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MBL BILL 5.0 INTRO'D IN SENATE, HOUSE VERSION EXPECTED SOON

WASHINGTON-Lawmakers again introduced a bill last week to raise the member business lending cap for credit unions, for at least the fifth Congress in a row.

The latest bill to raise the current limit from 12.25% of assets to 27.5% was introduced by Sen. Mark Udall, the Colorado Democrat who introduced essentially the same bill in the last Congress.

That bill, like similar measures in at least four previous Congresses, died amid major opposition from the banks. A similar bill is expected to be introduced in the House any day.

Credit unions have been lobbying for greater MBL limits since 1998, when, as part of HR 1151 (the CU Membership Access Act), Congress set the limit at 12.25%-at the behest of the banking lobby. The effort to increase the limit was first included in a bill as early as 2000, then was included as part of the CU Regulatory Improvements Act, which was introduced in 2003, and has been before Congress every year since then. But the credit union lobby insists it will not compromise with the bankers by lowering their proposed cap, in order to finally get the bill passed.

"This legislation is a great vote of confidence for credit unions and small businesses. This is a critical time to lift the arbitrary 12.25% member business lending cap on credit unions," said NAFCU President Fred Becker. "This important legislation would allow credit unions to help small business reinvigorate our nation's economy."

"Economic conditions may be improving, but the nation is still in need of more jobs, and small businesses are still in search of affordable and accessible options for capital. Credit unions can help on both fronts," said CUNA President Bill Cheney.

 

LAND OF ENCHANTMENT FCU IS FIFTH CU FAILURE OF THE YEAR

SANTA FE, N.M.-NCUA liquidated Land of Enchantment FCU and assigned the member accounts of the one-time $11-million credit union to Guadalupe CU, a $102-million credit union also in Santa Fe.

Land of Enchantment had losses of $765,000 for 2009 and of $297,000 for 2010 and net worth of just 1% at year-end 2010.

The credit union, the fifth failure of 2011, was chartered in 1951 to serve the employees of the New Mexico Department of Public Welfare.

 

UNINSURED MEMBERS SUE NCUA FOR $4M IN FAILED CU

NEW LONDON, Conn.-Uninsured members of New London Security FCU filed suit against NCUA last week seeking $4 million and damages in the 2008 failure of the $13-million credit union where the elderly investment manager leaped to his death from an 11-story building as authorities were preparing to arrest him for fraud.

The suit filed March 4 in federal court here claims that NCUA was negligent in examining the credit union's investments, which Edwin Rachleff had embezzled and deposited into his own accounts.

The new suit follows last month's dismissal of a suit brought by the same members against Wells Fargo, which acquired A.G. Edwards, the investment broker that employed Rachleff, who also served as a director of the credit union. Several other suits are pending in the case.

The scheme was uncovered on July 28, 2008, hours before the 82-year-old Rachleff jumped to his death from the 11th floor of a nearby building, as NCUA was taking over the credit union.

A subsequent audit conducted by the federal regulator revealed that Rachleff had misappropriated more than $12 million of the credit union's funds, rendering the credit union insolvent and leading NCUA to liquidate the credit union.

The latest New London Security lawsuit claims NCUA failed to adequately conduct annual evaluations over a 20-year period, the NCUA examiners consistently, improperly and negligently evaluated the transactional risk to member investors, "when in fact the investments of the (members) were at high risk of loss or embezzlement."

The members-Melvin Goldblatt, Joan Lazerow, Mark Fetcher, Gloria Johnston, and Douglas Antupit-say they lost $4 million in uninsured deposits when NCUA paid off members during the liquidation of the 72-year-old credit union.

 

REGULATOR OKS MERGERS SOUGHT BY SEVERAL GIANT CUS

ALEXANDRIA, VA.-NCUA reported that two more billion-dollar credit unions have been cleared for mergers; Pentagon Federal Credit Union, which will acquire $12-million Trippler Federal Credit union in Honolulu; and Anheuser-Busch Employees Federal Credit Union to acquire tiny St. Margaret Federal Credit Union.

The regulator also approved a request by $720-million Aloha Pacific FCU to acquire $15-million Media Hawaii FCU.

Also, Greater West Haven FCU, a $5-million credit union in West Haven, Co., was cleared to have two larger credit unions merged into it, West Haven Municipal FCU, with $14 million in assets, and West Haven V.A. Employees FCU, with $7 million.

NCUA also approved the combination of Heritage CU, Madison, Wis., with H-B CU in Milwaukee.

Merger activity has slowed considerably in comparison to previous months, with NCUA approving only nine combinations last month, about a third of the average number of monthly credit union mergers.

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