The credit union lobby is working with key lawmakers to craft a bill that would do much of what the pending regulatory relief bill would do-and then some-just in case the broad relief package fails to make it all the way to the finish line again this Congress.
The bill focuses on measures to ease the statutory ceiling on member business loans, which was stripped out of the Reg Relief bill for fear of offending the bankers, and would also ease current field of membership rules, while shifting rule-making authority on investments and loan maturities from Congress to NCUA, according to one credit union lobbyist who has reviewed a draft. The latter two provisions are currently in the Reg Relief bill.
"It's really a fall-back, if the Reg Relief bill doesn't pass," said the lobbyist, who did not want to be identified.
The Reg Relief bill, which contains a dozen credit union provisions among the more than 100 goodies for banks and s&ls, has been stalled all summer over the emergence of what are being referred to as "back-door" banks. The so-called Industrial Loan Companies, many of them owned by commercial giants or investment banks, have been proliferating in Utah, California and a handful of other states. Members of the House Financial Services Committee, which endorsed the Reg Relief bill before the summer, have been negotiating a compromise aimed at reining in the growth of ILCs before sending the bill to the House floor for a final vote.
That and other issues, including the fact that the Senate has yet to introduce its version of a Reg Relief package, worry some that the bill is headed for major difficulties as it progresses through the legislative process.
House leaders have acknowledged this dilemma to credit union lobbyists and have signaled they will not be offended if credit unions seek a potential alternative to get their provisions through. "Chairman (Michael) Oxley has told us he won't be mad if we pursue our own, separate bill," said John McKechnie, chef lobbyist for CUNA, who refused to talk about the details of the draft bill.
The Reg Relief bill, a major priority for credit unions, passed the House easily last Congress but was never acted on by the Senate, thereby killing it. A similar version, stripped of several credit unions measures, was approved by the Financial Services Committee earlier this year and is expected to be voted by the full House as early as the next few weeks.
The California CU League is the driving force behind the new credit union initiative. Rep. Ed Royce, a California Republican who has close ties to the league, is expected to introduce the bill next week. Royce has showed his support on the business loan issue before by sponsoring legislation that would ease the 12.25% of assets cap on MBLs by eliminating religious-based loans from the ceiling. Royce's office did not return phone calls seeking comment.
The bill does not include provisions relating to minimum capital standards or allowing credit unions to raise and count alternative forms of capital, but could serve as a vehicle for such measures later on, said one lobbyist involved in the process.
The draft of the bill includes provisions that would ease the way to voluntary credit union mergers and allow federally chartered credit unions to retain their select groups after the convert to community charters, something that is currently prohibited under HR 1151, the CU Membership Access Act.
The bill would also allow the NCUA Board to set standards for permissible investments by credit unions, limits on investments in CUSOs, and loan maturities.