Sen. Chuck Hagel said Monday that he will seek to attach a Federal Home Loan Bank reform bill to an unrelated credit union measure pending in the Senate.
In a speech to the Independent Bankers Association of America, the Nebraska Republican said he sees no other way to get his proposal passed this year.
The House included similar language in the financial services restructuring bill, giving community banks access to Federal Home Loan bank advances for small-business and other loans. But Sen. Hagel said the House bill, which was approved last week, is "dead" in the Senate.
Even as he pinned his hopes on the credit union bill, Sen. Hagel - one of only two senators on the Banking Committee to vote against it - called the bill a "diseased carcass" that he intends to "disinfect."
Proposed limits on business lending are too weak, he said. Also, he said the bill should require greater supervision of credit unions to avoid a financial crisis, such as the one that hit thrifts in the 1980s.
"The fact is that not too many years ago, we remember a little problem we had called the S&Ls," Sen. Hagel said. "I want to face these things in a lot more depth than we are before we start making some decisions."
Meanwhile the credit union industry is fighting similar rhetoric by banks.
Daniel A. Mica, president of the Credit Union National Association, demanded last week that the banking industry stop making "reckless and irresponsible" comparisons between credit unions and failed thrifts.
"A certain amount of hyperbole is to be expected in any legislative fight," Mr. Mica wrote May 14 to the heads of the Independent Bankers Association of America and the American Bankers Association. "But radio advertising paid for by the IBAA and statements issued by the ABA ... cross the line between responsible comments and irresponsible efforts to damage the public's confidence in our financial system," he wrote.
- Scott Barancik and Dean Anason