Banks and credit unions clash on bills to expand credit-union powers and municipal deposits

The committee heard competing testimony on bills that would authorize municipalities to deposit funds in credit unions (H.1078/S.766) and that would strengthen credit-union merger and charter rules (H.1079/S.837).

A representative of Massachusetts community banks (appearing early in the hearing) said the association supported several consumer-protection measures but strongly opposed H.1079/S.837 and related bills that would expand credit unions' powers. The witness said allowing tax‑exempt credit unions to receive public funds "would significantly upend" the marketplace and shrink the tax revenue base if a tax‑exempt entity were the surviving entity in a bank/credit-union merger.

Representative Mike Arriaga and Jessica Avery, director of advocacy for the Cooperative Credit Union Association, urged the committee to modernize state law. Representative Arriaga told the committee H.1078 would permit municipalities to deposit in credit unions and would authorize credit unions to accept public deposits up to 25% of their assets. Jessica Avery said nearly 40 credit unions have municipal employees as members and that allowing municipal deposits would remove an uneven barrier that prevents municipalities from doing business with their local credit unions.

The two sides framed the issue as one of market structure and parity: bank representatives urged parity of tax and regulatory obligations; credit-union advocates said the bills restore choice for municipalities and businesses. The committee received written testimony pledging to follow up on about 20 bills and did not take a vote at the hearing.