NOTE:  As provided in LFC policy, this report is intended only for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used for other purposes.

 

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F I S C A L   I M P A C T   R E P O R T

 

 

SPONSOR:

Varela

 

DATE TYPED:

02/20/03

 

HB

878

 

SHORT TITLE:

Out-of-State Credit Unions

 

SB

 

 

 

ANALYST:

Gilbert

 

APPROPRIATION

 

Appropriation Contained

Estimated Additional Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

FY03

FY04

 

 

 

 

 

NFI

 

 

(Parenthesis ( ) Indicate Expenditure Decreases)

 

SOURCES OF INFORMATION

 

LFC Files

 

Responses Received

Regulation and Licensing Department (RLD)

 

SUMMARY

 

     Synopsis of Bill

 

House Bill 878 makes technical clarifications to provisions of NMSA 1978, § 58-11-2 through NMSA 1978, § 58-11-57. It also strengthens the Regulation and Licensing Department (RLD) regulatory oversight of out-of-state credit unions, modifies credit union loan policies requirements for credit union board members, sets lending limits for executive officers, board and committee members, allows credit unions to invest in mutual funds composed of federally guaranteed or government sponsored mortgages and stock index mutual funds, and outlines procedures for converting from a bank to a credit union and visa versa.

 

It also modifies the definition of “immediate family to include stepchildren and other persons who live in the same residence, as a single economic unit.

 

     Significant Issues

 

Lending requirements and lending limits for executive officers, board and committee members are outlined below:

 

The credit union board shall require, at a minimum, a completed loan application [including] and a detailed current financial statement of the applicant; provided that submission to the board of directors of an application of an executive officer shall only be required for an applicant serving the credit union as chief executive officer, chief operating officer, chief financial officer or chief lending supervisor. The set limits for the total asset size of the credit union are as follows:

 

Credit Union Total Assets less than $5.0 million                         $20,000 credit limit

 

Credit Union Total Assets  $5.0 million to $10.0 million               $30,000 credit limit

 

Credit Union Total Assets over $10.0 million to $50.0 million   $40,000 credit limit

 

Credit Union Total Assets over $50.0 million or greater                         $50,000 credit limit

 

The RLD Financial Institutions Division director may revoke an out-of- state credit union’s right to do business in New Mexico if:

 

q    the credit union no longer meets the requirements that it be organized pursuant to laws similar to the Credit Union Act;

 

q    the credit union has violated a law of this state or a rule issued by the director;

 

q    the credit union has engaged in a pattern of unsafe or unsound credit union practices;

 

q    permitting the credit union to continue to conduct business in New Mexico is likely to have a substantial adverse impact on financial, economic or other interests of the residents of the state; or

 

q    the credit union is prohibited from conducting business in the state or territory in which it is organized.

 

ADMINISTRATIVE IMPLICATIONS

 

HB 878 assigns the RLD Financial Institutions Division director additional credit union oversight responsibilities.

 

RLG/sb