Michigan CUs applaud regulatory changes but look ahead to legislative revamp

PLYMOUTH, Mich. – Michigan’s credit unions are reacting positively to the changes in field of membership policies announced last month by Office of Financial and Insurance Services Commissioner Frank M. Fitzgerald. But they are only baby steps when compared with the changes the Michigan Credit Union League hopes are in the offing. “It certainly opens up field of membership a little bit more and clarifies some things,” said JoAnne Fillwock, CEO of Financial Health CU in East Lansing. The regulatory changes expand field of membership to include retirees and students for the state’s 285 state-chartered credit unions and remove a cumbersome regulatory procedure for community-based credit unions. While the changes are appreciated, Fillwock considers them only a preliminary to what MCUL hopes to get through the legislature. At its meeting June 25 at the Michigan CU Center in Northville Township, the MCUL board approved a working group’s recommendations for sweeping changes in the Michigan Credit Union Act. Fillwock chaired of the working group. The group’s recommendations would give credit unions authority essentially to define their own fields of membership, though OFIS will still be able to raise concerns over the safety and soundness of any expansion. If implemented, a credit union could include the entire state in its field of membership. Those changes will be brought to the new legislature that comes to the capital next January after the November election. The board approved the working group’s recommendations after seeing that 22 of 32 comment letters about the change supported the recommendations. Seven opposed the change and three voiced mixed opinions, according to the league. Supporters complained about the cost and time required to expand field of membership under the current law and cited the benefits to consumers of greater choice of financial institutions if credit unions could expand more easily. Opponents were concerned that the changes would benefit larger credit unions and make credit unions bigger targets for attacks by banks. Ken Ross, MCUL director of regulatory affairs described the regulatory changes as liberalizations of policy. “I think of these as important improvements, not groundbreaking or earth shattering,” he said. The regulatory changes open up school groups for credit union memberships either as SEGs or as part of defined communities and allow retirees living in any county contiguous to a county where a credit union has a branch to join the credit union. The new policies also eliminate the need for expanding community-based credit unions to provide written notification of the proposed expansion to all credit unions in the proposed community, who could then voice opinions on the expansion. Ross said the OFIS was only getting responses that complained, predictably, about market competition. “Regulatory review of an application to change or expand a credit union’s field of membership is a technical review, said Fitzgerald in a press release. ” The old policy of requiring the applying credit union to notify area credit unions of the application added no value to the review process.” Ross described the new regulations as incremental and positive. “ There’s been a significant change over the last few years from our regulator’s perspective,” he said. “There’s been a recognition that overlaps (in the territories of community credit unions) will be allowed.” Though the league has bigger fish to fry, both Fillwock and Ross applauded the regulatory effort. “They are always looking at the act and ways of enhancing a credit union’s ability to do business in Michigan,” she said. “Michigan has a pretty progressive group of regulators, we’re very fortunate.” -