Banks Support Relief For Selves, Not For CUs

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The banking lobbyists called on Congress last week to expand its proposals for regulatory relief for banks and thrifts, but asked lawmakers at the same time to reject a broader relief initiative proposal for credit unions, known as the CU Regulatory Improvements Act, or CURIA.

"(Independent Community Bankers of America) strongly opposes new powers for credit unions so long as they have an unfair tax and regulatory advantage over community banks," David Hayes, president of Dyersburg, Tenn.-based Security Bank and chairman of the ICBA, testified before the House Financial Services subcommittee on Financial Institutions.

At the same time, the bankers asked lawmakers to pass a slew of relief measures for community banks, including expanded powers on non-banking activities; exemptions from annual consumer privacy notices; expanded ability to lend to bank officers and directors; and elimination of various reporting and exam requirements. Bradley Rock, president of Bank of Smithtown (N.Y.) and vice chairman of the American Bankers Association, also urged the lawmakers to reject CURIA, which he said would exacerbate competitive inequities between banks and credit unions, and raise safety and soundness concerns about credit unions, by increasing credit unions' capacity to make business loans and reforming the current minimum capital rules for credit unions.

Representatives from CUNA and NAFCU testified on behalf of a dozen credit union provisions currently in the regulatory relief ill, and also asked Congress to add a provision to enact a risk-based capital system for CUs, that is already in CURIA.

But credit union lobbyists were conceding that addition of either the risk-based capital system and the measure to raise the limit on member business loans was a long shot, at least until the House bill is combined later on with a bill that is expected to be introduced in the Senate. Members of the House hope to complete their draft, or mark-up, of the regulatory relief bill as soon as this week, then have the full House vote on it before it adjourns for the year. But since the Senate has yet to introduce its version of the regulatory relief bill, any definitive action on the measure, i.e., passage, will have to wait until next year.

Meantime, the credit union lobbyists still hope that the House will hold a hearing on CURIA before the end of the year but chances of that happening are also negligible. Since most of the CURIA provisions are included in the House's regulatory relief package, the CURIA bill has almost no chance of passing on its own, despite the fact it has attracted more than 100 co-sponsors in the House, and is widely expected to eventually be combined with the regulatory relief bill. (c) 2005 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.

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