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WASHINGTON-The House Financial Services Subcommittee on Financial Institutions and Consumer Credit, chaired by Congressman Spencer Bachus (R-Ala.), unanimously passed H.R. 1375, the Financial Services Regulatory Relief Act, by voice vote. A proposed amendment banning privately-insured credit unions joining Federal Home Loan Banks failed. CUNA Vice President of Legislative Affairs and Senior Legislative Counsel Gary Kohn said prior to the vote last week that he did not expect many amendments to get through and he was correct. “I would anticipate that there will be very few if any amendments that will be, I won’t say offered, but certainly accepted as part of this markup,” Kohn said. “The [House Financial Services] committee’s made it fairly clear that they think that they’ve got this thing very finely tuned and finely balanced and are reluctant to upset that balance.” Credit unions have been looking to add provisions to increase the member business lending cap from 12.25% of capital to 20%, equivalent to what the thrifts are getting from the bill, and to permit credit unions the option of raising secondary capital. CUNA Senior Vice President of Government Affairs John McKechnie said that while CUNA respects House Financial Services Committee Chairman Mike Oxley’s (R-Ohio) wish to keep the bill noncontroversial and free of amendments, the lobby group still supports these amendments and is “looking for every reasonable opportunity to push those.” NCUA Chairman Dennis Dollar testified in favor of the bill March 27, with the exception of provisions in the section regarding privately insured credit unions joining the Federal Home Loan Bank System. Section 301 requires the affected credit unions to turn their financial audits into NCUA, which Dollar said does not have the oversight authority. However, Congressman Paul Kanjorski (D-Pa.) offered two amendments concerning credit unions, one of which may or may not surprise the credit union community. The first amendment was aimed at striking the provision allowing privately insured credit unions to join the Federal Home Loan Bank System. It was withdrawn. McKechnie said the amendment did not come as a shock to his organization, noting that Kanjorski had tried to amend the provision during last year’s full committee markup. The second amendment, which was also withdrawn, dealt with fixed assets and leased property. According to NCUA Director of Public and Congressional Affairs Cliff Northup, NCUA had been aware of the amendment, which would allow credit unions to purchase properties without the intent to inhabit them, prior to its introduction in order to study it. The current law requires credit unions to provide NCUA with a plan on how they plan to use any property purchased for themselves and occupy the property within three years, Northup explained. CUNA supports this provision, McKechnie said. Apparently a credit union in Kanjorski’s district met up with an examiner who “didn’t want the credit union in the landlord business,” according to McKechnie. A call for comment placed to Kanjorski’s office was not returned by deadline. Amendments that did break through, all passed by voice vote, including an amendment offered by Kanjorski to extend the terms of the FHLB directors from three years to four; an amendment offered by Representative Charles Gonzalez (D-Texas) that would require a biannual report by NCUA and the federal banking agencies on the status of the agency’s employment of minorities and women; and a manager’s amendment offered by Bachus making several technical and conforming changes. In lieu of another amendment offered by Congressman Rubn Hinojosa (D-Texas), subcommittee chairman Bachus offered to hold a hearing on the unbanked and international remittances, Northup said. The 13 credit union provisions remain unchanged, including: * allowing privately insured credit unions to become members of a FHLB; * allowing for minimal rent payments for credit union branches located on military installations; * expanding credit union investment authorities; * increasing the 12-year limit on federal credit union loans to 15 years; * increasing the 1% cap on credit union service organization investment to 3%; * excluding business loans to nonprofit religious organizations from the member business lending cap; * permitting credit unions to provide check cashing and wire transfers to anyone within the field of membership; * allowing voluntary mergers of multiple common bond credit unions; * giving NCUA authority to determine if a credit union converting to a community charter can continue to serve its existing groups; * providing credit unions greater control over their own governance; * giving NCUA extra flexibility to respond to market conditions; * exempting credit unions from pre-merger documentation requirements under Hart-Scott-Rodino; and * exempting credit unions from having to register as a broker-dealer with the Securities Exchange Commission. The legislation is aimed at counterbalancing the additional regulatory burdens brought on financial services providers under the USA PATRIOT Act. “The financial services industry spends a great deal of money every year complying with outdated and ineffective regulations. That’s money that could instead be lent to consumers and industry for new homes, new cars, and new projects that fuel job growth in local communities,” Oxley said. “NAFCU applauds Chairman Bachus and the House Financial Institutions and Consumer Credit Subcommittee on its approval of regulatory relief legislation that will directly assist federal credit unions in cutting through unneeded regulations,” NAFCU President and CEO Fred Becker commented. “The 13 credit union provisions supported by NAFCU remain unchanged and intact from when the legislation that was introduced in March. This is another important step in moving a bi-partisan bill that dovetails NAFCU’s significant efforts to enhance the federal charter.” Kohn said that the leadership’s plan is for the bill to go to full committee mark up shortly, but the date had not yet been set as of press time. In related news, prior to the mark up, Financial Services Roundtable President and CEO Steve Bartlett wrote a letter stating, “H.R. 1375 is a well-balanced bill that benefits financial institutions of all charters and sizes, the agencies that regulate them and the customers they serve.” The letter did not mention any opposition to the credit union provisions from the banking sector, which the roundtable represents. [email protected]

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