WASHINGTON-In a letter to House leadership, CUNA President and CEO Dan Mica highlighted several regulatory relief items the trade association backs to provide financial institutions regulatory relief in the aftermath of Hurricane Katrina. The very first item Mica discussed was reforming credit unions’ system of Prompt Corrective Action at the very least for the present situation down South, but preferably permanently. Due to nonperforming loans and relocation of membership, Katrina is likely to pack a secondary wallop to credit unions in the disaster area. Mica recommended at a minimum providing NCUA temporary authority-at least 18 months-to waive certain PCA requirements with an eye toward safety and soundness. At the conclusion of that time, NCUA should be able to offer “appropriate time frames” for credit unions that remain less than well capitalized to rebuild their net worth ratios. “As structured under the current statute,” Mica explained, “NCUA has limited flexibility to work with credit unions that encounter PCA problems, even if those problems are the result of a catastrophe outside of their control. Also, NCUA may be required to impose net worth restoration plans on some credit unions in the affected areas, for which the credit unions would have to divert resources from their operations to rebuild and recover. Such plans also would provide the agency and the credit unions very few options in addressing extraordinary situations that have been spawned by Katrina. “Further,” he continued, “other credit unions outside the hurricane’s path are willing to help in a variety of ways, including by offering services, as permissible, to displaced individuals. They also may be willing to purchase loans from affected credit unions. However, their ability to help will be seriously tempered by of PCA, particularly in the era of problematic loans.” The CUNA chief applauded Treasury for its proactive efforts in dealing with the situation, such as providing guidance for financial institutions to cash Treasury checks and Federal benefits payments to those in the affected areas. The agency’s statement clarifies that if prudent steps are taken to verify the identity of individuals presenting federal checks, the institution will not be liable for forged endorsements. To supplement this, Mica said CUNA does support legislation for indemnification for institutions cashing checks for Katrina victims, which turned out to be invalid. CUNA also supports waiving Federal Reserve fees for currency, coin or wire transfers and relaxation of certain Bank Secrecy Act requirements. As previously reported, CUNA takes no position on raising deposit insurance coverage but would work to ensure parity if an increase is considered for banks and thrifts. Mica’s letter and CUNA’s position paper were delivered to several members of the House leadership, including House Speaker Dennis Hastert (R-Ill.), House Majority Leader Tom DeLay (R-Texas), House Minority Whip Steny Hoyer (D-Md.), House Financial Services Committee Chairman Michael Oxley (R-Ohio), the committee’s ranking minority member Barney Frank (D-Mass.), House Financial Institutions & Consumer Credit Subcommittee Chairman Spencer Bachus (R-Ala.), subcommittee Vice Chair Richard Baker (R-La.), and ranking minority member Bernard Sanders (I-Vt.), He commended the legislators “for your leadership in your efforts to address the needs of financial institutions in their efforts to help in the recovery for the victims of Hurricane Katrina.” Mica’s letter came on the heels of a hearing regarding regulatory relief legislation, during which regulators also discussed Katrina related relief, in the House Financial Institutions Subcommittee last month. [email protected]