North Carolina credit unions are looking to expand their operations, but the legislation is facing strong opposition from the state’s banks.
Credit unions want to be able to add members who live in low-wealth counties or are below the federal poverty level. Credit union memberships are currently limited to specific groups, such as state employees.
The bill would also allow credit unions to add new financial services, such as safe deposit boxes and electronic fund transfers. They'd also be able to lend to municipalities and other credit unions, and have more ability to invest funds in things like financial technology. The state would also expand its oversight authority.
Rep. Julia Howard, R-Davie, is the bill’s sponsor. She says the change is needed to address the closure of bank branches in rural communities.
"If the banks for business reasons choose not to go into these districts, I understand it, but allow the credit unions to do the job," Howard said.
But Peter Gwaltney of the N.C. Bankers Association says the change would create unfair competition. He says banks have hundreds of locations in the state's rural counties and he disagrees with the argument that they're underserved.
"It will allow North Carolina credit unions to essentially become banks, just without the tax and regulatory responsibilities borne by banks," Gwaltney said.
The legislation is a major priority for the State Employees' Credit Union, which is North Carolina's largest credit union and one that's looking to grow. But some of its former executives spoke out against the legislation on Thursday.
"It is a major fundamental rewriting of N.C. credit union statutes," said Jim Blaine Sr., who served as CEO of SECU for decades. "You are being intentionally underinformed and misled as legislators. This bill endangers and eliminates the most important and original principles under which credit unions were formed."
Other credit union leaders say the criticism is overblown.
"Not-for-profit credit unions have served North Carolinians humbly and faithfully for more than 100 years," said Dan Schline, CEO of the Carolinas Credit Union League. "We wish to continue that history by offering financial services to rural and underserved communities that have seen people and capital shift to wealthier population centers."
The bill passed its first House committee on Thursday.