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WASHINGTON-The House Financial Services Committee reported out favorably last week the regulatory relief bill (H.R. 1375) and the check truncation legislation (H.R. 1474). The bill contains 13 provisions aiding credit unions, including expanded investment authority, lengthening the loan maturity maximum from 12 years to 15, raising the CUSO investment limit from 1% to 3%, and exempting business loans to faith-based organizations from the 12.25% of assets cap. Secondary capital and member business lending amendments were not raised during the discussion. Several of the provisions in the bill came from recommendations from NCUA at a March 27 subcommittee hearing and previous suggestions made at the behest of the committee. Prior to the markup of the bill, NCUA Chairman Dennis Dollar wrote a letter to all the Financial Services Committee members reading, “Our goal at NCUA, as we implement any regulatory relief provisions the Congress ultimately chooses to enact, will be to take any and all actions with an eye towards removing unnecessary regulator burden while maintaining, as is proven by the historical strong performance of America’s credit unions, our first and foremost priority and commitment to both safety and soundness and necessary regulation to protect the American public.” Several amendments were offered on the regulatory relief bill, but none directly affecting credit unions were accepted. As expected Congressman Paul Kanjorski (D-Pa.), typically a friend of credit unions, offered his amendment to remove section 301 of the bill, which permits privately insured credit unions to join the Federal Home Loan Bank System. He defended his offering stating, “This issue is raising considerable debate and emotion in the credit union community.” He pointed to the recent vote by the NAFCU Board to work to ensure all credit unions become federally insured, as well as the Consumer Federation of America. Additionally, Kanjorski reminded his colleagues that flight from the federal regulator was the first sign of the Savings & Loan crisis 20 years ago. The amendment did not pass. Congressman Bob Ney (R), representing Ohio where American Share Insurance is based, emphasized that no new risks would be brought into the FHLB System and that ASI is already strictly regulated at the state level. Congressman Pat Tiberi, also a Republican from Ohio, argued that the provision merely permits privately insured credit unions to apply to the FHLB System; the banks are not required to accept them. Very few said `aye’ when the amendment came up for a vote. CUNA Vice President and Senior Legislative Counsel Gary Kohn said he does not expect to see Kanjorski’s amendment raised again on the House floor. Congressman Luis Gutierrez (D-Ill.) introduced an amendment to strengthen disclosure requirements of wire transfer services, but withdrew it when the committee agreed to hearings on the subject in July. He also introduced an amendment to require acceptance of the matricula identification card as an official valid form of identification, which he withdrew. According to NAFCU Director of Legislative and Political Affairs Brad Thaler, Congressman Steve Israel (D-N.Y.) offered an amendment to help prevent negative reports to credit bureaus while military personnel are deployed overseas, which he subsequently withdrew. Additionally, Gary Ackerman (D-N.Y.) introduced an amendment similar to last session to require lenders to provide a consumer notice when they are going to provide a negative report to a credit bureau. He also withdrew it. “When these provisions become law, consumer-members of credit unions will realize even more efficient and effective service from their credit unions, who themselves will see a significant decrease in the amount of regulatory red tape they face in serving their members. We now look forward to seeing the bill on the House floor, and to the bill working its way through the Senate,” CUNA President and CEO Dan Mica said after the vote. Even though the bill easily passed the committee by voice vote, the battle may not be over as indicated by heated debate on the issue of Industrial Loan Companies and potential `Wal-Mart banks.’ The regulatory relief bill was marked up during the same session as Check 21 allowing banks to truncate checks and updating the current check truncation system employed by credit unions. The legislation passed with only technical amendments. Under the bill, credit unions would be able to truncate checks on the front end rather than the back, Kohn explained, resulting in extra savings and security. Currently, the law requires banks to physically present and return original checks, which is increasingly susceptible to fraud. Also approved during the markup session was H.R. 2143, the Unlawful Internet Gambling Funding Prohibition Act, to prevent the use of credit cards, wire transfers, or any other bank instrument to fund gaming transactions. Credit union lobbyists have been keeping an eye on this bill in the sense that it can affect bankruptcy filings. The legislation was approved without amendment. The next day, the committee followed up by approving a stand alone bill on bilateral netting. H.R. 2120 would make it faster and easier for financial institutions to detangle their obligations if one of the parties goes bankrupt, preventing a domino effect of institution collapses. An identical provision is included in H.R. 975, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2003. The committee also approved The Tornado Shelters Act (H.R. 23); The American Dream Downpayment Act (H.R. 1276); and the HOPE VI Program Reauthorization and Small Community Mainstreet Rejuvenation and Housing Act (H.R. 1614). -

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