Conversions Could Bog Down CURIA
The powerful thrift lobby is working to create mischief for credit unions by trying to convince Congress to add a provision to the impending regulatory relief bill that would restrict NCUA's powers over credit union conversions to mutual savings banks (thrifts).
The bid, if successful, could create complications for the credit union-backed bill because the credit union lobby is unanimously opposed to the ongoing efforts to limit NCUA's authority on credit unions conversions.
Meantime, Community CU filed suit in federal court in Dallas to overturn NCUA's decision not to certify last month's overwhelming vote by members approving the $1.4-billion credit union's conversion to mutual savings bank. The credit union-the largest ever to seek conversion to a bank-is asking the court for an immediate ruling overturning NCUA's action and for return of its $10-million NCUSIF deposit with NCUA.
Credit union lobbyists are confident a bill introduced by Rep. Patrick McHenry (R-NC), two weeks ago to restrict NCUA's powers over conversions has little chance of passing on its own, but they worry the provisions in the bill could gain support if they are added to a broader bill, such as regulatory relief, or even the CU Regulatory Improvements Act, better known as CURIA.
That could gum up the works for the credit union lobby, which has been full-heartedly behind both bills up to now.
The thrift lobby, particularly America's Community Bankers, the industry trade association, helped McHenry draft his bill and is keenly working to push the conversions issue on Capitol Hill. Their hope, ultimately, is to get the conversions issue tied to CURIA, giving the credit union lobby one big headache, a source told The Credit Union Journal.
"We've made it clear to (Congressional) leadership how we feel about this issue and how it may complicate things for us," said Gary Kohn, congressional lobbyist for CUNA, whose support for regulatory relief helped propel the bill to easy passage in the last Congress.
So far, the credit union lobby has been successful in keeping the conversion issue separate from regulatory relief, which is expected to be introduced as early as this week.
A representative for Rep. Jed Hensarling, the Texas Republican who is drafting the reg relief bill, said last week the congressman has agreed not to add the conversion provisions to the reg relief bill, even though Hensarling is one of the main critics of NCUA's actions in the Community CU case.
But Hensarling's representative made it clear the congressman, whose district covers the Dallas home of Community CU, is still interested in addressing the conversions issue and may seek another bill to do that.
The two-term congressman was the organizer of a letter to NCUA signed by 22 Texas House members criticizing the agency's actions in the Community CU case and met recently with NCUA Chairman JoAnn Johnson to express his criticisms.
Johnson has been visiting several lawmakers to explain NCUA's decision not to certify last month's vote by Community Credit Union members to convert to a mutual savings bank.