Ark. Insurance/Commerce Committee hears testimony on public funds

Credit unions in Arkansas have been anticipating that Senate Bill 257 by Sen. Kim Hammer (R-District 33) concerning public funds, would soon be given a full hearing. Yesterday, the Senate Insurance and Commerce Committee did just that.

SB257 is described as "To Include Financial Institutions Insured by the National Credit Union Administration as Institutions Allowed to Serve as Depositories of Public Funds" and would amend Arkansas law to permit federally insured credit unions to serve as a bank depository for public funds, thereby providing credit unions parity with banks. The amendments provide governmental entities with additional options in choosing a depository institution.

Among those testifying for SB257, Suzanne Yashewski, regulatory compliance counsel for Cornerstone Credit Union League, addressed the technical portions of the bill, such as terms, insurance (FDIC/NCUA National Credit Union Share Insurance Funds), and interest/dividends. She also covered the 2017 Tennessee Attorney General's opinion on proposed state legislation allowing a county, city, or town to make a deposit in a Tennessee state-chartered credit union.

Tammy Passafiume president/CEO of Diamond Lakes Federal Credit Union, testifies on the public funds issue to Arkansas' Senate Insurance and Commerce Committee.

Also testifying were Dee Edie, president/CEO of Pine Bluff Cotton Belt Federal Credit Union, and Tammy Passafiume, chief executive officer of Diamond Lakes Federal Credit Union. Edie and Passafiume addressed the services their credit unions provide members and their involvement in the communities they serve.

Testifying for the opposition were Cathy Owen, chairman of the Arkansas Bankers Association and Eagle Bank and Trust, and Larry Wilson, First Arkansas Bank and Trust in Jacksonville. Their statements concerned income taxes and how much the state was "losing" without credit unions paying taxes. The two held that credit unions should not be allowed to take public deposits until they are taxed like banks. Additionally, Owen stated that banks are governed by the Community Reinvestment Act and that she wasn’t sure credit unions were as involved in their communities as banks.

Arkansas Credit Union Association Lobbyist Ron Harrod said the testimonies of Yashewski, Edie, and Passafiume were compelling and successfully rebutted the issues the banks had raised, including taxation.

Dee Edie, president/CEO of Pine Bluff Cotton Belt Federal Credit Union, testifies on the public funds issue to Arkansas' Senate Insurance and Commerce Committee.

The ethics rules that the 92nd Senate has adopted this session require committee members on the floor to disclose if they have ever been involved or are currently involved with the issue before them. More than half of the eight committee members disclosed they were or had been credit union members.

The committee wasn't able to vote on the bill yesterday, so it remains in play and will be heard a second time before the end of this session.

For more information, please contact Arkansas Credit Union Association Lobbyist Ron Harrod at [email protected] or 501-944-3068.