From left to right: Michigan Credit Union League President and COO Ken Ross, NASCUS Vice President, Legislative and Regulatory Counsel Nichole Seabron, Michigan Department of Insurance & Financial Services Patrick McPharlin, Rivermark Community Credit Union President/CEO Scott Burgess and CUNA Director of Advocacy Shelton Roulhac.
WASHINGTON – While credit unions have the freedom to choose between a federal and state charter, regulators at the federal and state levels enjoy a competitive yet cooperative relationship, according to speakers in a breakout session, "Joined at the Hip: Federal and State Charter Interdependence," at CUNA's GAC Monday.
Nichole Seabron, vice president, legislative and regulatory counsel for NASCUS, said her organization engages often with federal agencies including the NCUA and CFPB to make them aware of the smaller, state-chartered credit unions' needs. "We engage with the NCUA most often, because we have a joint goal of credit unions surviving and thriving," she said. "We've had some points of contention, but overall the relationship is cooperative." She later added that since credit unions also compete with banks, it's most conducive for federally- and state-chartered credit unions to grow as one group.
Patrick McPharlin, director of the Michigan Department of Insurance & Financial Services, which regulates credit unions, banks and insurance companies, said the dual charter system is essential because it creates a healthy competition. "The fact that [a credit union] can leave its charter at any time makes us be more competitive," he said. "I think the competition is good, but the cooperation is good too. We had to close a credit union on Friday, and the cooperation between us and the NCUA was amazing. There were no bureaucratic battles; we did what was best for the credit union industry."
The session's speakers touted the benefits of choosing a state charter, however. Scott Burgess, president/CEO of the $829 million Rivermark Community Credit Union in Beaverton, Ore., said his state's credit unions follow a proactive process when it comes to interacting with state lawmakers to make regular updates to Oregon's credit union act. The state's credit union advocates have successfully taken action to incorporate programs for member expulsion, board director and committee member compensation, and CUSO investment increases into the act, just to name a few, Burgess said. "I find the state charter to be a great value," he said. "If there are changes we'd like to see [to the act] that would help us better serve our members, we love the fact that we can take a thought to the state legislature, and see it become law in 12 to 18 months."
But not all states benefit from a state charter program as robust as Oregon's, warned Ken Ross, president and COO of the Michigan Credit Union League. "A lot of the state acts are old and creaky, and they're not able to get work done," he said.
Ross said state-chartered credit unions looking to update their state's "old and creaky" act must develop a grassroots process to determine what changes they'd like to make and how they'll educate members of the state legislature. He recommended creating a narrative to present to lawmakers around what the state's credit unions are doing, why they're doing it and why the legislature should focus on their industry, and to negotiate behind the scenes as much as possible.
And, in response to an audience member's question on how federally-chartered credit unions can help make changes to the federal credit union act, Ross said even more intense grassroots efforts may be required.
"You'll have to lay a strong political bedrock," he said. "You have to be offensive, and to move something through the complex political landscape, it's a heavy lift. There will be a period of issue development that's built on top of a grassroots process."
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Natasha Chilingerian
Natasha Chilingerian has been immersed in the credit union industry for over a decade. She first joined CU Times in 2011 as a freelance writer, and following a two-year hiatus from 2013-2015, during which time she served as a communications specialist for Xceed Financial Credit Union (now Kinecta Federal Credit Union), she re-joined the CU Times team full-time as managing editor. She was promoted to executive editor in 2019. In the earlier days of her career, Chilingerian focused on news and lifestyle journalism, serving as a writer and editor for numerous regional publications in Oregon, Louisiana, South Carolina and the San Francisco Bay Area. In addition, she holds experience in marketing copywriting for companies in the finance and technology space. At CU Times, she covers People and Community news, cybersecurity, fintech partnerships, marketing, workplace culture, leadership, DEI, branch strategies, digital banking and more. She currently works remotely and splits her time between Southern California and Portland, Ore.
