Credit unions have a hefty wish list for next year, including capital reform and the right to make more business loans. The prospects for achieving those goals depend on the political environment, perceptions of the health of the industry and the industry's lobbying prowess.

How the corporate rescue plan plays out will be a part of that equation.

Financial services industry consultant Bert Ely said the need to rescue the corporates, coupled with the severe losses of some natural person credit unions, can't help but trigger additional scrutiny.

"Some credit unions are in the same situation as the thrifts were in 1980s," he noted. "And there is certainly the hard question to ask about whether there should be a separate kind of financial institution."

During communications with lawmakers and administration officials, bank lobbyists have been portraying the NCUA rescue as a bailout. They have been backed up by a widely distributed Wall Street Journal headline on the day after the NCUA announced its plans (though the word wasn't used in the story) and comments by Fox News Channel host Glenn Beck on his Oct. 14 program.

"At the end of last month, the Feds announced $30 billion bailout of the U.S. wholesale credit union system. But they said, don't worry about it because it's all backed up-get this one-by $50 billion in troubled assets inherited from failed institutions," Beck said.

Should Republicans win control of Congress in next month's elections, they will owe the victory in part to economic conservatives who loathe anything that even seems like government intervention in the economy.

Therefore, the corporate rescue, and the even more controversial TARP, might come under more scrutiny.

NCUA Director of Public and Congressional Affairs John McKechnie said most of the staff members of the House Financial Services Committee and the Senate Banking Committee see the agency's actions as a necessary response to wide ranging problems within the industry.

"There's a broad understanding that the entire financial services sector took a big hit that we are still recovering from," he said. "The sense on the Hill is that the plan is fair because the industry is paying for it."

Spokespersons for the two committees didn't respond to inquiries seeking comment.

McKechnie said it's too early to tell how the issue will impact the debate on secondary capital, though he noted that the agency has expressed support for congressional action in both areas.

But Ely contended that because so many credit unions are having capital issues, it may make lawmakers leery of allowing them to raise more.

"Many credit unions paid too much out in returns to their members and didn't keep enough capital. That doesn't make them look good in the eyes of some," he noted.

On Oct. 13, the heads of CUNA and NAFCU wrote NCUA Chairman Debbie Matz requesting her "leadership and assistance" in moving capital reform through Congress.

CUNA President/CEO Bill Cheney and NAFCU President/CEO Fred Becker wrote that the issue is one of "ever-increasing importance" and requested a meeting with Matz to discuss the issue further.

"I believe alternative capital and capital reform are important issues for credit unions, as my correspondence to Congress on the subject has indicated. I look forward to working with the credit union industry and Congress on ways to improve the legislative and regulatory framework for credit unions in this and other areas as we move into the 112^th Congress," Matz said in a statement responding to the letter.

Last year, Matz wrote House Financial Services Committee Chairman Barney Frank (D-Mass.) that modifying the Federal Credit Union Act to expand its definition of net worth to allow uninsured capital instruments would let some credit unions better manage net worth levels.

Lobbyists for CUNA and NAFCU said they hope to attach an increase in the member business lending cap to one of the spending bills that Congress will discuss in its post-election session.

But the banks have successfully stopped recent efforts to raise the cap and have promised to do it again.

Banks cited the problems faced by some credit unions-and the need to rescue the corporates-as a reason not to raise the cap.

Credit union advocates, such as Donovan and NAFCU Executive Vice President Dan Berger, responded that because credit unions are solving the industry's problems at their own expense, they should be allowed to respond to their members' needs for more business loans.

In addition, they noted that banks shouldn't be criticizing credit unions because many banks have received loans from the government and haven't paid them back yet.