CU Board Modernization Act Passes House Committee

On Wednesday, members of the House Financial Services Committee passed the Credit Union Board Modernization Act (H.R. 6889) introduced by Reps. Juan Vargas (D-Calif.) and Anthony Gonzalez (R-Ohio).

The bill would alter the Federal Credit Union Act’s requirement that federally charted credit unions meet 12 times each year and reduce that number to a minimum of six times each year.

In a statement Wednesday after its passage out of Committee, CUNA President/CEO Jim Nussle said, “Thank you to the House Financial Services Committee for passing this common-sense bipartisan bill that will give credit union boards needed flexibility. This bill addresses an outdated Federal Credit Union Act requirement and will free up credit union staff and board members to focus more on member service.”

In letters to the Committee on Tuesday, both NAFCU and CUNA argued that the Federal Credit Union Act does not consider the advances in technology that have occurred to allow board members to communicate at any time.

In his letter, NAFCU Vice President of Legislative Affairs Brad Thaler wrote, “With all of the connectivity and technology available today, credit union boards are able to communicate in an ongoing manner that has negated the necessity of monthly meetings.”

CUNA President/CEO Jim Nussle wrote in his letter that the burden of the old meeting requirements puts a particularly large burden on small credit unions. “This outdated board meeting requirement can place a burden on credit union staff and their volunteer board members, especially smaller credit unions with few employees and those in rural areas. The amount of resources it takes for a credit union to run a monthly board meeting can shift employee time away from the services that a credit union provides to its community.”

Nussle added, “To incentivize good governance at credit unions and promote safety and soundness of the overall system, we also support exemptions made in this legislation for credit unions with a low CAMELS composite rating, credit unions with a low Management component rating and de novo credit unions as they stabilize operations.”

A similar bill in the Senate was introduced in May by Sens. Kyrsten Sinema (D-Ariz.), Bill Hagerty (R-Tenn.), Alex Padilla (D-Calif.) and Thom Tillis (R-N.C.).

Michael Ogden

Editor-in-Chief for CU Times.