CUNA Pushes Senate to Look at Financial Services Hurricane Relief Legislation

WASHINGTON-In a Dec. 8 letter to Senate Banking Committee Chairman Richard Shelby (R-Ala.), CUNA President and CEO Dan Mica urged the Senate to move on hurricane relief legislation before the end of the 2005 legislative session. Mica asked Senate Banking Committee Chairman Richard Shelby (R-Ala.) to “take swift action” to move The Hurricane Rita and Katrina Financial Services Act (H.R. 4146). The bill would give NCUA the authority to exercise forbearance for institutions on an individual basis 1) that have become undercapitalized due to Hurricane Katrina, and 2) if it would help the credit union recover within 18 months. Mica also asked that the forbearance authority become permanent. “CUNA has serious concerns that the recovery of affected credit unions, as well as assistance from other credit unions, will be significantly limited by restraints imposed on credit unions under prompt corrective action (PCA),” he said. “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.” He also asked that H.R. 4146 be amended to include credit unions outside the area offering aid and those with members inside the area; give the regulators greater flexibility to waive PCA requirements; and include institutions with 50% of total deposits or loans from people who normally reside in the area among those impacted by the storm. As a technicality, CUNA requested that the Federal Reserve Act definition of insured depository institutions be used because “the current wording throughout the bill suggests credit unions are not insured depository institutions.”