WASHINGTON — Much of the focus on the Credit Union Regulatory Improvements Act over the last three years has been on risk-based capital reform and expansion of business lending authorities, but there are other important provisions in there of which credit unions should not lose sight.

Of course a few provisions are unnecessary now that the Financial Services Regulatory Relief Act is law. Part of Title I of reg relief includes a section to amend the definition of net worth in line with changes to come from the Financial Accounting Standards Board on merger accounting standards. Section 301 allows for low- or no-cost leases of land on military bases. Section 303 increases the 12-year maturity ceiling on loans to 15 years, while Section 305 allows for check cashing and wire transfers for all potential members.

As CURIA approaches its third birthday in November, credit union lobbyists are exploring how to further pursue the remaining provisions. On one hand, CUNA Vice President for Legislative Affairs Dean Sagar said, “Maybe we should have a CURIA for mobilizing credit unions but put everything from technical corrections to your highest wish list you get nowhere.” However, if Congressman Spencer Bachus (R-Ala.) becomes the next chairman of the Financial Services Committee, he has said that is how he would like to proceed. Sagar noted that the larger House reg relief bill has failed to become law in this manner for six years now.

California Credit Union League President/CEO Bill Cheney said his organization is in close contact with CUNA as they represent the home state of the current main sponsor of the bill. For the future strategy on CURIA he said he is not sure what form it will take in the new Congress. “There are lots of questions right now, not a whole lot of answers,” Cheney said.

He pointed out that credit unions got some items in regulatory relief, but, “In addition, we got this FOM issue, thanks to the bankers,” he said referring to the recent underserved area limitations. He was not sure whether credit union lobbyists would pursue another large CURIA-like bill or multiple smaller bills in the future, but he knew that Representative Ed Royce (R-Calif.) was committed to staying on. Royce's office did not return an e-mail prior to deadline.

If Ranking Member Barney Frank (D-Mass.) were to become chairman, it might be wiser to break it up into smaller groupings, Sagar said, like Section 205 authorizing credit unions to lease office space in underserved areas regardless of the fixed asset cap and maybe a new provision to allow all credit unions to adopt underserved areas under the banner of community development.

The military is another niche underserved community that could be benefited by Section 307 of CURIA, which would allow credit unions converting to community charters to maintain existing SEGs outside the scope of the community they are applying to serve. NAFCU Director of Legislative Affairs Brad Thaler explained that this came about several years ago when an Indiana credit union serving a military base there was shut down, but it wanted to continue serving another base overseas after converting to a community charter. Both the Department of Defense and NCUA wanted the credit union to be able to continue serving that overseas base, but it needed to convert to a community charter to survive. “It was not what DoD wanted. It was not what NCUA wanted. It was not what the credit union wanted. It was not what the members wanted, but because the way the law was written, that was the way the outcome had to be,” Thaler said.

Sagar also highlighted some of the investment provisions. Section 302 would permit credit unions to invest in the highest rated bonds, like Fannie Mae and Freddie Mac, as opposed to the current government securities restriction. He said he was not sure this is as big an issue now as it had been in the past because of some indirect investing.

Additionally, he said, “The authority to increase CUSO investments is extremely important.” Section 304 would increase the 1% investment cap in credit union service organizations to 3%.

A number of items are also in there designed to save credit unions money. At the time banks were exempted from the Hart-Scott-Rodino pre-merger documentation filings, credit union mergers were not anywhere near reaching the necessary size qualifications and were not even considered. Now, in larger credit union combinations, institutions can be paying in the tens of thousands of dollars to the Federal Trade Commission, which does not even oversee credit union mergers. Thaler said the FTC has waived the fee in some instances, but he does not know if it has been in all so Section 311 would be a helpful parity item for credit unions. He also pointed to the clarification in Section 312 to provide credit unions parity with banks in Securities Exchange Commission broker-dealer registration.

Thaler stressed that Congressmen Ed Royce (R-Calif.) and Paul Kanjorski (D-Pa.), the bill's main sponsors, have expressed continued commitment to the legislation, but Thaler would not speculate for the record on strategy in the future.

Titles 1 and 2 of CURIA cover capital reform and member business lending respectively. Other relief provisions include:

oSection 306-Voluntary mergers of multiple common bond credit unions.

oSection 308-Credit union governance, including authorizing the expulsion of members for just cause; permitting term limits for credit union board members; and allowing for reimbursement of lost wages while serving in the official capacity of the credit union.

oSection 309-Provides NCUA greater flexibility to respond to market conditions in setting the usury ceiling.

oSection 310-Requires 20% member participation for a vote to convert to a mutual savings bank. –scooke@cutimes.com

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Lawmakers Committed to CURIA, Strategy Could Shift with Change in Power

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