Bankers Take Aim At CU Credit CardBids
WASHINGTON - (03/02/06) -- A new impediment to regulatoryrelief crept up Thursday during hearings before the Senate BankingCommittee when the bankers raised objections to two credit unionprojects in the works that would create credit card banks forcredit unions. Terry Jorde, president and CEO of CountryBank USA,Cando, N.D., who was representing the Independent Community Bankersof America, asked the senators to reign in the expansion ofnon-bank industrial loan companies, specifically two ILC projectsundertaken on behalf of credit unions. Industrial loan companieshave become a major impediment to regulatory relief as growingnumbers of non-financial entities have entered the banking businessthrough ILC charters, most recently retail giant Wal-Mart Stores.But just as objectionable, according to the bankers, are recentapplications by two credit union groups to use ILC charters tocreate credit card banks for credit unions. The two applications,by a group including CUNA Mutual Group, Corporate One FCU, CardServices for CUs and Certegy; and by Wescom CU, are being reviewedby the FDIC, which must approve federal deposit insurance for theentities. "These combinations," said ICBA's Jorde, "would allowcredit unions to expand their reach beyond any conceivable commonbond restriction." Thursday's hearing was considered a good signthat the Senate is finally poised to take up regulator relief inearnest. Sen. Michael Crapo, R-Idaho, who is working to draft abill, said he hopes to move quickly to a committee drafting sessionand vote soon after the hearing.