Flurry Of CU Bills Debut In Congress

Register now

Lawmakers introduced two more credit union bills last week, the latest in an unprecedented two-week flurry of credit union-related legislation proposed in Congress.

At the same time, the Senate was debating the credit union-backed bankruptcy reform (see related story) and was expected to vote to pass the measure sometime this week, before sending it over to the House for its consideration.

The flurry came as more than 3,000 credit union executives were gathering in the Capital for their annual lobbying pilgrimage as part of CUNA's government affairs conference. John McKechnie, chief lobbyist, said the descent of the credit union executives on Capitol Hill contributed to the introduction of the new credit union bills but was not the sole reason.

"I wish we could take credit for all of that," he said, noting that the credit union lobby had been working with lawmakers on the varying bills for a long time. "It's been a successful culmination of many months of negotiations we've been pushing."

The first bill introduced last week would resolve a pending crisis over accounting for credit union mergers by allowing credit unions to contravene a new financial accounting standard and continue "pooling" their net capital after combining.

The second would expand a growing concept by allowing credit unions to provide check-cashing, wire transfers and remittances to anyone.

The bills follow closely proposals to allow check-cashing and wire transfers to anyone within the FOM; and to lift the cap on business lending from its current 12.25% of assets.

And several leading lawmakers vowed last week to introduce a broader bill wrapping all of these individual proposals into a new CU Regulatory Improvements Act, better known as CURIA. Many, if not all, of the proposals are also expected to be wound into yet another bill that would provide regulatory relief for credit unions, banks and thrifts, which is expected to be introduced soon.

The multitude of new bills, some proposing the same or similar measures, is expected to enhance prospects of passage of some or all of them. "This helps shape the debate. It means credit union issues are being talked about and discussed on Capitol Hill," said Brad Thaler, NAFCU's chief congressional lobbyist. "The fact is that some of these things could be passed separately or combined into Reg Relief or CURIA."

At least one issue, the accounting for mergers, is an urgent one because the new rules passed by the Financial Accounting Standards Board take effect Jan. 1, 2006. Those rules would bar credit unions from combining, or pooling, their capital after a merger, thus discouraging mergers, according to the credit union lobby.

CUNA's McKechnie called the flurry of bills the "cover-all-your-bases approach to legislative politics." "You have to have multiple options," he explained, noting that if one bill doesn't pass, there are still several other opportunities to push an issue or two. The urgency of the merger accounting issue, the expected introduction of the catch-all regulatory relief bills, including CURIA, require such a strategy. "These things," he said, necessitate this multi-pronged approach."

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER