Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Credit Unions Public Deposits topic
No spam. Unsubscribe anytime.
Credit union depository bill split committee after amendment adopted; banks and credit unions clash over tax and community impacts
Summary
SB257 would let federally insured credit unions serve as public depositories; the committee adopted an amendment addressing a reporting requirement but a later 'do pass' motion lacked a second and no final committee vote was taken. Testimony included claims that credit unions' tax status disadvantages banks and counterarguments that credit unions return value locally.
Senator Hammer presented Senate Bill 257 to permit federally insured credit unions to serve as depositories for public funds, saying the change would place credit unions "on parity with the banks" and give local governments more options. He opened with an ethics disclosure that he holds memberships and loans at credit unions and invited Suzanne Yashewski of the Arkansas Credit Union Association to explain the policy rationale.
Suzanne Yashewski, counsel for the Arkansas Credit Union Association, testified the bill modernizes statutory language that currently uses bank-specific terms (for example, references to FDIC insurance) and that federal law and the National Credit Union Share Insurance Fund provide comparable deposit insurance. She said 55 credit unions in Arkansas employ roughly 805 people, serve about 330,346 members and hold deposits the association cited as roughly $2.396 billion, and that 25 states permit public deposits in credit unions.
John Allen, deputy commissioner at the Arkansas State Bank Department, told the committee the amendment corrected a reporting requirement that had mistakenly assigned the Bank Department responsibility for reporting credit-union deposit capacities; the amendment moves that reporting duty to the securities department that oversees Arkansas-chartered credit unions. The amendment was adopted by voice vote.
Testimony for and against followed. Kathy Owen, chair of the Arkansas Bankers Association and chairman of Eagle Bank & Trust, opposed the bill, saying credit unions do not pay federal or state income taxes and arguing that shifting public deposits could reduce banks’ taxable income and their ability to support local projects through municipal bond purchases. Larry Wilson (First Arkansas Bank & Trust) made similar points, saying credit unions operate in practice like for-profit institutions and noting their retained earnings are untaxed at the state level.
Credit union witnesses including D. Eady (Pine Bluff Cotton Belt Federal Credit Union) and Tammy Passafume (Diamond Lakes Federal Credit Union) described community-focused work, small institution profiles and certified community development activities. Passafume said many credit unions serve low- and moderate-income borrowers and emphasized that credit unions pay property and other taxes and return value to communities via lower loan rates and higher deposit returns.
After closing remarks from the sponsor urging the committee to expand choice for municipalities, a motion to 'do pass' was made but failed for lack of a second; the committee did not take a final vote on SB257 during this meeting. The transcript records the amendment adoption but not a final committee approval. Sponsors and opponents repeatedly contrasted tax status, local reinvestment and regulatory oversight as the core issues.
