WASHINGTON -- Community development credit unions are eligible for a slice of $1 billion in funds through a special federal program to rebuild blighted areas.
But with the new source of funding comes concern that agencies other than the federal regulator could have a say in credit union activities.
An appropriations bill due to be signed by President Clinton says some of the $1 billion allocated to the program can go to "community development financial institutions such as community development loan funds and community credit unions" in areas to be designated.
Rules Expected Soon
Mr. Clinton's plan to aid distressed urban and rural communities with special tax breaks and other federal assistance was incorporated into the Omnibus Budget Reconciliation Act passed in August.
Regulations and application requirements are expected in November, and the first zones will be chosen in spring.
The departments of Health and Human Services, Agriculture, and Housing and Urban Development are the lead agencies in drafting regulations for the program. They will also choose what areas -- and credit unions serving those areas -- qualify.
Though credit union trade associations have been pressing for the inclusion of credit unions in plans for the "empowerment zones," they were surprised by the mention of credit unions in the appropriation.
David John, a lobbyist for the National Association of Federal Credit Unions, credits the President with placing credit unions in the appropriation.
"As far as we can tell, the language developed from the Clinton administration and reflects their priorities," Mr. John said.
NCUA Wants a Say
The federal credit union regulator, which was unaware of the appropriation, wants a say in where the money goes.
"We'd want to be consulted before any money goes to a credit union," said John Zimmerman, a lobbyist for the National Credit Union Administration.
A White House staff member said the law would not infringe on the agency's duties but would give it no say on which credit unions receive funds.
However, the agency would be consulted on an informal basis, and the safety and soundness of institutions would be taken into consideration, the staff member said.
Nevertheless, the motion that other agencies could set standards for which credit unions receive funds has created some concern.
"Everyone knows that with money comes oversight, and with oversight comes more red tape," wrote Rep. Thomas Ridge, R-Pa., a member of the House Banking Committee, in an opinion piece sent to the media.
|Who Is the Regulator?"
"That's something we need to keep our eyes on," said Gary Kohn, a lobbyist for the Credit Union National Association. "Who is the regulator? Is there going to be another regulator out there?"
Mr. Kohn said the situation should be more clear when the regulations are released in November.