Industry Fending Off Unwanted Reforms

Credit unions and their advocates have beaten back a raft of amendments to the administration's banking reform package.

In the course of a week, the House Banking Committee shelved proposals that would have significantly altered the industry's regulatory and accounting structure.

The industry is attributing much of its apparent success to a grass-roots effort that set telephones ringing in congressional offices last week.

The effort was also helped by a widespread belief that credit unions and their insurance fund are working smoothly, said Charles O. Zuver, director of governmental affairs for the Credit Union National Association, a trade group based in Madison, Wis.

Though the amendments have been warded off for now, credit union advocates will remain on the alert for attempts to reintroduce them. "The war is not over," Mr. Zuver said.

A Gonzalez Measure Withdrawn

The most objectionable measure was withdrawn last Thursday before it came to a vote. That amendment would have required credit unions to write off half their contribution to the insurance fund over a 12-year period.

The measure was intended to address what some critics have called a dubious accounting procedure: Credit unions place 1% of their deposits with the insurance fund but continue to carry the money on their books as capital.

Sponsored by House Banking Committee Chairman Henry B. Gonzalez, D-Tex., the proposal was similar to one included in the administration's initial package. The first provision was stripped from the bill several weeks ago by a House Banking subcommittee.

Patrick Keefe, director of communications for the National Association of Federal Credit Unions in Arlington, Va., said there was "no compelling reason" to write off the contribution. "Our fund is strong the way it is. It's proved it works, even through some of the most trying times."

Of all the measures opposed by the credit union industry, this one is the least likely to resurface in the Senate or the House, Mr. Zuver said.

No Treasury Delegate on NCUA

A proposal sponsored by Rep. James Leach, R-Iowa, to place a representative from the Treasury Department on the board of the National Credit Union Administration was defeated by the House Banking Committee on a 38-to-13 vote.

Like the writeoff provision, the measure was originally proposed by the Bush administration but omitted by the subcommittee, only to be reintroduced by the full committee - and defeated.

A measure that would have placed the secretary of the Treasury on the National Credit Union board was withdrawn last week. Another measure, which would have consolidated all the federal regulators of financial institutions - including Credit Union board - was set aside temporarily.

The consolidation amendment, sponsored by Rep. Gonzalez, would also have transferred administration of the National Credit Union Share Insurance Fund to the Federal Deposit Insurance Corp. Credit union advocates fear a consolidation would lead to credit unions becoming more like banks.

The Gonzalez proposal, or others affecting the NCUA and its insurance fund, could resurface this week, said Mr. Keefe.

Camel Proposal Pending

One amendment that did not come to a vote and remained alive at the end of last week would require all institutions insured by the FDIC and the National Credit Union Share Insurance Fund to disclose their Camel ratings.

The ratings measure an institution's soundness on the basis of capital, asset quality, management, earnings, and liquidity.

An amendment that would require all credit unions to have federal deposit insurance passed on a voice vote.

"The states are already taking action to do that," said Richard Beach, vice president of governmental affairs for the Credit Union National Association. "Our main concern is that it be done in an orderly fashion."

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