WASHINGTON-Credit unions were be put on the defensive at last week's opening of the 111th Congress with the introduction of 20 new bills that would allow bankruptcy courts to restructure at-risk mortgages.
Lawmakers in the House and Senate were planning to introduce the bills that would empower bankruptcy judges to lower principle and interest payments for troubled homeowners-so-called cram-downs - as the numbers of home foreclosures are expected to surge in the coming months.
The bankruptcy provision is also expected to be part of the economic stimulus package that Congress will debate later this month.
Meantime, the credit union lobby is working to get some of the remnants of the failed CURIA/CURRA/CUBTRRA bill into the stimulus package. The best bet right now is some provision that would lift the current limits on member business loans. Credit union lobbyists are trying to convince Congress that allowing credit unions to make more business loans will help stimulate the economy.
Brad Thaler, senior lobbyist for NAFCU, said they will continue to work with Congress to see that the cram-down provision is restricted to subprime and other non-traditional mortgages, those to which credit unions have limited exposure. "We want to help shape the cram-down provision," said Thaler, noting NAFCU's success in limiting last year's cram-down proposal, which died in the House and Senate.
But key lawmakers have indicated they favor a broader approach making the ability to ask the bankruptcy courts ability to intervene in troubled home loans available for all borrowers.
The cram-down bill is one of several consumer measures expected to be launched in the coming weeks opposed by credit unions, including a bill to create government oversight of credit card interchange fees and additional credit card reforms.
