Meeting at the State House last week, the Joint Committee on Banks and Banking gave its approval to a bill that would allow credit union directors to meet via conference calls.

Housekeeping is generally mundane and most people aren’t thrilled by the prospect. But if you don’t perform the tasks, chances are that giant dust balls and encroaching cobwebs will begin to impede your path.

A bill chock full of “housekeeping” items for credit unions in the Bay State has been passed out of the Joint Committee on Banks and Banking with a favorable nod. The committee met in executive session to consider bills on which it had not yet acted after its regular slate last Tuesday.

The housekeeping bill, H. 3481, sponsored by Rep. Michael J. Rodrigues, D-Westport, contained items reflective of how far credit unions have come over the past decades, according to industry watchers.

“We were pleased that the committee saw the logic of the bill and moved it along and reported it out favorably,” said Massachusetts Credit Union League Senior Vice President for Public Relations and Marketing Robert B. Kimmett.

The bill allows the board of directors of credit unions to meet via conference call rather than having to physically be present in a room for each meeting.

“It certainly doesn’t discourage physical meeting but it does allow credit unions that option to get together,” he said.

Additionally, it makes alterations in the formulas for capital expenditure and thresholds that trigger regulatory approval. The bill amends those dollar thresholds for credit unions that wish to purchase property or renovate their property. It also covers the purchasing of furniture and equipment. According to the draft, “It proposes to establish an amount for such expenditures that is commensurate with the financial strength of the credit union. A new formula is proposed based on 20 percent of certain reserves undivided earning of surplus accounts.” That would eliminate the flat rate currently on the books.

“[This is] just putting credit unions in a position where they can move quickly and address the physical needs that credit unions have,” said Kimmett.

The decisions by management will still be subject to regulatory review for safety and soundness, said Kimmett. “It allows [management] the opportunity to address the needs of the members of the credit union without having to go through lengthy regulatory approval for what were not necessarily large capital expenditures,” he said.

Additionally, the current expenditure limit of $50,000 to purchase electronic data processing equipment is deleted under the bill. “Those of us that pay any attention to high-tech know that $50,000 doesn’t last a long time in the high-tech marketplace,” said Kimmett.

“I think it [current law] runs the risk of putting credit unions at a disadvantage in the marketplace because the vendor is looking at the cycle that involves proposal, acceptance, then approval by another party, and whatever delays are involved in doing that even if it is done expeditiously,” he said.

The bill also eliminates the need for credit unions to seek advance regulatory approval for offering credit cards, safe deposit boxes and accepting utility payments.

The decision of what products to sell should rest with the board of directors, said Kimmett. Individual boards should determine whether it’s a good business decision and if it meets the needs of the members of the credit union.

Under the proposed bill, mailed ballots will be acceptable in the election of the board of directors.

Although Kimmett said the bill didn’t contain any “radical” ideas or provisions, he said it remains a very important bill to pass. “Housekeeping is an important part of your ability to do business. These restrictions are things I think the consumer and the average businessperson wouldn’t assume would be in place. They’re historic guidelines that dealt with the operation of a financial business in a different time period,” he said.

“I think the sophistication of the business climate together with the fast pace necessitates these changes.”

Kimmett said he expects the House and Senate to look favorably on the bill. It has no strong opposition to overcome.

Joint Accounts
Another bill passed out of the committee favorably on Tuesday was H. 1721, sponsored by Rep. Nancy Flavin, D-Easthampton, which seeks to change the law regarding joint bank accounts.

“It’s an issue that does need to be addressed. We’re very sensitive to that. There’s some ongoing concerns about the detailed language,” said David Floreen, senior vice president of the Massachusetts Bankers Association.

The bill is designed to protect senior citizens and their estates. Sometimes seniors establish a joint account with another family member, neighbor or friend in order for that second person to go and conduct business on the senior’s behalf.

“What arises, however, is that under banking laws [in cases where there is a joint account], if someone dies, the other person is a co-owner and has all the rights to whatever’s in the account,” said Floreen.

The bill would change the law and allow a second authorized signer on the account but, when the elder person dies, the money would go directly to the estate of the deceased.

“Quite frankly, we’re a little disappointed,” said Floreen about the amended portion of the bill. Although the association was still reviewing the draft passed out of the banking committee, he said, “It appears the banking committee removed non-banking entities from being covered by the legislation – i.e. mutual funds, brokerage firms and so forth. We’re a little disappointed by that, because the same rights and benefits ought to apply to anybody regardless of where they have their assets,” he said.

Both bills now go on to the full House and Senate for final voting.