Credit Unions got their start in Nineteenth Century Germany.  In 1909, Roman Catholic textile workers opened the first credit union in the United States, St. Mary’s Cooperative Credit Association (later, renamed La Caisse Populaire Ste.-Marie).  At first, the credit union operated out of the home of its first president, Joseph Boivin.  Today, that building is the site of America’s Credit Union Museum.  With the support of department store magnate Edward Filene, Massachusetts enacted the first state credit union law on April 15, 1909.  Twenty-five years later, President Franklin Roosevelt signed the Federal Credit Union Act into law.

Today, credit unions may either have a federal or state charter.  Generally, a federally chartered credit union will include the word “federal” as part of its name.  If the credit union is headquartered in Arkansas, Delaware, South Dakota, Wyoming or the District of Columbia, then it holds a federal charter.  In California, the Department of Business Oversight (Department) licenses and regulates state chartered credit unions under the California Credit Union Law, Cal. Fin. Code § 14000 et seq.  The Credit Union Law requires that a credit union’s bylaws prescribe the manner in which the business of the credit union shall be conducted with reference to the following matters:

• The purpose of the credit union;

• The qualification for membership;

• Determination of the month, time and place of the annual meeting; the manner of conducting meetings; the method by which members shall be notified of meetings; and the number of members which shall constitute a quorum;

• The authorized number of directors, the number of directors necessary to constitute a quorum, and the powers and duties of officers elected by the directors;

• The membership, powers, and duties of the supervisory or audit committee, as applicable;

• The membership, powers, and duties of the credit committee or if applicable, the general powers, responsibilities and duties of the credit manager; and

• The manner in which the bylaws may be amended.

Cal. Fin. Code § 14103. The Commissioner, by regulation, has required that credit unions submit any bylaw amendments for approval.  10 CCR § 30.105.  Recently, the Commissioner has given notice of her proposal to withdraw this regulation.  According to the Commissioner’s initial statement of reasons:

This proposed regulatory action would provide regulatory relief to all state-chartered credit unions. Repealing section 30.105 would allow credit unions to save time and money by eliminating application and approval procedures. Although the Department would not review bylaw amendments until the time of the examination, problems would be addressed no later than two years after they occur, which is how the Department treats other issues of safety and soundness.

Federal credit unions must seek approval from the National Credit Union Administration for any bylaw amendments.  12 C.F.R. Part 701, Appendix A.  The comment period on the Commissioner’s proposed change ends on July 17, 2017.