WASHINGTON-While the House Financial Services Committee has not made any decisions yet on the form of the regulatory relief legislation in the 108th Congress, lobbyists say it is unlikely to be separated into credit union and bank provisions. “I don’t believe that they have made a decision yet, but I do believe that [the split] is not likely anymore to occur. I think we’re more than likely to see the same thing that happened last year, one big bill on regulatory relief.They haven’t told anybody this, but its just the feeling one gets from the various discussions that have been going on,” CUNA Vice President and Senior Legislative Counsel Gary Kohn observed. In a recent letter to House Financial Services Chairman Mike Oxley (R-Ohio), NAFCU President and CEO Fred Becker wrote, “As for the issue that your staff has raised with us regarding the proper route to pursue regulatory relief-an industry-wide bill or a separate credit union bill -I would say that we would leave that to your best judgment. As we have discussed with your staff, we believe that there are pros and cons to each approach, and while we might prefer an industry-wide bill, we defer to your judgment and are ready to work with whatever track you and your staff deem the most appropriate.” NCUA Chairman Dennis Dollar said of his recent discussions with Oxley, “Chairman Oxley was very candid to say that.the committee leadership had not made a decision as to whether they would go with one bill or two.” “Both the pros and cons of one bill and two were discussed, but that is a legislative decision that they must make,” he said, adding that he was not asked to choose sides but Dollar did say in conversation that he felt a single bill would be a better avenue. In the meantime, NCUA did submit its second letter regarding last year’s regulatory relief provisions and potential amendments as requested by Oxley. While most of the suggestions were adopted in the 107th Congress, most were not adopted in full. Dollar again requested that NCUA be granted greater authority in determining loan maturity limits and CUSO investment limits, as well as general investing. “As the Committee continues its work on this legislation it is our belief that, where appropriate and dictated by efficiency and overall concerns for safety and soundness, it would be advisable for the Committee to consider the option to authorize the appropriate regulatory agency to address many of these issues from a regulatory perspective rather than by addressing them specifically by statute,” Dollar wrote. “Such an approach would make it possible for the regulators to adjust, where appropriate, to changing conditions in the marketplace or evolving safety and soundness considerations without the necessity of a statutory revision.” The “reasonable proximity” requirement for adding select employee groups was one item that NCUA recommended, but was left untouched by Congress. “We did include that again this year because we think it is important that the committee at least be aware of the fact that a statutory mandate regarding reasonable proximity is something that may as time progresses be an area of concern if we continue to have to mandate credit unions to have a service facility before they recruit a new SEG that ultimately we’re driving them to bricks and mortar in a clicks and windows age,” Dollar explained during a press audioconference. He also noted that the agency is partially addressing the issue through its field of membership proposal, which would expand the definition of a service center to include ATMs. Additionally, NCUA’s letter requested that credit unions be exempted from registering with the Securities and Exchange Commission for broker/dealer activities, as the thrifts are in Section 201. The letter also asked that NCUA be stricken from any responsibilities regarding Section 301 of H.R. 3951 from last Congress, which would permit privately insured credit unions to join the Federal Home Loan Bank System. NCUA explained that they have no legal jurisdiction regarding privately insured state chartered credit unions. The language added in the Financial Services Committee, Dollar said, “in effect, put NCUA into some oversight role as it related to private insurers we felt was very inappropriate. To have them submit their certified audits to NCUA, we thought was only confusing the issue. We have no regulatory authority over those state chartered credit unions that are privately insured and we certainly have no insurance regulatory authority over a private insurer. We feel very strongly that NCUA should not be brought into any type of oversight position. We think it’s a violation of the dual chartering system when you bring the federal regulatory authority into a matter impacting state chartered institutions that are not federally insured.” CUNA and NAFCU both remarked that they felt NCUA’s letter was a solid launch pad for this year’s legislation. “We fully agree with his assessment that these provisions provide needed regulatory relief to credit unions without jeopardizing the credit unions’ well-earned reputation for safety and soundness. We have a long ways to go before this legislation becomes law; Chairman Dollar’s letter is a solid starting point,” NAFCU Senior Vice President and General Counsel Bill Donovan said. “We’re glad they continued to advocate those. We through they were sound suggestions at the time and we continue to think so,” CUNA Senior Vice President of Government Affairs John McKechnie commented. He added that CUNA still looking for opportunities to add other provisions. Credit union lobbyists should get that opportunity in March, when hearings are expected. CUNA Vice President and Senior Legislative Counsel Gary Kohn added that he expects subcommittee markups to follow shortly thereafter. Dollar explained that Chairman Oxley seemed to be looking to introduce the bill pretty much as is so as not to stir up additional controversy between the banks and credit unions. “We do realize that the credit union provisions are a point of some contention with some of the bankers’ organizations,” Dollar observed. “Interestingly the credit union organizations don’t seem to have any problem with the bankers’ provisions but the bankers seem to have problems with the credit union provisions. We talked a little bit about the fact that the bill has to stay balanced to where both the credit union community and the banking community feels like there is something of benefit to them in the bill.” Regulatory relief proponents are looking to avoid knocking things off balance by keeping additional provisions out of the bill for now. However, some form of secondary capital and a broader expansion of the member business lending cap are certain to be where credit union lobbyists are looking to improve the bill from their perspective. Dollar noted that credit unions are fairly evenly split concerning the use secondary capital and that the regulation would be extensive. However, he said, “[A]s a safety and soundness regulator, responsible for the administration of the share insurance fund, we would not be true to our responsibilities if we were not willing to consider any proposal that added an additional buffer to the share insurance fund.” The board has not official taken a position on the issue. NAFCU’s Becker recently submitted a letter with recommendations on the regulatory relief legislation to Chairman Oxley, also requesting removal of “local” from the definition of community regarding community charters as out-dated in a high-tech world and broader regulatory authority over credit union governance issues, in addition to other amendments already noted, like the member business lending, the “reasonable proximity,” and the SEC broker/dealer provisions. CUNA was expected to submit a letter shortly after deadline. Dollar felt strongly that the lawmakers needed to place more trust in credit union regulators. “One of the reasons that they are considering this legislation is because there are things that are on the statute books that perhaps would have best been left in the regulatory realm and if they had we would be in a greater position to adjust to a changing marketplace and to changing safety and soundness considerations than to require Congress to have to go back and address these changes,” he said. [email protected]

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