In Washington, A New Look At CU Democracy: Congress Plans New Moves On Convervsions

WASHINGTON - Work on the CU regulatory relief bill, known as CURIA, has slowed on Capitol Hill, while lawmakers focus on more important issues, like funding for victims of Hurricane Katrina, terrorism insurance and reform of the secondary mortgage market, key members of Congress told attendees of CUNA's Governmental Affairs Confernce.

Meantime, Pennsylvania's Paul Kanjorski, who is drafting the bill, said he is looking at a couple of provisions that would make it more difficult for credit unions to convert to mutual savings bank, as part of the bill-formally the CU Regulatory Improvements Act.

Kanjorski's proposal would require a CU to hold a special meeting to discuss the charter change before voting begins. Now, the special meeting always culminates a 90-day vote and is largely moot because most votes are cast prior to the meeting.

An ardent opponent of the recent rash of credit union conversions, he is also considering a measure that would require at least 30% of all members vote in ballots to convert. Fewer than a handful of the 40 credit unions that have converted to mutual savings banks have obtained the 30% mark.

"We're just not going to allow smart- aleck Washington lawyers and (credit union insiders) to go out and rape credit unions," Kanjorski told attendees to CUNA's GAC last week, referring to the millions that have accrued to a small group of credit union insiders after they have converted the new mutual thrift to stock form.

The bill is still being held up by disagreement on a proposal to raise the 12.25% (of assets) limits on member business loans. Kanjorski said they may propose raising it to 20%, as in last year's bill, or "nudge it a little above that."

The bill will also include provisions enacting a risk-based capital system; allowing CUs to retain their select groups after converting to community charters; and allowing all CUs to add underserved communities to their fields of membership.

Credit Union lobbyists say they still have been unable to find a sponsor for the bill in the Senate. Sen. Joe Lieberman told attendees at the GAC he is willing to support CURIA in the Senate, but the Connecticut Democrat does not serve on the Banking Committee, where the bill will originate.

Kanjorski was one of two original co-sponsors of HR 1151, the landmark 1998 CU Membership Access Act which has made him the credit unions' champion in Congress. The other chief co-sponsor of the bill will be California Republican Ed Royce, who was also a credit union champion when he served in the state senate.