North Dakota League Does Turnabout on Processing Snub

BISMARCK, N.D. – Not entirely unexpected, the North Dakota Credit Union League, caught in a bitter schism over its lobbying policies, is reversing course on allowing non-members to use its processing subsidiary in hopes of bringing trade group unity. The policy reversal, adopted by the League Board at a June 9 meeting, invites four disaffiliated CUs to access its Regional Service Center following appeals by a contingent of North Dakota CUs. The contingent argued the denial of services from RSC served no purpose but to exacerbate the League split over a new Aug. 1 law-backed by bankers and the League leadership – limiting field of membership expansion. RSC access to the four disaffiliated CUs surfaced as a contentious issue at the annual League meeting here May 13-14 when CEOs took sides on how to treat the four CUs which had resigned complaining about a sellout to the banking lobby. Following two days of debate, the League membership voted to ask its Board to “reconsider” its existing policy denying access based on the views of some that the four CUs had abdicated business privileges by resigning from the League. “We want to rebuild those relationships,” with the four as well as another five North Dakota CUs which are non-members, explained Kermit Larson, president/CEO. There was no sign any of the disaffiliated had plans to seek RSC access or for that matter to rejoin the League. Since quitting the League, the four have sought out credit card and check processing services from other vendors including the Federal Reserve Bank of Minneapolis. Denton Zubke, president/CEO of Dakota West CU in Watford City, said his differences with the League remain unchanged based on the League’s willingness to accept what was described as a compromise FOM bill limiting the ability of CUs to set up new branches 75 miles from the main office. In the past, North Dakota CUs over the objections of bankers were able to engage in “leapfrog” FOM growth reaching many unbanked, rural towns which CUs contend now benefit from CU services. This year, however, the North Dakota Bankers Association reached a deal with the League to end political infighting over FOM rules by adopting the 75-mile limit. But a number of CUs objected to the League position triggering the resignations. Deb Mathern, president of the $16 million Fargo Public Schools FCU and one of the four which left the league, said she had not been formally notified of the RSC policy switch but her stance remains the same. “It’s all a little too late,” declared Mathern arguing the lobbying and management practices of the League were faulty in agreeing to the compromise. Mathern had been co-chairman of the Governmental Affairs Committee. Meanwhile, the League has set June 24 for a special hearing on perhaps the first test of the new FOM law prior to its taking effect brought by Zubke’s Dakota West CU. The Watford City CU, located in the western part of the state and with four rural branches, seeks to expand its FOM from a newly opened branch in Washburn, a community of 1,200 some 140 miles to the east. Dakota West opened its Washburn branch last November and has an application to extend its FOM 50 miles from there. Bankers could object to another example of “leapfrogging” prior to the Aug. 1 enactment which would effectively bar such practices, industry sources point out. Indeed, Zubke maintains “for as long as I can remember it is standard practice” for bankers to object to both CU branch and FOM applications. “Yes, we are trying to get it under the wire. If I do not get it changed now, when will I ever?” asked Zubke maintaining the new law “prohibits any FOM expansions period.” Larson, the League CEO, said Board members in reversing League policy on the Regional Service Center, “felt they wanted to be flexible” in adding those non-member North Dakota CUs as well as other CUs in neighboring South Dakota which also have been solicited. “It’s now the universe,” joked Tim Brown, the chairman of the League in describing a policy of inviting non-member CUs. The League noted that RSC pricing rules will likely be determined at a meeting later this month. [email protected]