WASHINGTON - A bill strengthening the federal government's power over state-chartered credit unions cleared the Senate Banking Committee on a unanimous vote last week.
The Credit Union Reform and Enhancement Act, which would limit the lending and investing powers of federally insured, state-chartered credit unions, sailed through without any amendments.
While committee Chairman Alfonse M. D'Amato said "legitimate concerns" could be addressed in possible future amendments, he vowed to block any change designed to dilute the National Credit Union Administration's authority.
"We want to give the NCUA powers to protect credit unions," the New York Republican said.
In addition to new controls on loans and investments, Sen. D'Amato's bill would let the NCUA close a state-chartered institution after contacting the state regulator. It would eliminate a 30-day waiting period for the agency before it could put a federally insured credit union into conservatorship.
The NCUA also would gain oversight over corporate credit unions under the bill. The legislation would ban federally insured credit unions from investing in uninsured corporates and would permit the NCUA to establish capital thresholds and limit the size of loans to a single borrower.
Although the Credit Union National Association sent Sen. D'Amato a letter supporting the bill in May, it wants changes made.
The industry's largest trade group has already persuaded Sen. D'Amato to "grandfather" state credit union powers in use May 1. Otherwise, under the bill, state-chartered institutions would have to ask the NCUA for a waiver to conduct any activity banned for federal credit unions.
According to a June 20 letter to the Indiana Credit Union League from CUNA president Ralph Swoboda, other desired changes include:
*Allowing the NCUA to ban only investment, not loan, powers for state- chartered credit unions.
*Requiring the NCUA to decide within 90 days whether a state-chartered institution's activity is permissible. Failure to meet the deadline would mean the credit union could go ahead.
*Allowing a phase-in period for uninsured corporates to obtain federal insurance.
A Senate aide said the bill should reach the floor this month. The aide and industry lobbyists said they had "no idea" to what other piece of legislation, if any, the bill would be attached.
So far, the House has shown little interest in the credit union bill.
But because of bipartisan support in the Senate, the bill "certainly has a very, very strong springboard from which to begin the legislative process," said an industry lobbyist.
