SB 1292 defeated in Assembly Banking & Finance Committee

California Bankers Association comments on failure of "credit union expansion" legislation

SACRAMENTO - June 22, 2004 - The following statement is from the California Bankers Association (CBA) regarding the failure of SB 1292 (Dunn) in the Assembly Banking & Finance Committee yesterday:

"The California Bankers Association (CBA) and the Community Bankers of California successfully stopped Senate Bill 1292 (Dunn) in the Assembly Banking and Finance Committee last night. SB 1292 sponsored by the California Credit Union League would have significantly altered the scope of credit union competition with community banks to permit credit unions to offer money transmission and check cashing services to non-members. The California Independent Bankers joined the opposition led by CBA to defeat the measure. A similar measure is under consideration in Congress.

"The chair of the CBA board, Thomas Shaffer and board Treasurer, Kent Steinwert testified in opposition to the measure arguing that SB 1292 represented a significant expansion of credit union powers by permitting credit unions to offer banking services to non-members.

"The entire banking industry opposed SB 1292, unless it was amended to require credit unions to abide by the Community Reinvestment Act (CRA). Credit unions have traditionally opposed CRA responsibility because they claim only to serve their members and not the community as a whole. However, SB 1292 turns that argument on its head.

"Credit unions can only serve people within the credit union's "field of membership", which is based on a common bond, such as: occupations, associations, or well-defined regions. They are not allowed to provide services to "potential" members. SB 1292 allows credit unions to provide services to non-members that live in the credit union's field of membership - similar to that of a bank.

"SB 1292 allows credit unions to act like banks without requiring them to be treated like banks, which have a CRA obligation," said Alex Alanis, CBA Legislative Advocate. "This bill creates a competitive disadvantage with community banks that have to abide by the Community Reinvestment Act - while credit unions do not."

"If credit unions want to act like banks, then they should be treated like banks and require them to abide by the Community Reinvestment Act," said Alanis.

"Although SB 1292 failed on a 4-3 vote, the bill may be reconsidered for another vote in the Assembly Banking and Finance Committee."

Information about CBA
Established more than 110 years ago, the California Bankers Association (CBA) is one of the largest state banking trade associations in the country. CBA leads the way in developing relevant educational and legislative solutions to some of California's more pressing financial and banking issues, including financial privacy, predatory lending, usage fees, and financial elder abuse. CBA's membership includes more than 300 of California's commercial, industrial and community banks and savings associations.