Reg Relief Good or Bad? Depends On Recipient

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Put this in the category of dog bites man.

It was no surprise, in fact it was expected, when the banking lobby began to work Congress against the recently introduced CU Regulatory Improvement Act, better known as CURIA.

Soon after the package of regulatory relief provisions was introduced in Congress, the three leading bank lobbying groups-the American Bankers Association, Independent Community Bankers Association and America's Community Bankers-sent a joint letter to House Speaker Dennis Hastert denouncing the credit union bill.

"Disguised as a regulatory relief bill (CURIA) fundamentally increases the powers of credit unions and raises serious safety and soundness concerns. Specifically, this legislation would greatly expand the business lending authority of credit unions-which can be a risky activity-while lowering their minimum capital standards," the group told Speaker Hastert, who controls the agenda in the House.

Of course, what the bankers neglected to mention in their letter to Hastert was that ACB, which represents the nation's thrifts, is lobbying to increase its own business loan authority by raising the percentage of assets a thrift may lend out to businesses. Or, that the risk-based capital system being proposed by NCUA and the credit union lobby is almost identical to the system already in place for banks and thrifts.

The bankers' letter to Hastert goes on to mention that the business loan cap, now 12.25% of a credit union's assets, as well as the minimum capital requirements, known as PCA (for prompt corrective action), were enacted by Congress under the landmark bill HR 1151, the 1998 CU Membership Access Act. What they don't mention is that both provisions were included in the field of membership law at the behest of, and as a result of, lobbying by the bankers.

In a letter to the editor sent to The Credit Union Journal, Camden Fine, president of the ICBA, which represents community banks, said, "we must oppose the nonsensically-named 'Credit Union Regulatory Improvement Act,' simply because it is not about regulatory relief nor would it enhance the credit unions' mission of serving people of modest means" (see full text of letter, page 6).

Fine, of course, failed to mention in his e-mail his group's support, in fact, drafting of, a bill that would provide regulatory relief, as well as billions of dollars in new tax breaks, for community banks. The bill is so far-fetched that neither of the other two groups, the ABA or the ACB, has or will endorse it.

But the bankers' avid, some may say rabid, opposition to the credit union bill puts them in an interesting position just as the House is about to introduce a new regulatory relief bill that includes most of the CURIA provisions as well as dozens more for banks and thrifts.

The credit union provisions prompted the ABA, by far the most powerful banking lobby, to oppose the Reg Relief bill in the last Congress-call it cutting off your nose to spite your face. ABA representatives indicated they will probably oppose this year's bill on the same basis, but reserved judgment until a bill is formally introduced.

A representative for the thrift group, the ACB, said they probably won't oppose Reg Relief based on the credit union provisions, preferring, he said, to take the high road. But the question remains, how could they oppose CURIA, then support the Reg Relief bill, which will have the same provisions in it?

The ICBA, while lobbying for its own Reg Relief bill, made its position clear during a congressional hearing last month. "We are unalterably opposed to the credit union industry's new proposal to expand chartering powers," said Terry Jorde, president/CEO of CountryBank USA, Cando, N.D., and chairman of the ICBA, during the hearing.

One has to wonder if the safety and soundness of credit unions is the bankers prime motive in opposing CURIA, as they suggest in the letter to Hastert.

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