WASHINGTON -- CUNA and NAFCU are working toward a united front on key provisions of the Credit Union Regulatory Improvements Act to get the ball rolling in the 110th Congress.
The two national credit union trade associations met several times late last month to hash out agreeable language to all stakeholders, including previous bill main co-sponsors Paul Kanjorski (D-Pa.) and Ed Royce (R-Calif.).
"We're making progress," CUNA Senior Vice President of Legislative Affairs John Magill stated early last week. "I'm not going to get into the details of those discussions but in terms of a timetable we hope to be meeting with committee staff as early as tomorrow and hopefully if there are green lights, we may have a bill in the next couple or three weeks."
NAFCU acknowledged the scheduled meetings, but declined to discuss them.
In the past, risk-based capital and expanded business lending powers were the anchors of the bill. There is talk now of adding a provision to permit community chartered federal credit unions to adopt underserved areas after the American Bankers Association's lawsuit against NCUA that resulted in a rule prohibiting it. The leverage ratio in the risk-based capital equation as supported by NCUA, CUNA, and NAFCU has been a sticking point with a number of groups, including the bankers and NASCUS.
"Representative Kanjorski, it is expected, will introduce it...[He] has been a tremendous friend of credit unions," Pennsylvania Credit Union Association Senior Vice President of Communications and Marketing Mike Wishnow stated. In the Republican-controlled Congress, Royce had served as the primary sponsor, but Kanjorski is likely to take up that role with the change in power after last year's elections.
Royce is still very much involved as well, California/Nevada Credit Union League President/CEO Bill Cheney said. He said he is hopeful for a bill in time before CUNA's Governmental Affairs Conference so the 4,000 or so attendees will really give the legislation good momentum from the start. The two leagues will have more than 200 delegates at the GAC.
Cheney highlighted that CURIA is a couple years old and some updates are in order with a provision to allow community chartered credit unions to adopt underserved areas as a solid possibility. League lobbyist Ryan Donovan noted, "A couple of substantive changes are being discussed but nothing is finalized."
One provision that will not be added to CURIA is one from the previous House regulatory relief language to allow privately insured credit unions to join the Federal Home Loan Bank System. "We were not part of CURIA before so we have no plan to be in it now," American Share Insurance President/CEO Dennis Adams said. ASI is the last remaining private provider of primary deposit insurance.
Kanjorski has been on record in the past in opposition to private primary deposit insurance.
In the last five or 10 years, Adams said, ASI member credit unions have quelled their cries for FHLB eligibility since corporates have begun offering "look-alike" products, though he still hears some. He said his board would evaluate the congressional climate and discuss whether to pursue the provision that had been part of reg relief again in the 110th Congress. "We want to solve the problem, not create legislation," Adams concluded. However, given the credit union/bank climate in Pennsylvania, Wishnow said he wonders if his member credit unions have the appetite for the CURIA battle at this point. In addition to the ABA lawsuit against NCUA over its approval of a community charter more than three years ago for Members 1st Federal Credit Union on the federal level, there are also a handful of state legal battles over field of membership and taxation going on, credit unions' two basic concerns.
"How strongly are credit unions rallied behind it? That's the $64,000 question," Wishnow said of Pennsylvania. He added, "We don't have credit unions bumping up against the business lending caps;" just a handful. Not that the issues CURIA raises are not important, but some of these state issues could be more pressing, he explained.
By contrast, in a recent meeting with 40 of his members, Cheney said, CURIA was "the No. 1 thing on their minds."
Last session of Congress, the entire Nevada congressional delegation and more than 20 California representatives were co-sponsors to the bill. When asked how the leagues were so successful, Cheney replied, "We have a very energized and vocal group of member credit unions." He said the faith-based business lending provisions--in addition to risk-based capital, overall business lending, and field of membership sections--were particularly important in California, where he said there are "a lot of successful faith-based credit unions." Royce had previously introduced a standalone bill to exempt loans to faith-based organizations from the member business lending cap.
