The House overwhelmingly approved a bill last week that would bypass an impending financial accounting rule and allow credit unions to continue "pooling," or combining, their net worth after mergers. The bill would redefine net worth for federally insured credit unions to include the retained earnings of both credit unions in order to bypass an impending rule by the Financial Accounting Standards Board that would bar the pooling of net worth after mergers.
The net worth bill must still be approved by the Senate. NCUA and the credit union lobby believes passage of the net worth bill is critical, otherwise credit unions would be barred from counting the net worth of a merged credit union, thereby discouraging mergers, especially those of troubled credit unions with diminished net worth.
However, the urgency of passage has been eliminated because the FASB has moved up the compliance date for the new accounting rule from Jan. 1, 2006; probably January 2007.
