jeskewitz (R-Menomonee Falls) and state Rep. Jeff Plale (D-South Milwaukee), was speeding its way toward a quick passage this session when the Democratic Senate leadership added a provision giving unpaid worker wages a priority lien over bank loans when bankrupt Wisconsin companies are dividing up their assets. “The lawmakers [in favor of the amendment] are painting this as an individual vs. business issue – as who is in the better position to absorb losses, a consumer or a financial institution,” said Daryll Lund, president and CEO of the Community Bankers of Wisconsin. “We believe workers should get paid, but is it the responsibility of financial institutions to pay them, or the responsibility of the employer’s business? We believe it’s the employer’s business.” Despite the current impasse, both banking and credit union industry representatives remain optimistic the measure will pass relatively soon. After all, the lion has lain down with the lamb. “It’s very unique that the banks and credit unions have gotten together on a piece of legislation like this,” said Kurt Bauer, vice president of government relations for the Wisconsin Bankers Association, “and it will be all worth it when we have a completed package and it passes both Houses.” Maxwell agreed. “We really have more in common than differences, and we look forward to working with the banking industry again in the future.”</p>