In addition to the private insurance provision, what will not be in CURIA this time around are the provisions that already passed as part of regulatory relief: permitting check cashing and wire transfers for nonmembers; changing the definition of net worth for impending accounting rule changes; increasing the loan maturity from 12 years to 15; and clarifying that no- and low-fee leases to credit unions are permissible on military installations. Still Working the Senate
"There's not a bill as such that's being readied to introduce but we had been meeting with key Senators and staff in the last couple of weeks letting them know that a bill is being introduced on the House side," Magill continued. "We put out some feelers about the possibility of a like-bill on the Senate side and they said 'keep us posted, we're interested.' And they're particularly interested in some of the provisions, perhaps to be sliced off and introduced individually on down the road but no commitments."
In particular, now-Senator Bernie Sanders (I-Vt.) said during his address at the 2006 NAFCU Congressional Caucus that he would be interested in introducing legislation similar to CURIA in the Senate. Even though he was not assigned to the Banking Committee, any member of the Senate can sponsor potential legislation. "It's always had a little more spotlight if a ranking member or a member of a committee introduces legislation but we'll take it wherever we can get it," Magill explained.
CUNA Vice President of Legislative Affairs Dean Sagar added, "I think there is a sense of senatorial courtesy where someone off the committee may or may not introduce a bill if they think someone on the committee is interested. In terms of Mr. Sanders, if it looks like other things aren't going to be introduced or pieces of it, there are some things he's very interested in." Branching Out
Striking out on its own, NAFCU asked Kanjorski and Royce that if they consider changes to the provision that would have expanded credit unions' member business lending cap to 20% to eliminate the cap altogether.
"We do not believe that it is appropriate to leave in place, or create another, arbitrary MBL cap; doing such would be to the long-term detriment of credit unions," NAFCU President/CEO Fred Becker wrote in a letter to the CURIA co-authors. "Accordingly, we would ask that if you decide it appropriate to shift the focus from the momentum that the current MBL proposal in CURIA has gained, the approach should be to remove the arbitrary cap imposed as part of the Credit Union Membership Access Act (CUMAA) in 1998." NAFCU would not comment on whether another cap was up for consideration or not.
In support of its position, NAFCU cited a 2001 Treasury study that stated, "...credit union's business lending currently has no effect on the viability and profitability of other insured depository institutions." The study also acknowledged credit unions' field of membership constraints and stricter business lending rules. It also found that "member business loans are generally less risky than commercial loans made by banks and thrifts..." Becker pointed out. "To date, Congress has not revisited the results of the 2001 Treasury Study."
He continued, "If you opt to make changes to the MBL proposals, taking the bold step to remove the arbitrary cap and restore what was in place before 1998 in CURIA would bring to the forefront the Treasury study. We hope you will consider our request as you draft the bill."
ABA Chief Economist Keith Leggett, one of the group's resident credit union experts, said, "What I find interesting is when they passed CUMAA, Congress was very adamant in wanting credit unions to remain focused on their mission to serve consumers." He asserted that more member business lending would hurt credit union service to those of modest means, which all goes back to the purpose of the tax-exemption.
Credit union member business lending has fundamentally changed since the 2001 Treasury study, he said, noting that he had an advertisement from one credit union organization offering commercial loans up to $50 million.
"If you want unlimited business lending authority, become a bank," Leggett offered. He said he found it ironic that NAFCU wanted to expand business lending while at the same time trying to limit credit union conversions to banks. "You can't have both worlds."
He added regarding NAFCU's letter, "Clearly, we will make it well known on the Hill. This may actually cause more damage to credit unions' ability to get CURIA because it shows what credit unions really want." Congress does not want credit unions to become "tax-exempt banks," according to Leggett, which the legislative body iterated during the CUMAA debate. --firstname.lastname@example.org