Trades eye opening a second front in `erosion' war

ARLINGTON, Va. and WASHINGTON - NAFCU preparation for it began early this year when directors and CEOs from federal credit unions were brought to the trade association's headquarters for discussions over what would become a top priority of new NAFCU President Fred Becker Jr.: the perceived flight of FCUs to more lenient state CU and mutual savings bank charters. It continued with a January 31 letter from Becker to 1,000 member FCUs identifying "enhancing the federal charter" as a principal concern of the membership; and it gained strength as the problem's details were elaborated in letters to the NCUA Board and in presentations to spring conferences in which Becker finally revealed that NAFCU would pursue a legislative as well as a regulatory response to the challenge. CUNA, too, responded to the "erosion" threat by establishing a Federal Credit Union subcommittee in January to look into some of the downside consequences of the Campaign for Consumer Choice and the CU Membership Access Act (H.R. 1151)-such as in the area of SEG approval constraints, prompt corrective action requirements, member business lending restrictions, and community charter size limits-that may have contributed to the defection of 135 FCUs (of increasingly large asset size) to state charter in the past four years. Then, after its own critical communications to NCUA on the subject, CUNA in May formally established its Renaissance Commission, a 24-member panel representing various size state and FCUs to investigate an "H.R. 10 (the 1999 law enhancing bank powers) for credit unions." "H.R. 1151 was never intended to create a new world for credit unions," CUNA President Dan Mica told Credit Union Times in May (CU Times, May 31). "It was lobbied and passed in response to challenges from the banks." Addressing the need for a follow-up to H.R. 1151, Mica added, "Congress just passed H.R. 10 for the banks, we need an H.R. 10 for credit unions. After H.R. 1151 was passed, we spent a lot of time making sure the provisions were the least onerous as possible. The time is now to prepare for further reforms." CUNA's Renaissance Commission, whose chairman is Pentagon FCU's President Frank Pollack, will soon begin conducting its own series of hearings with CU representatives throughout the country on a wide range of CU issues that also may result in legislative as well as regulatory lobbying action. "Our position is that we have to look at this thing thoroughly," said CUNA Vice President for Communi-cations and Media Outreach Pat Keefe about the CUNA initiative, "which is why we set up the Renaissance Commission; get as much input as we can from credit unions...and then deliberate on that, and then make recommendations. Now, this isn't going to be a terribly lengthy process, but it is going to be thorough and it is going to be deliberate.... That's our approach." NAFCU, however, already claims to have spoken with over a dozen members of the House Banking Committee and several members of the Senate about its specific-if less painstaking-legislative agenda for FCUs, and it continues its aggressive regulatory lobbying of NCUA on the subject despite gains seen in the agency's recent FOM task force report (CU Times June 14). Included in NAFCU's two-track FCU rescue approach are proposals for: *"reverse wild card" authority which would give FCUs the same chartering powers as any FISCU in the country, unless specifically prohibited by NCUA; *hybrid* charters that would allow single and multiple-SEG FCUs to add community charter-like geographic areas to their FOMs and extend occupational group FOM authority to community charter FCUs; *making a group's "preference" for not forming a new FCU the sole determinant for NCUA approval of SEG status for groups under 3,000 potential members; *allowing single common bond and community FCUs wishing to add underserved areas to their FOMs to partake of the same relaxed expansion requirements H.R. 1151 affords multiple-SEG FCUs; *simplifying and clarifying the definition of "underserved area" and placing it within the FCU Act itself; *repealing the H.R. 1151-imposed members business lending restrictions on FCU and FISCUs, tabling the issue until such time as the Treasury Department submits its mandated study of the subject; *overturning NCUA's recently proposed community action plan (CAP). "This is the first step in the process...," said NAFCU Director of Legislative Affairs Murray Chanow of the push. "We've (circulated our) initiative on Capitol Hill. We've showed them to a good amount of high-ranking Republicans and Democrats in the Banking Committee.... NAFCU has been very well received on Capitol Hill." "In terms of the process moving forward," Chanow added, "we didn't expect to get a giant credit union bill like H.R. 10...introduced and passed as the law this year. We realize that this is a two-year process, maybe even a three-year process, and what we're doing right now is just laying the ground work for that to happen." "But we're being very well received on Capitol Hill," Chanow repeated, explaining, however, that lawmakers do differ on what they like about the NAFCU proposal. "There's a lot of people that like what we have down on paper. I think that what we're doing right now is going to lead to maybe a good bill next year or the year after." -gmcorrigan@mindspring.com