WASHINGTON – The bankers on Friday were claiming credit for trimming even more of the credit union regulatory relief bill that was separated from the credit unions’ two main legislative priorities before it was combined with the banks own reg relief package.
The combined bill, called the CU, Bank and Thrift Regulatory Relief Act, is scheduled to be voted by the full House on Tuesday.
The American Bankers Association told its members Friday that House Financial Services Committee Chairman Barney Frank agreed to scale back the credit union bill provisions, known as the CU Regulatory Relief Act, or CURRA, after the bankers objected to efforts to vote the credit union bill in April.
The ABA was claiming credit for: the lawmakers’ decision to severely restrict the definition of underserved areas for credit union service; a requirement that credit unions serving those areas make an annual report to NCUA on how they are serving the areas; and, for limits on the types of underserved business loans that can be excluded from credit unions' business lending cap.
CURRA already represents a major concession from the main credit union bill, known as the CU Regulatory Improvements Act, which also would raise the current federal limits on member business loans and enact a risk-based capital system for credit unions.
Officials with the ABA and the other main banking lobby, the Independent Community Bankers of America, did not respond to requests for comments on the credit union provisions on Friday.
But the ABA’s gloating may be premature, according to credit union lobbyists. Ryan Donovan, senior lobbyist for CUNA, said the provisions in the new bill exempting both religious loans and business loans made in underserved areas from the current business loan cap will provide significant relief from credit unions to make more business loans. In addition, he said there is a chance that a risk-based capital system could be enacted for credit unions this year as part of another bill. “There could be another opportunity to do PCA (risk-based capital) reform,” he told The Credit Union Journal.
With the legislative calendar dwindling, it is important for credit unions to move the bill forward, said Donovan, who figured there are only about 30 legislative days left for lawmakers to craft and vote bills.
The combined reg relief bill would: allow credit unions to retain their select employee groups after converting to a community charter; 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 to 3% of capital from the current 1%; and, allow NCUA, rather than Congress, to determine permissible investments for credit unions.
It 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.
The major provisions for banks and thrifts in the reg relief bill would: eliminate annual privacy notices for financial institutions that do not share information with affiliates or have not changed their privacy policies; and, authorize banks and thrifts to offer interest on business checking accounts two years after enactment.
The bill also would raise the lending limit for thrifts on commercial loans to 20% of assets from the current 10%; eliminate the asset limitation on small business loans and personal motor vehicle loans and leases; restate authority to invest in small business investment companies up to 5% of capital and surplus; and, raise the lending limit on commercial real estate loans to 500% of capital and surplus from the current 400%.
