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CU Modernization Bill Passes California State Assembly
Monday, August 29, 2016 6:45 AM

A credit union modernization bill passed its last legislative hurdle Aug. 18 in the California State Assembly by a vote of 66-0.

Assembly Bill 2274 is the culmination of efforts by the California Credit Union League’s State Charter Review Committee, chaired by Brett Martinez, CEO of Redwood CU, Santa Rosa. It is now in the hands of Gov. Jerry Brown, who must sign the bill by Sept. 30 for its provisions to take effect by Jan. 1.

The legislation modernizes the state charter by:

  • Allowing member business loans to exceed a member's deposits;
  • Eliminating board approval of membership applications;
  • Allowing for an audit committee in lieu of a supervisory committee;
  • Allowing non-members to act as co-borrowers, surety, or guarantors of a loan made to a member;
  • Redefining which credit union officials' loans are subject to certain limitations and are required to be reviewed by the board;
  • Allowing credit unions to decide whether their boards need to meet on a monthly basis or if they should opt to meet less often based on the needs of the credit union; and
  • Removing unnecessary loan documentation requirements.

Throughout the legislative process, this measure was well received by lawmakers as it passed through the Assembly Banking and Finance Committee with a vote of 12-0, Assembly Appropriations Committee (20-0), Assembly floor (79-0), Senate Banking and Finance Committee (7-0), Senate Appropriations Committee (7-0), and the Senate Floor (38-0).

The California legislative session ends Aug. 31, and the league is focused on other credit union-related bills including measures regulating property accessed clean energy (PACE) loans and unclaimed property.