Lawmakers agreed last week to tentative legislative changes that would give NCUA greater authority to set maturity limits on loans, extend credit union participation in credit union service organizations, or CUSOs, and expand the universe of permissible credit union investments, all of which are currently set under the Federal Credit Union Act.
The expanded powers were agreed to by staff of the House Financial Services Committee, which is drafting language for a regulatory relief bill for financial institutions. The congressional staffers, who do all the preparation work on bills, met last week with representatives of NCUA and the other banking regulators, and later on with representatives of the key trade associations, including CUNA and NAFCU.
"They've got some ideas down on a piece of paper," said Clifford Northup, head of public and congressional affairs for NCUA, who participated in the drafting session. "Now they're looking at holding hearings in March or April, where we'll get a chance to comment again."
The financial services panel, which has jurisdiction over all banking issues, is also expected to be amenable to other legislative changes favoring credit unions, including a measure opening up membership in the Federal Home Loan Bank System to privately insured credit unions for the first time, and another provision that could mean a roll back in leasing costs for defense credit unions' on military bases.
But the committee has apparently rejected, at least in the early stages of the process, other provisions favored by credit unions, including an elimination of the "reasonable proximity" clause defining the limits of field of membership (FOM) in HR 1151, the CU Membership Access Act, which amended the FCU Act. A separate proposal by NCUA that would have extended credit union services for check cashing and wire transfers to potential members, those residing within an FOM, as a means for expanding services to the underserved, was also turned down.
The credit union lobby has also been reluctant to push for other provisions popular within the movement, including a lifting, or modification, of the recently enacted limits on member business loans (MBLs); greater allowances for raising alternative, or secondary capital; removing some of the limits on FOM, and easing the restrictions on voluntary mergers.
John McKechnie, chief lobbyist for CUNA, said he expects the committee to be open to other changes as the legislative process progresses. "I feel very positive about this, as a baseline," said McKechnie. He said CUNA plans to meet with all of the broad-based committee's 70 members over the coming months to discuss the bill and how it may be shaped further to benefit credit unions. "We're looking for more opportunities where they present themselves," he said.
NAFCU, which succeeded in getting the defense credit union provision in the draft, was also pleased by the early progress. "I think it went well; I hope there will be something for everyone," said NAFCU lobbyist Brad Thaler.
The NAFCU provisions would address a 1983 amendment to the laws governing on-base financial institutions that requires that defense credit unions pay fair market value when leasing space on base for their own buildings. The proposed amendment would give the base commander discretion to charge a nominal amount, as little as $1 a year, to provide his soldiers with the convenience of credit union services, according to Thaler. This could result in significant cost savings for dozens of defense credit unions.
Northup said NCUA is also studying some of the regulatory relief provisions being lobbied by the bankers to see if credit unions could also benefit from those proposals.
The Senate Banking Committee is expected to begin deliberations on its own regulatory relief package soon, which would eventually be merged with the House version. Regulatory relief bills appear to surface every two years, or every Congress. The last major regulatory relief measure was included as part of the landmark Gramm-Leach-Bliley Financial Modernization Act, which struck down Depression-era barriers preventing the mixing of investment banking with commercial banking and insurance activities.
