WASHINGTON - After five years of languishing on the congressional back-burner, CURIA, the regulatory relief bill for credit unions, was pushed to the front burner last week by a confluence of incidents–prompted by the gathering of 5,000 credit union executives and directors for their annual Capitol Hill lobbying pilgrimage at CUNA’s Government Affairs Conference.
First, was the introduction of a new regulatory relief bill for credit unions – call it CURIA lite – which had most of the same provisions as CURIA except the three major ones opposed by banks. Then, CURIA was finally introduced in the Senate, five years after it was first introduced in the House. The House Financial Services Committee, which has had CURIA now for three congresses, finally held a hearing, a critical step before any vote can be taken on the bill.
All of these actions contributed to push the bill up the congressional agenda, according to credit union lobbyists.
The movement reignited the chances for the bill, formally known as the CU Regulatory Improvements Act, even though more weighty issues like the war in Iraq, the mortgage market mess and the economy, are sure to take precedent over the final eight months of the 110th Congress.
“As the Senate Banking Committee starts to debate regulatory relief, these items will now be on the table,” said Brad Thaler, senior lobbyist for NAFCU.
The new bill, formally called the CU Regulatory Relief Act, or CURRA, has 11 provisions, but is missing the CURIA provisions to raise the cap on member business loans, enact a risk-based capital system for credit unions, or to toughen voting requirements for CUs converting to mutual savings banks, all of which are vehemently opposed by the banks.
Stripping Out The Barriers
By stripping out the two provisions, lawmakers believe they have a better chance of moving a regulatory relief bill for credit unions, according to Congressman Paul Kanjorski, the Pennsylvania Democrat who co-sponsored both CURIA and the new bill.
“We have to get some momentum on the credit union bill,” said Kanjorski. “The way we do that is to hold hearings, build sponsorship, get support.”
CURRA would do some of the same things as CURIA, including expand the power to branch into underserved communities to community chartered credit unions; exempt credit unions from the pre-merger notification requirements of the Clayton Antitrust Act; and increase the amount individual credit unions can invest in a CUSO from the current 1% of capital to 3%.
It would also ease the current 12.25% of assets cap on member business loans by exempting both religious-based loans and loans made in underserved areas from the cap. And it would allow credit unions to retain their select employee groups after converting to community charters upon the approval of NCUA.
It would also do a couple of new things, including allowing credit unions to offer payday loans to anyone within their fields of membership, in the same way credit unions were allowed two years ago to provide check cashing and wire transfers services; it would ease restrictions on credit unions’ ability to participate in the Small Business Administration’s guaranteed loan program; and it would give NCUA greater flexibility in setting the interest rate ceiling for federal credit unions.
“The movement of credit union reforms is not a one-step process and it may take several phases,” said Kanjorski. “The swift adoption of this legislation will allow us to continue to work on enacting the many other important legislative reforms contained in CURIA, but not contained in this new bill.”
CUNA CEO Dan Mica noted the absence of the key CURIA provisions when he cited the introduction of the new bill. “This timely legislation will get us a long way toward credit union goals–but not all the way: More needs to be done. Easing restrictions on business lending and providing more flexibility for credit unions in net worth requirements remain key goals for us,” said the CUNA executive, in a prepared statement.
Progress In Senate
The movement in the House was matched on the Senate side, where two Democratic senators, Mary Landrieu of Louisiana and Joe Lieberman of Connecticut, introduced a similar version of CURIA, ensuring that both chambers will include the credit union agenda in their forthcoming debate on regulatory relief for financial institutions.
To some observers, the sponsorship by Lieberman was payment for CUNA’s help in ensuring the three-term Senator’s reelection in 2004 with an unprecedented campaign of independent expenditures after Lieberman lost the Democratic primary and ran as an independent. CUNA, based on past support by Lieberman on legislative issues, spent more than $250,000 on direct mail pieces supporting Lieberman–independently of his campaign and without his knowledge–helping him win reelection without despite the opposition of his party.
Eventually, the credit union provisions are probably going to be rolled into an overall regulatory relief bill for all financial institutions, something that members of the House and Senate suggested last week.
U.S. Rep. Spencer Bachus (R-AL) summed up what others in Congress are thinking when he said he will support the credit union efforts, as well as efforts by banks and thrifts for regulatory relief, as long as the various parties do not oppose the other’s goals. “I’ll work for both the credit unions and the banks, not against each other, but to better serve the American people,” said Bachus, the senior Republican on the Financial Services Committee.
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