CU LOBBY MOURNS THE LOSS OF 2 KEY BACKERS IN SENATE
WASHINGTON-Connecticut Sen. Joseph Lieberman, who rewarded credit unions for their unprecedented support in his historic 2006 reelection with sponsorship of the CU Regulatory Improvements Act, announced last week he will not be running for a fifth six-year term next year, the second major credit union supporter to announce his retirement from the Senate in recent days.
Lieberman's announcement, coming on the heels of retirement plans for North Dakota's Kent Conrad, another staunch CU backer, will make it increasingly difficult next year for the Democrats to retain control of the Senate, where they currently hold a slim 51-to-47 majority, with two independents who normally vote with the Democrats, including Lieberman.
Lieberman shed his Democrat affiliation in the 2006 election when he lost his party's primary despite an unprecedented independent campaign by CUNA, which spent almost $250,000 blanketing Connecticut with pro-Lieberman literature in the days leading up to the primary and general election. The then-three-term incumbent went on to win a fourth term as an independent, the first candidate in history to win a Senate seat after losing his party's primary. The so-called independent campaign expenditure was the largest ever attempted by CUNA to that time.
Lieberman subsequently acknowledged CUNA's role during a speech at CUNA's Governmental Affairs Conference, noting neither he nor his staff knew of the CUNA mailing campaign. "I will say I owe you for your support," said Lieberman, who only learned of CUNA's mailings after the elections. "Without that support I wouldn't be here."
CUNA's support was subsequently rewarded in the following Congress when Lieberman introduced a Senate version of the regulatory relief bill, better known as CURIA, which had languished five years in the House-even though Lieberman did not even sit on the Senate Banking Committee. The Connecticut senator later became a cosponsor of the bill to raise the member business loan limit on credit unions.
"The Senate is losing two titans," said John Magill, chief lobbyist for CUNA. "Lieberman, of course, sponsored CURIA and has been a (member business loan) cosponsor. It is always tough when you lose a champion."
NCUA BID TO SPREAD CORP. COSTS FACES OPPOSITION
ALEXANDRIA, Va.-NCUA's proposal to spread the growing costs of the corporate credit union bailout to privately insured credit unions, CUSOs and league members of corporates is creating a firestorm, with some promising a legal challenge if the measure is enacted.
"This attempt by the NCUA to extract funds from privately insured credit unions to pay for the corporate losses is obviously a case of this federal agency stepping out of its legal boundaries," said Bruce Rodela, president of Reno, Nevada-based Frontier Financial CU, in a recent comment letter on the proposal. "The potential for legal proceedings and legal expenses looms on the horizon, and can be avoided altogether by removing this unreasonable requirement from the final amendments to the proposed corporate rules."
Under the controversial proposal, NCUA would allow corporates to assess "voluntary" payments onto its members, including privately insured CUs, CUSOs and trade associations that access corporate services. Those entities could be expelled from the corporate if they do not "volunteer" to pay.
The proposal is part of a package of amendments NCUA would make to its new corporate regulation that also includes a limit on corporate membership to a single corporate; new requirements for disclosures of executive and director compensation; and Sarbanes-Oxley-like internal audit provisions.
Many commenters are pointing out that making CUSOs and state leagues pay a bailout assessment would amount to double taxation for credit union owners of the CUSOs or members of the leagues.
"Several of the credit unions that the Association represents have wholly owned credit union service organizations while a number of other affiliated credit unions have jointly owned CUSOs," noted Robbie Thompson, president of the Credit Union Association of the Dakotas. "If this proposed rule were to be implemented, federally insured credit unions with investments in CUSOs would essentially be assessed twice."
Doug Burke, president of CU Service Network LLC, noted that the CUSO's 100 CU members share cooperatively in annual profits. "If CU Service Network were to voluntarily make a payment, the payment would in fact be an additional payment from the credit unions that have already made a non-voluntary assessment payment. The net result is the credit unions are now paying twice," he wrote.
Privately Insured CUs Speak Out
But the vast majority of the opposition is being posed by members of Ohio-based ASI, who noted that their status as state-regulated and privately insured leaves them outside the legal authority of NCUA.
"As a privately insured institution, our credit union is not under the regulatory jurisdiction of the NCUA, nor are our deposits insured by this federal agency. As such, our credit union and other privately insured credit unions are not bound by contract with the NCUA, nor are we required by Idaho law to have to pay for federal share insurance losses," wrote Cyndi Tiferet, president of Boise (Idaho) Valley CU. "This attempt by the NCUA to extract funds from privately insured credit unions to pay for the corporate losses is obviously a case of this federal agency stepping out of its legal boundaries," wrote Tiferet. "By doing so, the NCUA is effectively taxing non-federally insured credit unions by requiring this "voluntary contribution" be paid to the (corporate bailout fund)."