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State-Chartered CUs Most Vulnerable to Proposed Firearm Bills
Monday, February 8, 2016 6:45 AM

Recently introduced state legislation regarding firearm and ammunition businesses and their relationships with financial institutions could adversely affect credit unions at the state level. The legislation, the Firearms Industry Nondiscrimination Act (FIND Act), has been introduced in Georgia, Kansas and Missouri and would create a private cause of action against any credit union or financial institution that “discriminates” against a firearm and ammunition business by refusing service or discontinuing service.

“We understand the concern of the industry, but from our perspective, the bill impacts state-chartered credit unions disproportionately,” said Brandee Bickle, director of governmental affairs at the Georgia Credit Union Affiliates.

For instance, credit unions may not be able to accept a gun shop as a member because the business is not within its field of membership. It also may be at its cap for member-business lending and therefore could not provide lending services to the firearm business.

“Despite those restrictions, credit unions could still face the charges of discrimination and potential legal action,” Bickle said. The bill would in effect be legislating a credit union’s business decision, disallowing its ability to assess risk to its membership, she added.

The FIND Act has been proposed in response to the federal Operation Choke Point initiative that discourages financial institutions from offering services to businesses deemed as “high risk” or as a “reputational risk.” The gun industry contends that financial institutions have discriminated against lawful firearm and ammunition businesses due to Operation Choke Point and that discrimination has led to higher business costs.

On Thursday, the U.S. House passed the CUNA-supported Financial Institution Consumer Protection Act (H.R. 766), which would in effect end Operation Choke Point. It limits federal regulators’ ability to discourage or restrict depository institutions from entering into or maintaining a financial services relationship with specific customers unless certain criteria are met.