WASHINGTON – New York Sen. Charles Schumer was on the phone to CUNA and NAFCU yesterday offering to attach a provision to lift the cap on member business loans in exchange for their support on the so-called cramdown bill to allow bankruptcy courts to amend the terms of mortgages.
Schumer, who said he plans to introduce legislation to lift the cap on MBLs–something credit unions have been seeking for seven years–spoke directly to CUNA President Dan Mica and NAFCU President Fred Becker in making the offer.
"He wanted me to consider or think about the bankruptcy bill with member business lending attached to it," Becker told Credit Union Journal last night. Becker said he told the New York Democrat NAFCU would support the bill only if it were limited to subprime loans, which is what they agreed to last year. But he said NAFCU will not support the cramdown bill in its current form, which applies to all mortgages.
The credit union lobby has been ardently opposed to the cramdown bill, insisting it would cause greater havoc in the mortgage market at a time when credit unions, especially in the Sand States of California, Arizona, Nevada and Florida, are struggling with heavy losses on home loans, Becker noted.
John Magill, chief lobbyist for CUNA, confirmed Schumer’s call to Mica and said they have not agreed to any deal and have not seen any language yet. He said CUNA would also like to return to last year’s compromise limiting cramdowns to subprime loans.
The cramdown bill narrowly passed the House last week, but only after Democrat leaders tried to neutralize the credit unions’ and banks’ opposition by adding to a bill that makes permanent the increase in federal deposit insurance coverage to $250,000 per account. An added sweetener for credit unions would allow NCUA to stretch out the $5 billion in assessments to pay for the corporate credit union bailout over as many as five years.
