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Credit Union Exemption Restored in Texas Senate
Thursday, April 27, 2017 7:00 AM

SB 714 by Sen. Kel Seliger (R-Amarillo) was considered by the Texas Senate Wednesday. Sen. Charles Perry (R-Lubbock) had been working with the Texas Credit Union Association on an amendment to SB 714. It would restore the exemption in the Estates Code, relating to payable-on-death (POD) disclosures for state and federal credit unions when opening new accounts.

The amendment would protect credit unions from costly new requirements when opening new accounts or modifying existing accounts. Seliger decided to offer the amendment, restoring the credit union exemption on disclosures for new accounts, to his bill himself. It was added without objection. The Senate voted to pass the amended bill by a vote of 30 ayes and 1 present, not voting.

The tremendous outpouring of grassroots opposition to SB 714 by credit union members, staff, and volunteers persuaded senators that this matter was very important to credit unions. They responded to the Texas Credit Union Association’s request to contact their senators and oppose the bill as it was originally written.

“The engagement by credit unions to the Texas Senate, asking that they protect credit unions from unnecessary mandates, shows what can be accomplished by credit unions working together,” said Cornerstone Credit Union League President and CEO Caroline Willard.

SB 714 offered revisions to a law, passed in 2015, that was designed to increase public awareness of the POD option that makes it possible to transfer assets without going through the costly probate process. Credit unions believe the required disclosure is unnecessary because of the high rates of member use of the POD feature on their accounts. Therefore, the requirement would have added the costs to implement the new disclosures without adding any benefit to the members.

In addition, the new disclosures would have complicated indirect lending, potentially eliminating credit unions from this market. The bill would have put credit unions at a competitive disadvantage with banks while providing reductions in the requirements on banks when opening new accounts.

Having several senators' support was critical to addressing credit union concerns with SB 714. Last week, Sen. Bryan Hughes (R-Mineola) removed the bill from the Local and Uncontested calendar, where it would very likely have been passed last week, without an amendment.

On Wednesday, Perry spoke in favor of the amendment, saying it addressed credit unions’ concerns about unnecessary regulations. Sen. José Menéndez (D-San Antonio) also spoke in favor of the amendment, citing the approximately 400,000 credit union members who live in his district.

"We appreciate the leadership by Senators Hughes, Perry, and Menéndez, along with all the other senators who stepped up to protect credit unions," said Texas Credit Union Association President Jeff Huffman. "Credit unions and their members no longer need to contact senators about SB 714. I hope credit union CEOs will take a moment to send a thank-you note to their senator for voting to protect CUs from costly new mandates."

For more information, please contact Texas Credit Union Association President Jeff Huffman at 469-385-6488 or jhuffman@txcua.coop.