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By CLAUDE R. MARX WASHINGTON — If House Financial Services Committee Chairman Barney Frank (D-Mass.) is his chamber’s answer to Santa Claus, then credit unions can expect a lot of coal and just a few goodies this year. The brainy and feisty lawmaker told Credit Union Times that while credit unions were good actors and didn’t cause the financial crisis, they will have to wait for capital reform and additional business lending power. At the same, they may have to comply with the Community Reinvestment Act. He said the House would try to pass a measure that allows credit unions to do more in low-income areas; it passed last year but the Senate never acted on it. However, he said no measure that includes capital reform or MBLs will pass because it puts too many members of Congress in a corner. The MBL and capital reform provisions “become controversial in terms of the competitive effect. Members [of Congress] don’t like to have to choose between their friends, and members have friends in the community bankers and friends in the credit unions,” he said during an interview in his Capitol Hill office. Frank said the political pressures won’t be any less because members aren’t up for re-election this year. “When you have a two-year term, it’s always an election year,” he said. Last year, the House passed the Credit Union Bank and Thrift Regulatory Relief Act on a voice vote, which would have grandfathered existing approvals of underserved areas and allowed federal credit unions to apply to serve underserved areas outside their fields of membership. Also, loans in those communities and to nonprofit, religious institutions would not count against the member business loan cap. It would also have permitted credit unions to provide short-term, unsecured loans to anyone in their field of membership. Given the willingness of credit unions to do more in underserved areas, Frank said getting them to comply with the Community Reinvestment Act shouldn’t be an increased burden. “For larger credit unions, they may have to come under the CRA. Credit unions shouldn’t be hurt by that because many of them already do those kinds of activities. But there are a few that don’t,” Frank said. Both CUNA and NAFCU have fought efforts to have CRA apply to credit unions, arguing in part that the measure was designed to punish financial institutions with discriminatory lending practices, which was never the case with credit unions. CUNA President/CEO Dan Mica said that placing credit unions under CRA would be an example of the movement’s congressional allies “loving us to death.” While Frank has never said he loves credit unions, at the very least, he strongly likes them. He used a literary analogy to describe credit unions’ behavior in the financial crisis. “Credit unions are like the dog in the Sherlock Holmes story. Holmes said he could explain the mystery they were trying to solve through the dog, and Watson said ‘the dog didn’t bark.’ And Holmes said ‘exactly.’ The role of credit unions in all this was to not have a problem.” Mica said while he is pleased that Frank appreciates the work of credit unions, he hopes that the environment changes so credit unions can get more of their agenda through. “He told us we need to work the Senate and encourage them to get their act together. And we are planning on doing that and meeting with him again. Ours is a specific, parochial issue, and he’s been distracted with issues such as the economic stimulus,” Mica said. “I hope it’s not a situation where it’s all off the table because that’s not what we expected.” NAFCU President/CEO Fred Becker said his association would “continue to explore all avenues and push those issues. Credit unions could help get the country out the economic malaise with more business lending.” Frank said that despite talk of placing credit unions under the same regulator as other financial institutions won’t happen. “The Treasury Blueprint is dead and no one ever paid serious attention to it,” he said. When asked if the NCUA would remain intact with existing powers, he replied, “Yes.” In follow up, when asked if there would be changes, Frank replied, “What part of ‘yes’ wasn’t clear?” He urged credit unions not to overreach when trying to persuade lawmakers. “I am for giving credit unions the ability to do more things. But if they ask for too much, they’ll get nothing,” he said. –[email protected]

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