Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON-Credit union lobbyists have expressed confidence that the so-called `FASB Fix’ bill will advance through the legislative maze of the House of Representatives. In fact, the Net Worth Amendment for Credit Unions Act (H.R. 1042) may get a full committee mark-up as early as this week, bypassing the subcommittee mark-up because of the bill’s noncontroversial nature. “Given the fact that it’s got widespread support, they’ll probably clear it through on a voice vote,” he added. But, Brad Thaler, NAFCU Director of Legislative Affairs, noted that nothing had been finalized as of press time. He has previously said the bill is likely to make it on the suspension calendar in the House, which is reserved for uncontroversial legislation. The Senate is a little more up in the air with no legislation introduced at this time. However, Senator Mike Crapo (R-Idaho) was interested in it for the overall regulatory relief bill he has been working on for the financial services sector, according to CUNA Vice President of Legislative Affairs and Senior Legislative Counsel Gary Kohn. “We’re all fairly confident that this bill will move forward in the House and that Senate action could be potentially later on down the road, depending on what, if anything, happens on the Senate side in the regulatory relief area,” he said. A hearing on H.R. 1042 was held in the Financial Institutions and Consumer Credit Subcommittee April 13. Testifying were NCUA Chairman JoAnn Johnson, Financial Accounting and Standards Board Chairman Robert H. Herz, and Georgia Banking and Finance Senior Deputy Commissioner George A. Reynolds on behalf of NASCUS. Kohn noted the hearing “went extremely well. All the witnesses were strongly in favor of the bill and all the members that were in attendance indicated support for the bill.” NAFCU previously submitted written testimony at the hearing (CU Times, April 20) and CUNA followed up the next day. In a letter to Congressman Spencer Bachus (R-Ala.), chairman of the subcommittee and primary sponsor of the bill, CUNA President and CEO Dan Mica wrote to thank him and offered the organization’s support for the bill. “Not revising the legislative definition of net worth would have a detrimental impact on the merger of two-similar sized, healthy credit unions, and would discourage similar-size mergers between smaller credit unions in favor of small credit unions merging into much larger ones,” Mica wrote. “It is crucial for the safety and soundness of the credit union industry that the net worth legislation, H.R. 1042, be enacted by the end of this year.” H.R. 1042 modifies the definition of net worth in the Federal Credit Union Act in order to avoid unintended consequences of accounting changes by FASB, which will eliminate the “pooling” method of accounting for mergers in favor of the “purchase” method next year. The pooling method allows for the combination of balance sheets while the purchase method would count the merging credit union’s equity toward “acquired equity.” The FCUA defines net worth as “retained earnings.” Without amendment, the result would stymie credit union mergers because the continuing credit union would most likely be exposed to Prompt Corrective Action regulatory responses. NCUA was particularly concerned that it could potentially lose the cost effective method of assisting mergers of less-than-healthy credit unions with stronger ones, which saves the National Credit Union Share Insurance Fund money. In her testimony, Chairman Johnson stated that if FASB’s Financial Accounting Standard 141, which requires the purchase method, were applied to last year’s mergers, $307 million of nearly $6.5 billion in capital would be wiped out for PCA purposes. CUNA’s Kohn called it a “very important and timely piece of legislation.” [email protected]

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?


Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times
Live Chat

Copyright © 2022 ALM Media Properties, LLC. All Rights Reserved.