After nearly two decades of lobbying, credit unions based in the nation’s capital now have the option of operating under a District charter.
Enacted on Wednesday, the Credit Union Act of 2020 grants Washington, D.C.-based credit unions the ability to apply for a charter from the District’s Department of Insurance, Securities and Banking. The new law authorizes DISB to charter, regulate, examine and oversee the 36 credit unions based in Washington.
"We've always believed that more options are better for credit unions so that they can make the decision of how they want their credit union to be chartered," John Bratsakis, the MD|DC Credit Union Association's president and CEO, said in an interview with Credit Union Journal.
It’s unclear why the D.C. charter was abandoned in the mid-1960s, though what was then known as the D.C. Credit Union League is believed to have asked for the charter to be repealed and that the 16 institutions governed by it be brought under the umbrella of the Federal Credit Union Act. Since that time, all Washington-based credit unions have been required to operate under a federal charter.
Bratsakis added that provisions in the new charter grant credit unions greater flexibility in working with the District and rulemaking powers similar to that of state-chartered institutions.
Some of the new changes grant the DISB commissioner flexibility in defining forms of capital when calculating a credit union’s net worth, along with additional flexibility in determining fields of membership. D.C. credit union boards hold more autonomy under this new law, too. For starters, a credit union’s board now holds the sole power of terminating a member. Under the Federal Credit Union Act, terminating a member required a two-thirds majority vote from a CU’s membership during a special meeting.
Institutions found to be operating in an unsafe or unsound manner can be placed into conservatorship by the DISB.
Acting DISB Commissioner Karima Woods was appointed to that position in January.
The MD|DC CUA began working on reviving the District charter in 2001, and the new legislation passed the D.C. Council earlier this year before being signed by Mayor Muriel Bowser. The charter is still pending regulatory approval on some procedural grounds.
“We will continue to work with DISB and the DC Council during the rulemaking process to ensure that regulations serve in the best interest of credit union members,” Bratsakis said.
