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Banks, credit unions clash over bills to allow municipal deposits and modernize charters; UCC update draws support
Summary
Industry witnesses debated measures including H.1078/H.1079 (allow municipal deposits in credit unions; strengthen credit union charters) and a Uniform Commercial Code update (H.1282/S.684). Bank trade groups opposed expansion of credit union powers; credit union advocates and business groups supported modernization and municipal choice.
Representatives of banking and credit‑union trade groups and business associations presented sharply different views on several bills before the committee, including measures to allow municipal deposits in credit unions and to amend state law so credit unions could remain not‑for‑profit after certain mergers.
Brad Avlado, identified in testimony as executive vice president of the Massachusetts Bankers Association, described broad industry concern about proposals that would expand credit unions’ powers. He said the association “strongly oppose[s] any efforts that the credit unions want to be a surviving entity in case where a bank and credit union merge” because that would allow a non‑taxpaying entity to be the surviving institution after a merger and could reduce tax revenue and competitive balance.
The bankers’ witness listed bills the association opposed — including H.1079 and S.837 (merger and charter changes) and H.1078 and S.766 (allowing municipal deposits) — and asked for parity (equal tax and regulatory obligations) if credit unions received broader powers.
Credit union advocates countered that the bills would modernize choices for municipalities and members. Representative who filed the bills explained H.1078 would permit municipalities to deposit with credit unions and would limit public deposits to 25 percent of a credit union’s assets; supporters described the change as modernizing older statute language. Jessica Avery, director of advocacy for the Cooperative Credit Union Association, testified that H.1078/H.1079 and companion Senate bills “eliminate barriers to choice for municipalities and businesses” and would align state law to permit transactions municipalities already undertake informally.
Separately, proponents of a Uniform Commercial Code update (bills H.1282/S.684) said electronic business requires statutory updates. Carolyn (managing director) told the committee the amendments would modernize the UCC for electronic transactions and align Massachusetts with other states that have adopted similar changes.
Committee members heard both procedural and policy arguments: bankers emphasized tax and public‑fund concerns if credit unions accessed municipal deposits or acquired banks; credit unions emphasized member choice and modernization. No formal committee vote on these bills was taken during the hearing.
