Disagreements Between Trades Arise in CURIA Bid

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WASHINGTON - CUNA and NAFCU were skirmishing last week as they were meeting to draft proposals for CURIA, the CU Regulatory Improvements Act introduced in each of the last two congresses.

This year's bill, which is expected to be introduced over the next few weeks in time for CUNA's Government Affairs Conference, is slimmed down from the past two versions, which had as many as 15 provisions. Much of that is because four of the major provisions that were in the previous versions were passed as part of last year's regulatory relief bill for all financial institutions.

The bill will focus on four major provisions: enacting a risk-based capital system for credit unions; easing the limits on member business loans for credit unions; requiring a minimum amount of members to vote on a conversion to mutual savings bank; and allowing community-chartered credit unions and single-common-bond credit unions to participate in NCUA's underserved expansions.

Talks between the two trade associations, which have been working with congressional staffs on the drafting of the bill, broke out into disagreement last week, as NAFCU went public with a call to erase the cap on business loans, set at 12.25% of assets, enacted in HR 1151, the 1998 CU Membership Access Act. In letters to the main sponsors of the bill, Democrat Paul Kanjorski of Pennsylvania and Republican Ed Royce of California, NAFCU President Fred Becker said the association believes it would be inappropriate to leave the current cap in place or to create another arbitrary limit. Becker cited to a 2001 Treasury study that found credit unions' business lending was not adversely affecting other insured institutions' health or profits. Credit unions are also subject to limits on membership, face stricter business lending rules and issue loans that are generally less risky than banks' or thrifts' commercial loans, it found.

CUNA was more circumspect about the issue but a representative also said CUNA would like to see the cap erased but was dubious about its chances. An increase in the cap, to 20% of assets, or 25% of assets, was more realistic, given the opposition of the bankers, who lobbied Congress to enact the cap to begin with. CUNA lobbyists were worried that by asking to erase the cap altogether it could jeopardize support of some of the 125 House sponsors who signed on to the bill in the last Congress.

Last year's bill set the cap at 20%.

In a recent interview with the Credit Union Journal, Kanjorski said he would also like to see the cap erased but believes an increase to the 20%-25% level is more palatable politically.

The trade groups are hoping that the sponsors finish work on the bill over the next two weeks so they can have it introduced in time for the GAC, when some 3,000 credit union representatives will be in Washington for their annual lobbying pilgrimage to Capitol Hill.

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