108th Congress' Agenda Is Crowded; Bankruptcy Back

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With several pieces of unfinished business at hand, the 108th Congress promises to be an eventful one for the credit union lobby.

First off, credit unions will try for a fourth time to pass a bankruptcy reform bill after coming tantalizing close in each of the last three Congresses.

"That remains one of our top priorities," said Brad Thaler, a lobbyist for NAFCU. "We're hearing from our members that bankruptcy is still a problem; the numbers of bankruptcies are still rising."

Leaders in both the House and Senate are expected over the next few weeks to introduce a new bankruptcy bill absent the controversial abortion clinic violence language that doomed the bill last year.

Though the bill remains major priority for credit unions, they are still wary of the way the effort ended last year, according to John McKechnie, chief lobbyist for CUNA. "Last year's bill, at the very end, became nothing more than an issue of partisan finger-pointing and I'm not interested in subjecting credit unions to that again," said McKechnie.

He said CUNA and the state leagues will weigh in carefully to make sure the bill does not get tangled again in the abortion issue.

The advent of a Republican majority in the Senate could affect the outcome this time as the proponents of the so- called Schumer amendment barring abortion clinic protestors from shielding their assets under bankruptcy were on the Democrat side last year. Key senators are currently working to avoid the same entanglement this year, said McKechnie.

That's just the beginning of a long list of items that will keep the credit union lobby busy this year.

Over the next few days the Congress is expected, with the support of the credit union lobby, to pass a renewal of the federal flood insurance program that provides about 90% of insurance on all loans secured by properties in a flood plain. The program expired Dec. 31, leaving millions of loans in the lurch, but lawmakers have pledged to make a reauthorization retroactive.

Then there's regulatory relief. An effort for a broad financial institutions regulatory relief bill with numerous credit union priorities is widely expected to be reintroduced in the early days of this Congress. According to McKechnie, CUNA is talking with lawmakers to expand the bill's credit union chapter in order to expand investment powers and member business lending authority. CUNA is also working with lawmakers on a separate but similar bill that is aimed at easing certain credit union regulations and is expected to be introduced in the coming months.

Some of the provisions included in a proposal by former Rep. John LaFalce (D-NY), which are aimed at liberalizing the federal charter, may also be included in a new regulatory relief bill, according to Thaler.

One of those provisions, which would limit the powers of state-chartered, federally insured credit unions to those of federal charters, could cause a rift in the credit union movement. Watch for major opposition by CUNA and NASCUS to such a provision if it is included in a bill.

"The wording of anything like the LaFalce (provision) is extremely dangerous to state-chartered credit unions," said Jonathan Lindley, a lobbyist for NASCUS.

Retirement savings legislation is also sure to return early on and with it the credit union lobby is hoping to expand inducements for both retirement and regular savings.

Also returning is the effort to reform deposit insurance, to, among other things, increase the coverage on federally insured accounts beyond $100,000. The credit union lobby will focus on assuring that whatever increase is afforded for bank and thrift accounts is provided for credit unions covered by the NCUSIF.

Lawmakers have also expressed an interest in introducing a new privacy bill that would require consumers to "opt- in," that is to expressly give their prior permission for credit unions, banks and others to share their confidential information with third parties. The credit union lobby has indicated it will oppose an opt-in bill. McKechnie refused to express a stance on any such bill before it is introduced, but said, "We are not going to support anything that sets up unrealistic and burdensome new obstacles to information sharing for credit unions."

An effort is also expected to pass uniform nationwide standards for subprime, or predatory, lending, to replace a patchwork of state laws that have sprung up over the past few years.

Finally, later this year the Government Accounting Office (GAO) is expected to issue a report on the credit union industry that requested by former Senate Banking Committee Chairman Paul Sarbanes )D-MD) that is sure to include both regulatory and legislative recommendations. It is too early to say how these recommendations will be affected, especially since the Republican, Richard Shelby of Alabama, who now chairs the Senate Banking Committee, has a different agenda than Sarbanes.

All or some of those issues could be linked together as part of a number of bills; regulatory relief, deposit insurance reform, or the renewal of the Fair Credit Reporting Act, which is scheduled to expire at year-end.

"We do have a very full plate in front of us this year," said McKechnie. "I think credit union people continue to look at the government relations area as one in which we need to be proactive."

"Do not presume," added Lindley, "that this will be a no-action year in the banking world."

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