WASHINGTON — While the Credit Union Membership Access Act–H.R. 1151–may have saved some credit unions in 1998, concessions had to be made, original co-sponsor to the bill Paul Kanjorski (D-Pa.) explained.

Now the long-time credit union supporter is working to reverse some of the deals that had to be made in a time of crisis for credit unions with the Credit Union Regulatory Improvements Act (H.R. 1537), better known as CURIA. One thing H.R. 1151 did was eliminate the minimum voting requirement for credit union conversions to mutual savings banks. “I'm an opponent to these credit unions that try and buy out and change form and pass their assets off to just this generation,” Kanjorski told Credit Union Times.

CURIA would put in place a 30% minimum voter participation for conversions. “I'd go to 50 if I could,” he added.

While CURIA is primarily about regulatory relief and enhancement, Kanjorski said this provision fits in as well. “I think it's appropriate because it's a vehicle. [The repeal of a minimum voting requirement for mutual savings bank conversions] was in 1151 and actually it was put in there at the end of the conference and I was opposed to it but it was a question that we'd have to hold up the whole bill in order to stop that provision…so we sort of conceded at that time,” he recalled.

Kanjorski emphasized that now there are people who specialize in converting credit unions for profit. “I don't like that.” He said a credit union's accumulation of capital from nothing to hundreds of millions of dollars occurs over generations and does not belong just to that current generation of members. Kanjorski said he would prefer to see a system similar to those for charitable corporations where, if they are going to disband the credit union, the courts assign the capital to a continuing organization that has a similar mission.

With this provision, he said he simply wants to ensure minimum voter participation, proper notice and informed voting. “I don't know that we've struck the right balance in the bill, but we're moving in the right direction,” Kanjorski stated.

Also, during the rush to pass 1151 back in 1998, the bill's language specifically permitted multiple common bond credit unions to adopt underserved areas while a drafting oversight did not mention the other types of credit unions. Proponents of credit unions said there was already an assumption that this was permitted while opponents pointed out that is not what the law states.

At the time of passage, Kanjorski even had a colloquy read into the record to clarify that all credit unions could add underserved areas and NCUA adopted this policy. But, when push came to shove in a lawsuit by the American Bankers Association seven years later, NCUA backed down and changed its policy to allow only multiple common bond credit unions to adopt underserved areas.

So a provision was added to CURIA in the 110th Congress to remedy this situation and clarify that all federal credit union charter types are authorized to adopt underserved areas. This section and others of the bill have helped garner the 124 members of Congress officials supporting the bill. “There is a realization that there are some new areas that can be served out there,” Kanjorski said, noting that his colleague, Jos?(C) Serrano (D-N.Y.), has introduced legislation–the Affordable Financial Services Enhancement Act (H.R. 3113)–specifically on this provision, which has 20 co-sponsors.

As for credit unions in his district that he met with during the August recess period, the lawmaker said, “They're most interested in the capital structure. They'd like to get that cleared up. I think they'd feel safer if they got a better capital structure.” The matter is also an issue of parity with the other federally insured financial depository institutions, he said.

The House Financial Services Committee faces a full plate in the fall with the subprime lending crisis and other matters, but Kanjorski said he still expects to get a hearing on CURIA. “I think the new majority will be more sympathetic to credit union problems than the old majority,” he observed. However, CURIA is going to take a long-term commitment and credit unions need to be in it for the long haul.

When asked for a preview of his remarks for NAFCU's Congressional Caucus, Kanjorski said, “I like to urge them on. I like to rev them up when they're in town. There's no reason in the world why we shouldn't have 218 co-sponsors.” That is the magic number for a passing vote in the House, which has 435 members. At press time, CURIA was on the cusp of surpassing the 125 co-sponsors tallied during the 109th Congress with 124 for the 110th Congress, including Kanjorski.

One issue the new Democratic majority has discussed that strikes fear in the hearts of credit unions is expanding the Community Reinvestment Act requirements. “They aren't covered by CRA now and the banks raise hell about it but other institutions aren't either,” Kanjorski highlighted.

He said he sees both sides of the debate. “Credit unions by and large–that is most credit unions, I can't speak for all credit unions–but most credit unions serve the purpose of servicing the area they are organized in. So they, by their very nature, do what CRA asks banks to do,” Kanjorski asserted. On the other side of the argument is that it is showing favoritism by not including credit unions. However, he said, where do you draw the line on CRA as financial services continue to evolve; should insurance companies and mutual funds be covered as well?

Kanjorski said he would like to overhaul the entire format of CRA. However, he noted that allowances have been made by the Office of the Comptroller of the Currency for small banks and that something similar could possibly be worked out for credit unions “if that came to pass.”

Neither CRA nor taxation is likely in credit unions' future, he said. “There are a few of us up here who would oppose it vociferously.”

The government is under pressure to raise money because of the deficit, Kanjorski explained, and taxing credit unions would raise money, “but the real question is would that serve the best interests of the country and the communities to do that?”

He believes it would destroy credit unions' entire methodology. “I know them in a big way. Their directors are unpaid, a good part of their operations unpaid and free. The only people who are paid are the actual workforce. If you start taxing them…I think you have a tendency to discourage that form,” according to Kanjorski.

“When I came to Congress,” he said, “I was hell-bent on trying to democratize capital that would be in terms of encouraging people to be investors and owners of capital so that they would get a growth return like the wealthy people.” He was drawn to the credit union movement as an instrument of this ideal. He had not belonged to a credit union before coming to Congress and now belongs to a few.

Even though he is a strong supporter of credit unions, as a member of the House Financial Services Committee, Kanjorski said he does not have a problem with giving community banks a shot in the arm when they need help too. “On the other hand, I'll help community banks if they have needs but I've never tried to pick one side or the other, although I have to be honest, my sympathy, as I said, my desire for democratic capitalism, is very close to the credit union movement.” He commented that the bank-credit union clashes primarily center inside the Capitol Beltway.

–scooke@cutimes.com

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CURIA Would Fix a Couple CUMAA Problems, Kanjorski Says; CRA, Taxation Not on the Horizon

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