Bankers' Bill May Help Move CURIA

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The credit union regulatory relief initiative, which has come to be known as CURIA, got a hand from an unexpected source last week-the bankers.

The bankers successfully beat the credit unions to the punch, getting their own regulatory relief bill introduced in Congress that would deliver billions of dollars in new tax breaks and significantly reduce regulatory compliance for community banks.

Though it could complicate matters for credit unions seeking a separate regulatory relief bill-the CU Regulatory Improvements Act-the credit union lobby was looking positively last week at the bankers' bid. "We think it's a real benefit because it clearly enables members of Congress who feel torn between two constituencies to help both the banks and credit unions," said John McKechnie, chief lobbyist for CUNA.

Further, said McKechnie, it will be difficult for the bankers to lobby against regulatory relief for credit unions while they are working for their own relief package. "If that's their argument, that they need regulatory relief, it will be hard for them to argue that we shouldn't get it, too," he added.

"This could help us," said Brad Thaler, chief congressional lobbyist for NAFCU, "by allowing (congressional) members to say they helped banks and credit unions at the same time."

In addition, it could add momentum to an overall regulatory relief bill for banks and credit unions expected to be introduced in Congress any day by encouraging the divergent interests to support the overall package, he suggested.

Tax Breaks For Banks

The banks' bill, dubbed the Community First Act, would deliver billions of dollars in new tax breaks for banks at a time the bankers are stepping up their lobby to repeal the credit union tax exemption (see related story, above, right).

Among the things the regulatory relief bill for banks would do is: allow a 20% tax credit for closely held Subchapter S corporation banks; provide community banks in distressed areas with a 50% tax credit; repeal the Alternative Minimum Tax for banks up to $5 billion in assets; and exempt income earned on agricultural and mortgage loans in small communities from taxation. The measure would also provide a variety of other regulatory relief measures for banks on reporting and privacy issues.

The bill was praised by the Independent Community Bankers Association, which has worked to get it introduced. "Our members are excited about this proposal because it will benefit consumers, small businesses, local governments and others who depend on community banks for financial support," said David Hayes, chairman of the ICBA and president of Security Bank, Dyersburg, Tenn. "By lifting the yoke of regulatory burden off their backs, and moving them closer to tax parity with tax-exempt credit unions, community banks can focus their resources on better serving their customers."

Representatives for two of the biggest credit union advocates in Congress, California Republican Ed Royce and Pennsylvania Democrat Paul Kanjorski, are busy trying to finish a draft of the CURIA bill, which is expected to be formally introduced over the next few weeks.

Also Included In The Bill

Sources familiar with the process say the bill will include the 14 provisions in last year's bill, which was never voted on, and two more, NCUA's proposal for a risk-based capital system for credit unions, and a fix for the FASB merger rule that would allow credit unions to continue counting their combined capital after merging.

Other provisions that will be in CURIA are:

* Allowing NCUA, instead of Congress to set permissible investments and loan maturities, for credit unions.

* Allowing federal credit unions to retain in their fields of membership their select groups after converting to community charters.

* Allowing federal credit unions like state charters in six states, to provide limited services, including check cashing, wire transfers and money orders, to non-members within their FOMs.

* Increasing the cap on member business lending.

* Allowing credit unions to lease space they own-in effect acting as landlords-in underserved areas.

* A variety of governance reforms for individual credit unions.

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