CURIA, CURRA, CRA, GAC--The Whole Alphabet Soup
Credit unions just can't stop making news, particularly in Washington. Of course this last week, Capitol Hill got a huge dose of credit unions with CUNA's Governmental Affairs Conference taking place from March 2-6.
In fortuitous fashion, Congressmen Paul Kanjorski (D-Pa.) and Ed Royce (R-Calif.), co-authors of the Credit Union Regulatory Improvements Act (H.R. 1537), introduced new, pro-credit union legislation just prior to the meeting that brought 4,700 credit union officials to Washington, D.C. The Credit Union Regulatory Relief Act (H.R. 5519) would accomplish a large number of the items from CURIA but excludes the more controversial--and some might argue--necessary provisions, such as risk-based capital reform and raising the member business lending cap from 12.25% to 20%.
On the other hand, it does include a provision to adopt underserved areas as well as new sections that would allow credit unions to offer payday lending services to anyone within their fields of membership and encouraging small business development in rural communities. These are excellent and creative changes that will expand credit union market share while serving the social mien of the Democratic controlled Congress. At the same time, both of these new provisions would help boost the ailing economy, which should be an easy sell with the politicos. Hopefully, these new provisions will make it into CURIA or vice versa.
Credit union lobbyists and lawmakers seem to feel this method of parallel legislation is the way to accomplish credit unions' objectives at hand. As an outside observer, I would have to think lawmakers could more easily get behind the less controversial CURRA. But then what happens to CURIA's increased business lending cap, which bankers are fiercely opposed to, when the warm and fuzzy pieces like expanded service to underserved areas are taken out?
Obviously, CURIA is like the wish list a kid sends to Santa that's 20 pages long--you're not going to get everything. CURRA is certainly a solid start. And lobbyists are quick to point out that the legislative process is just that, a process. Amendments are added along the way, and deals are brokered prior to votes and before and after hearings.
Frankly, from the standpoint of getting amendments in, time is on credit unions' side. Congress typically isn't known for acting swiftly. Note that CURIA has been in process for about five years now, and four of the 15 or so original provisions made it into law with the Financial Services Regulatory Relief Act. None of those provisions really received any push back from the banking trades, in part because the provisions were paired with a similar number of their own.
CURRA was also well-timed because it was introduced after the credit union trades caught wind of a bank-heavy combined regulatory relief draft in the Senate.
The hearing on credit union regulatory relief measures that took place last week went a long way to show the political clout and the allies credit unions have on the Hill. House Financial Services Committee Chairman Barney Frank (D-Mass.) banged the gavel and said less talk, more action before handing the hearing over to Kanjorski's control. While Frank has talked of expanding Community Reinvestment Act requirements to everyone, including credit unions, he still has a certain affinity for the services CUs provide and who they provide them for. Kanjorski has been with credit unions on most issues at least since H.R. 1151 a decade ago.
House Financial Services Ranking Member Spencer Bachus (R-Ala.) in his opening remarks stressed that while Congress is taking a solid look at regulatory relief, adding broad regulatory mandates should be avoided. He specifically cited CRA in contrast with his colleague on the other side of the aisle. He argued that CRA has even been counter-productive.
NCUA Vice Chairman Rodney Hood made that very argument from the stage of CUNA's GAC. He noted that non-CRA subject credit unions are trying to save members from subprime mortgages that were sometimes made by banks, which are subject to CRA.
Appropriately, NCUA Board Chairman JoAnn Johnson touted the benefits of providing credit unions with a risk-based capital system. She also threw the issue into the Basel talk during a hearing on the state of the banking community earlier in the week.
This flurry of activity on the Hill the week of CUNA's GAC, which I tongue-in-cheek earlier in the column referred to as "fortuitous," was not coincidental. It demonstrates the political acumen and prowess that the credit union trades and credit unions possess on the Hill. The 4,700 attendees of CUNA's GAC should be proud to be a part of that because it still has not dawned on some in the credit union community that, while Washington lobbyists do a yeoman's job, it's really the individual credit unions with their unique, local anecdotes that sell the credit union story to elected officials.
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