Rep. Ed Royce, R-Calif., and Rep. Paul Kanjorski, D-Pa., have reintroduced a regulatory-relief bill for credit unions that would revise their capital regulations and allow individual credit unions to make more business loans.
The two lawmakers introduced a similar bill during the 108th Congress, but it failed to pass.
For the most part, the Credit Union Regulatory Improvement Act of 2005 mirrors the previous bill. The most significant difference comes in its treatment of capital.
The first Royce-Kanjorski bill would have introduced risk weighting - a concept regulators use when figuring banks' capital ratios - to credit union capital calculations. The bill introduced Thursday incorporates the more comprehensive capital changes that JoAnn Johnson, the chairman of the National Credit Union Administration, proposed last month. In addition to introducing the risk weighting of credit union assets, Ms. Johnson called for reducing the capital threshold for well-capitalized institutions to 5%, from 7%.
Both versions of the bill would raise the congressionally imposed cap on business lending to 20% of a credit union's assets, from the current 12.25%, and exempt loans under $100,000 from counting at all.
