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WASHINGTON-The Net Worth Amendment for Credit Unions Act (H.R. 1042) should have very little trouble making its way through the House. The bill changes the credit union definition of net worth from retained earnings to acquired equity to bring it in line with anticipated accounting changes from the Financial Accounting Standards Board. While the change seems simple, it will keep credit unions out of a world of trouble. Sometime next year, FASB plans to begin requiring all merging organizations to being using the purchase method of accounting as opposed to the current pooling method that credit unions use. Under the purchase method, a credit union would not be able to add the net worth of the merging institution to the surviving credit union’s net worth causing serious Prompt Corrective Action problems. Rep. Spencer Bachus (R-Ala.), the bill’s primary sponsor and chairman of the House Financial Institutions and Consumer Credit Subcommittee, is looking at holding a hearing on the bill April 13. NAFCU Director of Legislative and Political Affairs Brad Thaler said he expects a markup of the bill shortly after that. “I think even the bankers will admit it’s more of a technical correction – other than the fact it has the word credit union in the bill, which you know they find tough to swallow in any circumstance,” Thaler said, “but they’ve looked at it and I know Hill staff have talked to the bankers about it and admit, at least privately, that it’s pretty much technical correction legislation and not really worth a fight for them to raise the issue. But that’s not to say that some banking group out there won’t come out in opposition to it.” He pointed to the bill’s bipartisan support with 16 co-sponsors in addition to Bachus, including eight Republicans, seven Democrats, and one Independent. -

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