California CUs victorious as government banking bill amended in committee
Credit union leaders and supporters across California are celebrating a victory that saw a bill they opposed, Assembly Bill (AB) 1177, significantly amended in committee. The California Credit Union League was able to initiate more than 4,500 "NO on AB 1177" messages to lawmakers from credit union staff, volunteers and supporters in the weeks leading up to the bill being heard in committee, helped by the efforts of 177 credit unions across the state
Assembly Bill 1177 would have created a high cost, government-run banking system that is completely duplicative of what is offered by credit unions. as originally drafted. Credit unions had already been fighting against the idea of a public bank over the past few years.
While the League will review the bill’s amendments, AB 1177 came a long way from the bill credit unions lobbied against during the League's California Government Relations Rally (GRR) earlier in April.
“We want to thank everyone who helped lay the groundwork during GRR,” said League President and CEO Diana Dykstra. “The messages we sent to assemblymembers — as well as credit unions’ participation in GRR — were pivotal in winning this legislative battle.”
The League also wants to thank credit union leaders who worked to submit AB 1177-opposition opinion pieces to local news media editorial boards. As of last Friday, 24 opinion articles had been published locally. Some were directly submitted by credit union CEOs and the League, and others were editorial-board pieces that were highly influenced by the credit union movement's “NO on AB 1177” efforts.
While the government-run banking system in AB 1177 is different from the public bank concept of year’s past, the California Credit Union League and credit unions across the state contended that this newly discussed model is still a risky and perilous endeavor.
Local credit union leaders share the goal of the bill’s author to bank more of the unbanked and under-banked, but they advocated that California could spend a fraction of what AB 1177 would cost by partnering with credit unions that already offer low or no-cost access to financial products and services.
AB 1177 passed out of the California Assembly Banking and Finance Committee Thursday evening, but not before it was significantly amended by Chair and Assemblymember Tim Grayson.
The committee chair, with the help of some key committee members, was able to convince the author to amend the bill to include a market analysis contracted to one or more third-party entities before any state dollars are spent, with the legislature independently approving the study before BankCal can be implemented (the name of the government-run banking system).
Three assemblymembers also brought up concerns that the board-run banking system should have more experts from the banking industry and academia.
Another assemblymember asked that the study look at less risky methods of banking the unbanked.
The final committee vote was 7-4-1 (“yes,” “no,” and one “abstention”) — with the bill passing committee, yet heavily amended due to the efforts of credit unions and their supporters (and other banking industry opposition advocates).
The League will monitor AB 1177 as it moves through the legislative process and is asking credit unions to stand by for any changes — and to prepare for potential future legislative fights.