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WASHINGTON-The House Financial Services Committee leadership is discussing the possibility of moving the credit union provisions of 2001′s regulatory relief legislation separately from the bank provisions, credit union lobbyists have confirmed. Whether this will be helpful or harmful to credit unions is up for grabs. The credit union and banking trade associations are being consulted, but have not made any hard and fast decisions yet. They have said they plan to respond shortly after deadline. “It’s an idea that’s being floated and all the different facets of that are being considered,” CUNA Vice President and Senior Legislative Counsel Gary Kohn commented. While there are some opportunities presented by introducing a separate bill, it also gives the bankers a “stand alone target” to unite against, NAFCU Director of Legislative and Political Affairs Brad Thaler explained. “Quite frankly, we have some fairly deep-seated apprehension about following that parliamentary course,” NAFCU Senior Vice President and General Counsel Bill Donovan added. “However, that’s a call that’s ultimately going to be made by Chairman Oxley in consultation with the leadership of the House. Chairman (Mike) Oxley (R-Ohio) has consistently proven himself to be both a highly skilled lawmaker who uses parliamentary devices to his advantage and also a strong friend of credit unions.” If he decides the best avenue for passage is to separate the credit union and bank provisions, NAFCU will cooperate and support that effort, Donovan said. “I have all the confidence in the world that we could beat them (the bankers). We’d whoop `em,” Kohn said. “But the question is whether or not it’s worth the effort because it would be a tremendous battle and unless we get some kind of assurances of the possibility of getting additional provisions in there that we think that would excite credit unions even more than they already are, it may not be worth it. Curiously enough, when the bankers were approached about this last week, I thought that they’d jump up and rejoice over this but, believe it or not, they were fairly unanimous, from the reports I’ve been given, in their opposition to this approach too.” He speculated that the bankers wanted to focus more resources on other priorities like privacy, their battle with the realtors, deposit insurance reform, and the Fair Credit Reporting Act reauthorization, rather than another battle with credit unions. America’s Community Bankers, the American Bankers Association, and the Independent Community Bankers of America were leery of commenting on the issue as of press time. According to CUNA’s Kohn, the committee’s plan to separate the provisions was aimed at easing the bills’ passage through Congress because each lobby would be focusing on their own bill. “That might be the case, but what they forgot is that the banks would also attack the credit union bill itself and that might in turn force us to take a look at stuff that’s in the banking bill,” Kohn pointed out. “If we had opposition with the credit union stuff, then we might be forced into doing the same thing with the banking stuff. We don’t normally do that, but it may never come to that either.” “In an effort to try to alleviate or prevent even some of the animosity that was out there last year, what this might inadvertently do is create even more animosity,” Kohn reasoned. However, he too acknowledged, the ultimate decision is up to the lawmakers leading the charge on regulatory relief legislation. CUNA has participated in informal conversations with the banking groups, Kohn added. Donovan said that his organization had not been in contact with the banking groups on this issue. The banking groups gave last year’s bill, with dozens of regulatory relief provisions for banks and thrifts, a tepid reception when it was introduced specifically because of the credit union provisions. Even after Financial Institutions and Consumer Credit Subcommittee Chairman Spencer Bachus (R-Ala.) chastised the banking lobby for attacking credit unions rather than reinforcing their own provisions during hearings in the 107th Congress, ACB, ICBA, and ABA have not been shouting its praises from the rooftops of the nation’s capitol. While ACB and ICBA supported the bill last year, though begrudgingly, ABA chose neither to support nor oppose the legislation. Relief Could Be Better The credit union community is not completely enamored with the legislation either. While the bill goes a long way in providing credit unions some regulatory relief, more can be done, according to CUNA and NAFCU. “They’re also taking a look at possible other ideas that could be worked into the legislation, but essentially what they’ve said is that they’ll use what was approved by the House Financial Services and House Judiciary Committees as their starting point for this year,” Thaler said. Both groups are interested in tacking on additional items, including secondary capital usage for credit unions and lifting the member business lending ceiling. “I would say that if we were able to get those two items as part of the package, that might be worth fighting over,” Kohn commented on the option of dividing the bill into credit union and bank provisions. “That would excite a lot of credit unions, not all of them, but you’d have a whole group that would be excited about alternative capital and another group that would be excited about member business lending. You throw that in with last year’s provisions and you’ve got yourself a pretty meaningful package. Not to say that the stuff in last year’s bill isn’t helpful, but I’d say that you’re talking about a limited amount of stuff that is there that would get credit unions excited for a true grassroots battle.” Kohn said that CUNA has feelers out to discover whether the trade group should suggest additional provisions when the appropriate time arrives. He added that discussions are continuing on whether Congressman Brad Sherman (D-Calif.) should once again propose a provision regarding secondary capital for credit unions. Sherman did so twice in the last Congress, but withdrew the amendments before they came to a vote. The purpose of that move was to stir discussion on the issue, according to the credit union lobby. Last session’s regulatory relief legislation (H.R. 3951) included 12 provisions specifically for credit unions (see sidebar). CUNA supported all the provisions, but NAFCU’s Donovan said that the portion allowing privately insured credit unions to join the FHLB System requires further consideration. “We think the issue should be studied and well thought through before there is a precedent established,” he said. “We also feel that access to the Federal Home Loan Bank System has its greatest value because of the role that the federal government plays in standing behind the Federal Home Loan Bank System. So the question could be raised as to whether institutions that seek to derive a benefit from the federal backing of the Federal Home Loan Bank System should as a precondition for enjoying that benefit also participate in the federal system of insurance.” NAFCU plans to have an official policy statement on the FHLB issue in a few weeks. Donovan explained, “To the extent that that’s an essential element to a package of credit union regulatory relief provisions, we’ll have to assess the value of the package.” In whatever form, the bill has to start from scratch again this year, through the typical congressional hearing and markup process. Similar legislation aimed at credit unions being considered by Congressman Bob Ney (R-Ohio) is up in the air at this point, according to the credit union lobbyists. “There is interest by a number of members of the committee, which we see as a positive,” Thaler said. [email protected]

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