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ALEXANDRIA, Va.-NCUA has ruled that credit unions must accept alternative, non-traditional credit reports at a member's request when deciding on a member's creditworthiness.

In a new legal opinion, NCUA said Reg B, the Equal Credit Opportunity Act, requires creditors to consider any information an applicant may present tending to indicate the credit history being considered does not accurately reflect the applicant's creditworthiness. So if a member asks a CU to consider information not gathered on a traditional report issued by the three credit bureaus, such as payment of utility bills, the CU must comply.

The legal opinion was requested by Trycera Credit Services, an Irvine, Calif., provider of alternative credit reports. Trycera offers MyFullCredit Service, which uses alternative credit references, such as regular bill payments, with any application requiring a credit check.

Generally, Reg B allows creditors to "restrict the kinds of credit history and credit references they will consider in making a determination of creditworthiness as long as the restrictions are applied to all applicants without regard to any prohibited basis, such as race, sex, or marital status," according to NCUA. "Upon an applicant's request, however, Reg B requires creditors, in evaluating the creditworthiness of an applicant, to consider any information an applicant may present tending to indicate the credit history being considered does not accurately reflect the applicant's creditworthiness."

"Creditors, at an applicant's request, must consider credit information not reported through a credit bureau when the information relates to the same types of credit references and history the creditor would consider if reported through a credit bureau," said NCUA.



WASHINGTON-Credit union allies have always come and gone in Congress, but the loss of Pennsylvania Democrat Paul Kanjorski will be a big blow to the credit union lobby-leaving CUs to search for a new champion.

"Congressman Kanjorski has always been a reliable supporter for credit unions and he will be missed. But we've always had friends on both sides of the aisle," said Brad Thaler, senior lobbyist for NAFCU.

Members of both the House and Senate have distinguished themselves in the past as strong credit union supporters, but no one more so than Kanjorski, the 73-year-old sponsor of numerous bills critical to credit unions. His prominent support began really when he helped draft HR 1151, the 1998 CU Membership Access Act, which overturned a Supreme Court ruling invalidating multiple group credit unions, then continued on every Congress since then with one or more bills that would cut regulatory burden for credit unions, and culminated last year with his sponsorship of the corporate credit union bailout bill.

But the credit union lobby is confident another champion will emerge on Capitol Hill. The main reason, according to John Magill, chief lobbyist for CUNA, is that credit unions have always sought to be bipartisan, to not identify too much with either party. In fact, CUNA donated to candidates in almost 400 House and Senate races this year, split almost evenly between the parties. Magill and others noted that the two House members that appear to be vying to be chairman of the House Financial Services Committee under a Republican-controlled House next year, Spencer Bachus of Alabama and Ed Royce of California, have proven themselves to be reliable credit union supporters.

Bachus, one of just eight House members to vote against HR 1151 12 years ago, has grown to be a CU friend, said Will McCarty, chief lobbyist for the Southeast League of CUs, who once worked on Bachus's staff. "We've built a very good relationship with Congressman Bachus. He's always willing to meet with us and always listens to us."

The House panel is the most important congressional committee for credit unions because it is where all financial legislation originates, before going to a vote by all House members, and then to the Senate.

Though Bachus appears to be the favorite to become the committee's next chairman, Royce, a reliable sponsor of credit union bills, all the way back to his days in the California legislature and to HR 1151, has indicated an intention to challenge for the important post. "I think Royce clearly has the ability to take the role (of credit union champion)," said NAFCU President Fred Becker. "He's been on most of those bills with Kanjorski."

Under the rules, the Democrats will recede to the minority next Congress. But numerous CU supporters remain, even if they no longer have the ability to set the agenda. Among them are: Barney Frank, the Massachusetts Democrat who will lose the chair of the Financial Services Committee; Maxine Waters, the California Democrat and subcommittee chair; and Ed Perlmutter, the two-term member from Colorado who has emerged as one of the biggest credit union allies in Congress.



WASHINGTON-Regulators closed another four banks recently, making a total of 143 bank failures so far in 2010 and exceeding last year's total of 140. The latest failure were of $453-million K Bank, Randallstown, Md., $221-million Pierce Commercial Bank, Tacoma, Wash., $99-million Western Commercial Bank, Woodland Hills, Calif. and $48-million First Vietnamese American Bank, Westminster, Calif. About 300 banks have failed since the start of 2008, right after the financial crisis started.

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