WASHINGTON -
An effort to get long-sought regulatory relief measures through Congress dissipated almost as quickly as it appeared last week after the credit union lobby rejected the bid.
Both CUNA and NAFCU turned down an offer to attach the Reg Relief provisions to the so-called Wal-Mart Bank bill because the provisions were so heavily laden with bank measures but had only minor inducements for credit unions.
“We appreciate the efforts to bring regulatory relief to the forefront of the Senate agenda, but we cannot support the amendment as it is because it tilts too far in favor of the banks and thrifts,” said Brad Thaler, senior lobbyist for NAFCU.
He was referring to a proposal by Sen. Mike Crapo (R-ID) to attach the regulatory relief provisions to a controversial bill being considered by the Senate Banking Committee to bar all commercial entities, such as Wal-Mart Stores, from owning bank-like Industrial Loan Companies.
In a rare show of unity, CUNA and NAFCU notified members of the banking panel prior to the vote of their opposition because of the absence of the major credit union priorities–which are the focus of CURIA–including capital reform, lifting of member business loan limits and allowing community chartered CUs to expand into underserved areas.
Pledge Is Extracted
Subsequently, Sen. Crapo decided not to offer the amendment, but extracted a pledge from Sen. Chris Dodd, chairman of the committee, to try to move regulatory relief as part of another bill.
The amendment would have added 15 provisions that were originally part of the Reg Relief bill that passed the last Congress but were eventually removed.
They included five credit union provisions: exempting religious-based loans from the current 12.25% of assets cap on member business lending; exempting credit unions from pre-merger notification under antitrust laws; increasing the 1% limit on CUSOs; allowing privately insured credit union to join the Federal Home Loan Bank system; and exempting credit union securities operations from registration with the Securities and Exchange Commission, which was provided for banks and thrifts last fall.
Several of these provisions are also part of CURIA–the CU Regulatory Improvements Act. But the proposal offered far more for banks and thrifts. It would have allowed banks and thrifts to pay interest on business checking accounts; eliminated the delay on allowing the Federal Reserve to pay interest in so-called sterile reserves; increased the number of allowable transfers from money market funds from six to 24 a month; increased the permissible amount of small business loans for thrifts; removed the limit on auto loans for thrifts; extended the examination schedule for community banks; among other things.
CUNA tread carefully on the proposal, not wanting to discourage the senator’s interest in furthering Reg Relief. “The amendment he has proposed is not balanced,” said Ryan Donovan, senior lobbyist for CUNA, “It doesn’t do enough for credit unions. But it has given us the opportunity to talk about some of these things with Senate Banking Committee leadership.”
Absent the Reg Relief provisions, the Wal-Mart Bank bill passed the Senate Banking Committee on a narrow margin, an 11-10 partisan vote, with the Democrats voting for it and the Republicans against the bill.
Republican Sen. Bob Bennett, who represents Utah, home to most of the nation’s ILCs, remained steadfast against any limits on the bank-like charters.
Passage Is Questionable
But most of the Republicans opposed the ban on commercial ILCs because it would exempt financially strapped U.S. automakers. Sen. Dodd said the U.S. automakers need the ability to charter such banks because foreign automakers already have self-financing arms.
The close vote on the bill makes it questionable whether the measure will pass the full Senate. A similar bill, without the automaker carve-out, overwhelmingly passed the House last year.
