WASHINGTON — A withering lobby by the bankers last week killed an effort to bring the credit union regulatory relief bill, known as CURRA, to a vote in Congress, sending the credit union lobbyists scurrying to regroup.
"We think it would have worked if leadership had put it to a vote," said a frustrated John Magill, chief lobbyist for CUNA, after House leaders removed the bill from the so-called suspension calendar, reserved for non-controversial bills.
The bill, formally known as the CU Regulatory Relief Act, was offered by credit union supporters as a compromise to CURIA — the CU Regulatory Improvements Act — with most of the same provisions as CURIA, absent the two most objectionable to the bankers: raising the limit on member business loans and enactment of a risk-based capital system for credit unions.
But the bankers believe the CURRA provisions that would allow credit unions to make unlimited business loans in underserved areas and to extend the power to branch into underserved areas to all credit unions is akin to raising the business loan limit, making the bill every bit as objectionable as CURIA.
"We thought the bill was lopsided, as introduced," said Ron Ence, senior lobbyist for the Independent Community Bankers of America, which had 300 bankers lobbying Congress last week in conjunction with its annual government affairs conference.
The ICBA, said Ence, tried to work with lawmakers to tighten the definition of underserved areas in the bill so that entire cities, like Washington, Baltimore, Houston, Miami and San Francisco, are not considered underserved, as they are under current NCUA rules.
The bankers also sought to ensure that business loans considered made in underserved areas benefit those areas, said Ence. But the bankers entreaties were rejected.
"When that happened, we had no alternative but to oppose the bill," said Ence.
The ICBA's lobby was joined by the much larger American Bankers Association, which ran ads in Capitol Hills newspapers illustrating recent credit union problems related to large business loans, at failed credit unions Norlarco CU, Huron River Area FCU, and at Eastern Financial Florida CU.
Last week's defeat represents a major setback for the five-year effort to get CURIA passed. The effort achieved major advances just two months ago when lawmakers introduced CURRA — dubbed CURIA-Lite — then members of the Senate promised to introduce their own version of CURIA. The Senate version, which still lacks a Republican co-sponsor, has yet to be introduced.
CURRA would do most of what CURIA would do, but is focused more on the underserved markets — something its sponsors hoped would improve its prospects.
Beside expanding credit union powers to branch into underserved areas and offering unlimited business lending authority in those areas, the bill would allow credit unions to offer payday loans and similar products to anyone within their fields of members — including non-members.
"CURRA was always designed as a package that could move quickly," said Brad Thaler, senior lobbyist for NAFCU.
Like CURIA, it would also: 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%; allow NCUA, instead of Congress, to determine permissible investments for credit unions.
CURRA would also 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
As a means of reducing the bankers opposition, House leaders offered to put both CURRA and a new regulatory relief for banks and thrifts to a vote under suspension rules, normally reserved for non-controversial bills. Under suspension, bills are allowed to bypass votes by the normal committees of jurisdiction to be voted by the full House.
The rules normally call for a simple voice vote, but if any House member asks for a recorded vote, the request is usually granted — then a two-thirds majority is required for passage.
"They only need one-third of the House to defeat it, so we have a little lower bar to get under," said NAFCU's Thaler.
The credit union lobbyists, were still confident of passage. "I believe we had the votes," said Magill, who said CUNA's unofficial polling of members was "safely above two-thirds". But, he conceded, many House members did not want to be recorded as favoring one of the two powerful adversaries.
"The good news," said Thaler, "is nobody's saying that this is dead. They're just putting it on the sidelines."
(c) 2008
