WASHINGTON – House leaders last night pulled the credit union regulatory relief bill from today’s planned vote in the face of a withering lobby effort waged by the bankers.
Both the American Bankers Association and Independent Community Bankers Association were flying in hundreds of bankers from around the country the past three days to urge a vote against the bill, known as the CU Regulatory Relief Act, or CURRA. The bankers blanketed Capitol Hill with letters and advertisements calling the bill a back-door for credit unions to expand their business lending in new markets.
An ABA ad run in Capitol Hill newspapers focused on large losses reported by credit unions in Colorado (Norlarco CU), Michigan (Huron River Area FCU) and Florida (Eastern Financial Florida CU) on non-traditional business loans.
Making the prospects even more troublesome was the fact that instead of needing a simple majority to pass, the bill would have required a two-thirds vote under the House’s so-called suspension calendar rules.
A simple majority voice vote of 218 House members would be easily within reach, considering the 150 House members who have co-sponsored CURIA, but a two-thirds vote would be much more difficult, noted Brad Thaler, senior lobbyist for NAFCU. “They (the bankers) would only need a third of the House to defeat it, so we’d have a little lower bar to get under,” said Thaler yesterday.
The credit union lobby had hoped that CURRA, which is similar to the CU Regulatory Improvements Act, would have been easier to get passed because of the absence of the two provisions targeted most by the bankers: a risk-based capital system and lifting the limits on member business loans.
The credit union lobby hopes to be able to add those two provisions as the bill progresses and is moved to the Senate for its review.
Otherwise, CURRA would expand the ability to branch into underserved markets to community chartered credit unions; exempt business loans made in underserved markets from the MBL cap; and allow credit unions to provide payday loans to non-members within their fields of membership.
As in CURIA, CURRA would: allow credit unions converting to community charters to retain their select groups; exempt credit unions from the pre-merger notification requirements of the Clayton Antitrust Act; increase the amount individual credit unions can invest in a CUSO from the current 1% of capital to 3%; and allow NCUA, rather than Congress, to determine permissible investments for credit unions.
CURRA also would give NCUA greater flexibility in setting the annual interest rate ceiling and ease credit union participation in the U.S. Small Business Administration’s Section 504 program.
