WASHINGTON -
The regulatory relief bill, formally known as the CU Regulatory Improvements Act, is expected to be introduced in Congress in the next two weeks and the credit union lobby hopes the prospects for the bill are better than the last two times when it failed to even make it to a vote.
Plans call for the bill to be introduced in the House around the middle of February, just before CUNA's Government Affairs Conference, so that the 3,000 or so credit union managers and volunteers attending the annual event can begin to lobby Congress on the bill's merits, sources involved in the process told the Credit Union Journal. The hope is that as many as two dozen co-sponsors will add their names to the initial bill, as the credit union lobby tries to recapture the 125 co-sponsors they had last year, as Congress adjourned and the bill died.
The new CURIA will include many of the provisions that were in the first two versions, as well as a few new ones, and not include some of the measures that were passed last year as part of the regulatory relief bill for all financial institutions, according to Pennsylvania Congressman Paul Kanjorski, whose staff is drafting the measure.
"I'm interested in making sure the credit union movement remains strong and secure and has a long life," said Kanjorski, summing up is position on the credit union relief bill. "and don't put yourself in jeopardy, don't put yourself in a situation where (in times of) budget imbalances are going to come after you as a source of revenue."
Fixing HR 1151
The main provision of the new bill, according to Kanjorski, will include undoing some of the measures loaded on to HR 1151, the 1998 bill he co-authored known as the CU Membership Access Act, as part of the price of getting HR 1151 passed. That includes replacement of the current minimal capital rules for credit unions with a risk-based capital system similar to that applied to banks; easing of the limits on member business loans; and allowing credit unions to retain their select employee groups after converting to community charters.
Kanjorksi also plans to address the increasing numbers and size of credit unions converting to mutual savings bank by ensuring that to do so each credit union must get at least 20% of its members to participate in the vote. "If I had my choice I'd set it at 50%," he said. But Kanjorski acknowledged that such a high voting threshold is not likely to pass and a much smaller one, something around 20%, is more likely. Kanjorski said he will not pursue a proposal he discussed earlier, recapturing the taxes from a credit union that eventually sheds its tax-exempt status, but he worried about the financial benefits accruing to a handful of insiders who eventually convert the mutual savings bank to publicly owned bank. "We can't bar them from doing it (converting)," he said. "But we shouldn't allow it to become profitable."
Additional Provisions Expected
The new bill is also expected to include additional provisions. One will be a measure that will explicitly allow both community chartered and single group credit unions to add underserved communities to their fields of members, thereby overturning a federal court ruling prompted by the banks. Kanjorski, who sees credit unions as a vital part of local communities, is also exploring provisions that would facilitate the delivery of electronic benefits through credit unions and encouraging municipalities to deposit tax receipts in credit unions.
A number of lesser provisions are also expected to be included as they were in last year's version, including those addressing governance of credit unions, investments in CUSO and easing the way to voluntary mergers.
Eliminated from the new CURIA will be provisions that were passed last year in Reg Relief, including measures: allowing federal credit unions to provide wire transfers and check cashing to non-members within their FOMs; allowing credit unions to continue aggregating their capital after merging; providing subsidized rents in government buildings; and extending the maturity limits on uncollateralized loans.
Kanjorski Says 'No' To CRA
Despite increasing clamor by the banks for measures to ensure credit union service to the underserved, Kanjorski doesn't see any provision, such as a Community Reinvestment Act bid, included in the new CURIA.
"With credit unions, to a large extent, CRA on small credit unions would be offensive as hell, and expensive as hell, would probably drive more of them out of business," said the Pennsylvania lawmaker. Most credit unions, he insisted, are already performing what CRA was designed to force banks to do. "They're investing in the community."
A provision removed at the last minute from the regulatory relief bill which would have allowed privately insured credit unions to join the Federal Home Loan Bank system, is not expected to make it into the new CURIA, as the main advocate of the provision, former House Financial Services Chairman Mike Oxley, has retired.
Kanjorski, who will assume the chair of the Financial Services subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, hasn't decided exactly what his role will be with the new CURIA, which will be referred to a different subcommittee, on Financial Institutions and Consumer Credit. Whatever he decides, though, he will continue to champion the credit union cause. "Quite frankly, I'm going to make sure we have something that furthers the cause of the credit union movement," he stated.
