Senate Bill Report — HB 1165, Washington Credit Union Act (March 12, 2021)

Summary

Senate Bill Report on HB 1165, as of March 12, 2021, prepared for the Senate Committee on Business, Financial Services & Trade, with committee activity listed for 3/16/21. The bill concerns the Washington credit union act, and the report lists Representatives Ryu, Vick, Santos, Hoff and Harris-Talley as sponsors. Its brief summary states that the bill authorizes credit unions to invest in the equity interest of corporations engaged in or planning activity incidental or complementary to a credit union's operations, allows credit unions to acquire real property without occupying the property within a designated period of time, and modifies certain powers of state-chartered credit unions.

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Issuer: Congressional materials
Document type: Report
Date: 2021-03-16
Case: 2021 03 16 A28696 D231724 Bill Report 1165 Sba Bfst 21

Cite this document

“Senate Bill Report — HB 1165, Washington Credit Union Act (March 12, 2021).” Original at app.leg.wa.gov, dated 2021-03-16. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2021-03-16-2021-03-16-a28696-d231724-bill-report-1165-sba-bfst-21/, SHA-256 c009bd6cc99adc91bdeb0451d8a7dfed2ec97e5c68fc0011879a534afb4cb0c3.

Full text

SENATE BILL REPORT
HB 1165

As of March 12, 2021

Title: An act relating to the Washington credit union act.

Brief Description: Concerning the Washington credit union act.

Sponsors: Representatives Ryu, Vick, Santos, Hoff and Harris-Talley.

Brief History: Passed House: 2/3/21, 93-2.
Committee Activity: Business, Financial Services & Trade: 3/16/21.

Brief Summary of Bill
• Authorizes credit unions to invest in the equity interest of corporations
that are engaged in or planning activity incidental or complementary to a
credit union's operations.
• Allows credit unions to acquire real property without occupying the
property within a designated period of time.
• Modifies certain powers and authorities of state-chartered credit unions.

SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES & TRADE

Staff: Clinton McCarthy (786-7319)

Background: Credit unions are cooperative, nonprofit organizations created for promoting
thrift among their members and providing a source of credit to them. Credit unions may be
chartered under state or federal law. The National Credit Union Administration regulates
federally chartered credit unions.

The Department of Financial Institutions (DFI) regulates state-chartered credit unions.
State law provides for the organization, regulation, and examination of state-chartered credit
unions. The director of the DFI (director) may, by rule, provide relief from certain state

This analysis was prepared by non-partisan legislative staff for the use of legislative
members in their deliberations. This analysis is not part of the legislation nor does it
constitute a statement of legislative intent.

Senate Bill Report -1- HB 1165
laws and rules to small credit unions, which are defined as credit unions with up to $10
million in total assets. There are no credit unions with less than $10 million in total assets.

Credit Union Authority. State-chartered credit unions have all of the powers and authorities
held by federal credit unions on December 31, 1993, or a subsequent date not later than July
28, 2019. State credit unions may have all of the powers and authorities held by federal
credit unions after that date, if the director finds the exercise of the power and authority
serves the convenience and advantage of credit union members and maintains the fairness
of competition and parity between state credit unions and federal credit unions. State credit
unions also have all powers and authorities of out-of-state credit unions, except
membership, so long as insurance and other requirements are met.

Credit Union Services and Charges. Credit unions may provide a variety of financial
services to members, including accepting deposits, making loans, and paying interest or
dividends. Credit unions may impose reasonable charges for services provided to members.

Investment of Credit Union Funds. Credit unions may invest funds in a variety of
investment types so long as the investments are deemed prudent by its boards of directors.
Examples include:
• loans held by other credit unions;
• fixed income securities such as bonds;
• mutual funds with a portfolio of securities issued or guaranteed by the federal
government;
• shares of stocks in organizations whose primary purpose is to strengthen, advance, or
provide services in the credit union industry or for the credit union's membership; and
• insurance policies and investment products related to employee benefits.

Real Property Interests. With some limitations, credit unions may invest in real property or
leasehold interests if used in conducting its business or the business of a credit union
services organization. Credit unions must partially occupy real property acquired for future
expansion within three years of the investment if property improvements are made at the
time of acquisition, or within six years if no improvements are made.

Summary of Bill: Credit Union Authority. DFI is provided rule making authority to
establish a definition for the term small credit union.

Credit unions may impose reasonable charges for the services it provides to both members
and non-members. The list of services that a credit union can provide is expanded to
include cashing checks, money orders, and other payment instruments for members and
persons who are eligible for membership in the credit union.

State-chartered credit unions may have all of the powers and authorities held by federal
credit unions as of December 31, 1993, or a subsequent date not later than the effective date
of this act.

Senate Bill Report -2- HB 1165
Investment of Credit Union Funds. The principal business of the corporation or entity does
not have to be related to the credit union's business, but the corporation or business must be
engaged in or planning activity that will be performed for or provided to the credit union or
its members. An equity interest is defined as a stock, membership in a limited liability
corporation, or a limited partnership interest in which the credit union's liability is limited to
the amount of the investment and the credit union does not take on general liability. A
credit union's investments in equity interests may not exceed the lesser of 50 percent of the
credit union's net worth or, when combined with investments in credit union service
organizations, 10 percent of the credit union's assets. Credit unions may not invest in a
federal or state depository institution or a bank or savings bank holding company.

A credit union may engage in investment activity only with prior authorization from the
director, and investment activity is subject to any requirements, restrictions, or other
conditions adopted by the director. When approving or denying a proposed investment, the
director must consider the financial and management strength of the credit union and the
relationship of the activity to the credit union's operations.

Real Property Interests. The requirement that credit unions partially occupy property
acquired for future expansion within a designated amount of time from acquisition is
removed.

Appropriation: None.

Fiscal Note: Not requested.

Creates Committee/Commission/Task Force that includes Legislative members: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Senate Bill Report -3- HB 1165

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Original: app.leg.wa.gov