N.C. House of Representatives
16 West Jones Street
Raleigh, N.C. 27601
Ref: H. 410
Short Title: Credit Union Updates
Dear Representative Winslow,
My name is Jim Blaine. I am one of your constituents in Granville County. I would welcome the opportunity, at your earliest convenience, to discuss your future support of H. 410. Here’s why:
The bill was filed on behalf of the Carolinas’ Credit Union League (“CCUL”, Dan Schline, CEO), the trade association for North and South Carolina credit unions. There are currently 30 active state-chartered credit unions in N.C.
The final draft of the 9-page bill is the result of a two year struggle by small credit unions, bankers, social activists, states’ rights advocates, and credit union members to mitigate the disastrous implications of the original 80+ page draft proposed by CCUL. The original “model bill” sought to re-regulate state credit unions in accordance with “federal standards” and to eliminate the long held original principles under which credit unions were formed in North Carolina – 1) limited membership requirements, 2) a member-controlled, non-profit cooperative, 3) and a primary focus on serving “individuals of modest means”.
Although over 70+ pages of detritus has been removed from CCUL’s original draft, H. 410 retains all the worst features attacking original credit union principles:
1. Proposes unlimited membership for both individuals and corporations – Even a superficial reader of the changes under 54-109.26 “Membership” defined (b)(1)(2) [as written] would find it difficult to identify any person on the planet who would not qualify to join any NC credit union. Consider the phrase… “groups having a common bond of similar…association or interest.” The translation of that phrase is anybody and everybody can join.
To add to the assault on the original principle of limited membership 54-109.27 ups the ante by opening membership to any and all corporations on the planet “…corporations owned and controlled primarily by eligible individuals, may be admitted to membership…”. The CCUL, not satisfied with just making individual membership open to everyone, here proposes to allow membership to corporations, whose owners don’t even need to belong, just be “eligible” to join. That would be all businesses and corporations including companies say in China. That is not where North Carolinians want their credit union money to go. If you’re unsure of your constituents’ opinion, just ask them!
2. Codifies the purposeful erosion of local, member cooperative control: Additionally, even a not so careful reading of 54-109.31 Meetings of Members will alert you to changes which remove decision-making authority from the member-owners of a credit union and place key controls in the hands of a potentially self-selecting, self-perpetuating board of directors. See (a), (b), (c) for statutory changes which move meeting times and formats, voting rights, and potential proxy voting rights for corporations into “bylaw changes” exclusively controlled by an entrenched and then potentially unaccountable board of directors.
Legislates a shift away from folks of modest
means: H. 410 is fraught with
examples of statutory changes which will permit N.C. based credit unions to
export member deposits and capital out of North Carolina - threatening the
State’s economy, local jobs, and the availability of credit. 54-109.82 Investment of Funds - Do take note of the potential
investment possibilities provided by this bill for N.C. credit unions to lend essentially without limit to members, non-members and
corporations anywhere in the world. The focus on North Carolina and
its citizens is notably absent.
And while you’re at it - given the recent collapse of two large banks; take note of the new authority for N.C. credit unions to invest: 54-109.82 (16) ”In stocks, securities, obligations, or other instruments that are approved by the Administrator.”
I assume you have been informed that there was substantial credit union opposition to the original bill draft. Opposition remains, although many credit unions have agreed to “remain neutral or voice no objection”, because the watered down version “does not affect their individual interests”. While that may be a reasonable posture for an individual credit union, your duty and that of the State Legislature is to the interests of all North Carolinians. H.B. 410 does not serve the best interests of North Carolina.
In checking through the N.C. Credit Union Commission, I have been assured that none of the new provisions included in H. 410 are important at this time to the continued success, safety, and soundness of North Carolina’s credit unions. Legislators may also confirm through Ms. Rose Conner, Administrator of Credit Unions, that no part of H. 410 is vital to the continued sound regulation, nor oversight of N.C. credit unions.
Many North Carolina credit unions remain highly, and rightfully, concerned that their future viability as independent credit unions will be jeopardized if H.410 is passed.
Many of those existing credit unions, which passage of H. 410 will “put at risk”, are located in rural and economically distressed counties in our State. The provision in H. 410 (54-109.28) purporting to assist “underserved populations and communities” is an excellent example of that old legislative trick of attempting to make an awful bill “look better” by throwing in an “orphans and widows” clause. It used to be called “putting lipstick on a pig!’’ The “pig” in this case is H. 410!
It appears obvious that the sponsors of H. 410 have – at best – not been given full and accurate information as to the actual implications of this legislation. Nor has the Carolinas’ Credit Union League been forthright in explaining that the underlying intent is to allow North Carolina credit unions to have unlimited membership, expand and invest outside of North Carolina, and increasingly limit the local control of North Carolinians of their member-owned cooperatives. If Mr. Schline and the CCUL believe that these drastic shifts in credit union laws are needed, then he should plainly say so. And, let the State Legislature vote those provisions up or down – sleight of hand wording benefits no one.
H. 410 will literally affect over 5+ million North Carolinians, who are credit union members. Those North Carolinians deserve the whole truth and nothing but the truth on the future consequences of H. 410. One would assume that legislators would appreciate the same courtesy. You should be told the whole truth and shown “the whole hawg!” before you are asked to vote.
For those in the Legislature who are unaware of the rising debate over credit unions in North Carolina – particularly with State Employees’ Credit Union and Local Government Federal Credit Union – you might like to follow one side of the “discussion” at www.secujustasking.com. Or simply ask your local state employees, teachers, police officers, firefighters, neighbors, family, and friends.
If new legislation is needed to clarify the future role of credit unions in North Carolina – H. 410 is not it!
Please let me know when I might meet with you. Many of the constituents in your district are credit union members and would appreciate an opportunity to voice concerns over H. 410. Look forward to meeting with you.
...usually not wise to try and fool Mother Nature... or The State Legislature. Both tend to have very long memories...