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News Now

CU System
Kansas lawmakers to take up CU membership limits
TOPEKA, Kan. (12/7/07)--The possibility of limiting membership in credit unions will be taken up by the Kansas state legislature in its next session, which starts Jan. 14 and will run into May 2008. The state’s Special Committee on Financial Institutions and Insurance voted Tuesday to ask lawmakers to clarify restrictions on where and how credit unions can solicit members. This clarification is necessary to ensure that the state committee is fulfilling statutory requirements to limit credit union membership to individuals who share common bonds, according to State Sen. Ruth Teichman (R-Stafford), the committee’s chairwoman (Harris News Service Dec. 5). However, some members of the panel were opposed to the move, reasoning that decisions have been made consistently by the state Department of Credit Unions, and these decisions have not been contested in court. The Kansas Credit Union League issued the following statement to News Now, concerning the matter: “The committee voted to recommend that the legislature look at possible definitions for terms used in the field of membership statute that may provide more clarity. The committee was unable to reach an agreement concerning the post audit staff’s accusation that the interpretation used by decades of regulators appeared to be out of compliance with the statute. “The credit union movement will be working closely with the financial institutions committees of both the House and Senate during the upcoming session on this issue. The credit union message has been well received by Kansas legislators. We look forward to a positive outcome in the 2008 legislative session.” Credit union membership is supposed to be limited to groups that have a “common bond” of occupation or association, or who reside in the same neighborhood, community or rural district, according to state law. However, the statute has been broadly interpreted, a 2006 state legislative audit found. As a result, several credit unions have expanded their territories over the past several years, which includes five groups that can draw members from anywhere in the state. Limiting membership to the home county of a credit union’s main office branch and the contiguous counties is one proposal brought before the panel. This is similar to a Missouri law passed earlier this year, which was developed to resolve similar disputes in that state. However, Kansas credit unions have opposed this type of legislation.


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