Wednesday, May 10, 2023

H. 410 - Credit Union "Updates" - The N.C. Senate Rules Committee - Designed To Deceive # 7 Good morning, Senator Rabon and members of the North Carolina Rules and Operations Committee.

Re: H. 410 - Short Title: "Credit Union Updates"

H. 410: Credit Union "Updates" reminds me of that famous Loudon Wainwright III song "Dead Skunk in the Middle of the Road" [Here's the link...if you want a whiff!]

In putting forth this legislation, credit union industry advocates have been casual with their data, casual with the facts, and casual with the truth. Would hope that you find that statement unusual, coming from a life-long, die-hard advocate of credit unions, who served for 37 years as the CEO of State Employees' Credit Union (SECU).

North Carolina credit union statutes (now § 54.109) were first promulgated in 1915 at the behest of John Sprunt Hill, the premier banker of his time. Statutes governing banks already existed, Mr. Hill was seeking legislative authorization for an entirely different, new type of financial institution to serve North Carolinians - credit unions. 

Those who would allege that Mr. Hill was trying to create a competitor for his banking interests, badly underestimate the business acumen of Mr. Hill and purposefully misrepresent the basic, statutory principles under which credit unions were chartered. Those core principles were:  1) limited membership, centered on a common bond for safety and soundness purposes, 2) a member-owned and member-controlled, cooperative organizational structure, and 3) an emphasis and focus on individuals of modest means.

The wisdom and soundness of North Carolina credit union statutes is apparent in the uninterrupted growth and success of N.C. state-chartered credit unions; and, in the measurable benefits those credit unions now provide to over 3 million North Carolinians.

But H. 410 - Credit Union "Updates" is the proverbial "skunk at the garden party". Here's why it stinks!  

👎  H. 410 is not a "minor update" to credit union statutes; it is a major rewrite.

👎 H. 410 authorizes unlimited membership, anyone can join. And, would overturn a 1981 N.C. Supreme Court ruling affirming limited membership as the intent of N.C. law

👎 H. 410 authorizes open membership for corporations anywhere in the country.

👎 H. 410 de-emphasizes the focus on North Carolina and citizens of modest means. Proponents have consistently rejected a specific mandate to serve these individuals. 

👎 H . 410 permits unlimited lending, including unsecured, to corporations.

👎 H. 410 will accelerate the export of local jobs, local funds, and local capital out of North Carolina, undermining the State's efforts at business recruitment and development - especially in rural counties.

👎 H. 410 will enhance "federal parity" for credit unions, which is a device to circumvent scrutiny and approval of North Carolina standards by the State Legislature.   

👎 H. 410 has disrupted a positive detente in the rivalry between N.C. banks and credit unions and will "unlevel" the competitive balance between the two groups,

👎 H. 410 does not enjoy united support among N.C. state-chartered credit unions and is opposed by thousands N.C credit union members and groups such as the State Employees Association of North Carolina (SEANC).

👎 H. 410 does not represent the best interests of all of North Carolina, nor those specific citizens who are credit union member-owners. If credit union statutes need to be rewritten, H. 410 is not the answer. 

Thank you for your consideration in leaving H. 410 where it belongs...somewhere dead along the side of the legislative road.