WASHINGTON – The bankers were all over Capitol Hill the past few days trying to convince House members to vote against the credit union regulatory relief bill Tuesday, freed to do so because Congressional leaders did not schedule a vote on the bankers own bill, also.
The American Bankers Association was urging its members to contact their representative and urge a “no” vote on CURAA – the CU Regulatory Relief Act – by insisting it will “permit a huge expansion of credit unions' geographic reach, commercial lending authority and product offerings.”
The credit union lobby was trying to counter the bankers’ campaign with its own call to action. “If they want a war, then we’ll give them one,” said one credit union lobbyist.
The bankers supported their campaign with ads in Capitol Hill newspapers illustrating large losses reported by credit unions in Colorado (Norlarco CU), Michigan (Huron River Area FCU) and Florida (Eastern Financial Florida CU) on non-traditional business loans.
The absence of the banks’ own regulatory relief bill, which was supposed to be voted on at the same time as the credit union legislation, freed the banks for an unequivocal call for a no vote on the credit union bill, since the bankers no longer have to worry about asking for passage of their own bill at the same time.
CURRA is similar to CURIA, the CU Regulatory Improvements Act, absent the two provisions most objectionable to the banks: an increase in the cap on member business loans and enactment of a risk-based capital system for credit unions.
CURRA would expand the ability to branch into underserved markets to community chartered credit unions; exempt business loans made in underserved markets from the MBL cap; and allow credit unions to provide payday loans to non-members within their fields of membership.
The ABA insists that this amounts to vast new powers for credit unions because entire cities, including Philadelphia, Washington, D.C., Miami, San Francisco and Houston already have been designated as underserved areas. “Many whole cities with no geographic or population ties to individual credit unions would become eligible for expansion by credit unions because the credit union regulator has declared them ‘underserved,’” said the ABA in its action alert.
As with CURIA, CURRA would: allow credit unions converting to community charters to retain their select groups; exempt credit unions from the pre-merger notification requirements of the Clayton Antitrust Act; increase the amount individual credit unions can invest in a CUSO to 3% of capital from the current 1%; and allow NCUA, rather than Congress, to determine permissible investments for credit unions.
CURRA also would give NCUA greater flexibility in setting the annual interest rate ceiling and ease credit union participation in the U.S. Small Business Administration’s Section 504 program.
