Legislative changes under Senate Bill 306
On July 5, 2011, Gov. Jay Nixon signed Senate Bill 306, a bill sponsored by Sen. Jay Wasson and passed by the Missouri General Assembly this past legislative session. This bill modifies several laws relating to the administration and regulation of credit unions. This bill will now become law on Aug. 28, 2011.
- Reserve transfer calculation no longer required
There is one main provision that has a direct impact on all state-chartered credit unions. The current law, Section 370.320, requires each credit union to perform a “reserve transfer calculation” to determine if an amount must be transferred to Regular Reserves.
Several years ago, a federal law was enacted that established new minimum capital levels for all federally insured credit unions. As a part of this legislation, a quarterly calculation and potential transfer to Regular Reserves was eliminated for all credit unions above the minimum Prompt Corrective Action thresholds, of which nearly all Missouri credit unions are.
As of Aug. 28, 2011, Missouri state-chartered credit unions will no longer be required to perform a reserve transfer calculation or transfer an amount to Regular Reserves. There also is a regulation that requires a “recapture” or transfer amount between equity accounts equal to the amount of the quarterly provision for loan loss expense. It is expected that this will be eliminated soon after the effective date of the bill as well.
- Borrowing restrictions lifted for elected officials
Another provision in current law, Section 370.310, prohibits an elected official from being indebted to their credit union more than $25,000 unless the borrowings are secured by mortgages on primary and secondary owner-occupied residences, negotiable securities, vehicles or shares. This limit has now been eliminated. Elected officials have no restrictions other than those that apply to the general membership, as of the effective date. However, all loans to officials are still to be reported to the Board, per regulation, which will not change.
- Confidentiality ensured for exams
Other changes to our state laws will have less of a direct impact on individual credit unions. The bill cleans up outdated language by clarifying that the division operates under the correct department and that the Director is appointed by the Governor, with the advice and consent of the Senate.
Also, the bill helps ensure that examination reports and the information obtained during examinations remain confidential. Further, the bill establishes proper procedures and due process in the event of the removal or suspension of credit union officials.
If you have any questions, regarding any of the provisions of this bill, please do not hesitate to contact our office.