CU-Supported Reg Relief Bill Past First Hurdle

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A key congressional subcommittee easily passed a regulatory bill heavily laden with credit union provisions last week, and have now passed the bill on to the full committee.

"Today's mark-up was relatively proforma," said John McKechnie, chief lobbyist for CUNA, noting that the House Financial Services Subcommittee on Financial Institutions had hoped to formally mark-up, or draft, the regulatory relief package with little controversy.

That's why credit union allies on the panel refrained from trying to add two controversial credit union priorities to the bill that would lift the congressionally mandated limit on member business loans and allow credit unions to raise secondary capital and count it as net worth under NCUA's prompt corrective action (PCA) net capital rules.

Those two provisions are expected to be raised when the full committee conducts its mark-up, probably the first week of May. "We're talking with members of the committee and their staff about both," said NAFCU lobbyist Brad Thaler.

Last week's session did raise the potential for controversy when credit union champion Rep. Paul Kanjorski (D-PA) expressed wariness over private deposit insurance and proposed scrapping the provisions to allow privately insured credit unions to join the Federal Home Loan Bank system. Kanjorski, the father of HR 1151, mentioned NAFCU's opposition to private insurance before withdrawing his proposal, which allowed the bill to go forward with the provision.

Thaler insisted that NAFCU, which has come out against private insurance, did not put Kanjorski up to it, noting that Kanjorski has expressed his own concerns about private insurance over the past few years.

The issue has the potential of riling Rep. Michael Oxley (R-OH), the powerful chairman of the House Financial Services Committee and a major backer of the measure, whose district includes American Share Insurance, the lone surviving private deposit insurer. Oxley took NAFCU to task last year when the trade group issued its opposition to the private insurance measure.

Kanjorski also proposed, then withdrew, a measure that would have allowed credit unions to buy developments in underserved areas and lease them out without occupying the entire development.

The bill passed by the committee includes 13 credit union provisions that would, among other things, allow federal credit unions to provide check cashing and wire transfers to non-members within their FOMs; retain select groups after converting to community charters; making privately insured credit unions eligible to join the Federal Home Loan bank system; exempt religious-based loans from the MBL cap; and authorize NCUA, instead of Congress to set limits on loan maturities and credit union investments.

The credit union provisions did not attract any opposition from the banking lobby or its supporters last week but credit union lobbyists expect some fire when the full committee take up the package.

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