Oxley gives trades one more shot to chime in on regulatory relief

<p>WASHINGTON – With initial suggestions digested, the House Financial Services Committee asked credit union trade associations for anything else they thought should be part of its planned regulatory relief bill. The trades treaded on some more complex issues this time around. “After the first round of suggestions from the NCUA the committee staff came to us and asked if we had anything else we thought should be part of the package,” said Pat Keefe, CUNA’s vice president of communications. CUNA submitted 11 additional suggestions for credit union regulatory relief. Keefe said that CUNA decided what to include in the additional request by looking at issues for which this package would be the “right time.” CUNA left out issues, like gaining credit unions the means to raise secondary capital and the cap on member business lending, which it plans to continue to raise Keefe said. In his letter of February 4 to Rep. Michael Oxley (R-OH) CUNA President Dan Mica wrote that he hoped to meet with Oxley “to discuss the possibility of future consideration” of the priorities that were left off the list. The full list of CUNA’s eleven recommendations included are the following: Permitting credit union boards of directors to decide how and when to expel members. Allowing for regular quarterly, rather than monthly, meetings of the credit union board. Permitting federal credit unions to limit the number of times an individual may be elected to their boards of directors. Providing more flexibility in reimbursing volunteers for the direct expenses (lost work time, childcare, etc.) of their credit union work. Increasing to $50,000 the borrowing threshold for volunteers before the credit union board of directors needs to approve the loan. Providing a clear exemption for faith-based lending from the member business loan restrictions. Eliminating the requirement that credit unions must maintain at least a 10 percent interest in a participation loan. Allowing credit unions to purchase general obligations (loans) even if the aggregate balance of these notes exceeds five percent of the paid in capital and surplus of the credit union. Permitting federal credit unions to invest in fixed assets, without limitation. Permitting credit unions to offer check cashing and wire transfer services to non-members. Facilitating voluntary mergers of federal credit unions in a manner similar to that of other financial institutions, in order to enable credit unions to successfully compete in the rapidly evolving financial marketplace. Two on the list, allowing credit unions to cash non-members checks and wire money and facilitating credit union mergers, closely resemble ideas for regulatory relief which the NCUA originally asked to be included in the package and which the first draft of the package failed to include. Five of the suggestions dealt directly with the rules governing credit union governance, allowing credit unions to expel members, addressing how boards meet and are how long board members can be elected and rules regarding credit union volunteers. The remaining four represent long-held credit union legislative goals that have been considered and debated often before. Though it may appear that CUNA asked for a lot, it says its package is reasonable. “We have a lot of people here with a lot of experience working with members of Congress and legislation. These were proposals that we thought were reasonable,” said Keefe. NAFCU shared CUNA’s suggestion about allowing credit unions to expel members, but suggested a broader relaxation of the member business-lending rule (CUNA supported exempting faith based institutions from the MBL) and, in general, presented former NAFCU proposals dealing with credit union business operations. NAFCU’s entire list included the following: Adjusting the usury ceiling for credit unions. Allowing FCU’s converting to a community charter to continue serving their previous SEGs after a conversion. Eliminating “local” from the definition of community. Eliminating the preference imposed by the Credit Union Membership Access Act (CUMAA), P.L. 105-219, for the formation of new credit unions over the addition of groups to an existing credit union. Relax the current member business loan restriction imposed by CUMAA. Expulsion of a credit union member for those who pose a threat to the credit union, its members and employees. NAFCU differed with CUNA and NASCUS’ position in questioning whether privately insured state chartered credit unions should be allowed to join federal home loan banks. A bill offered by Ohio Republican Bob Ney would make privately insured credit unions eligible to join home loan banks and has been included in the regulatory relief package. An “outline” of NAFCU’s regulatory relief proposals noted that NAFCU members had read about the proposed change and have expressed concerns. “They believe the reputation for safety and soundness associated with the National Credit Union Share Insurance Fund (NCUSIF) has been earned over time and is well-deserved,” the outline said. “They are concerned that opening the FHLB system to non-federally insured institutions – be they banks, thrifts or credit unions – would expose the FHLB system to unnecessary risk that would redound to the detriment of the federally-insured members of the system.” “There has always been a level of concern about the issue,” said John Zimmerman, NAFCU’s public relations manager. “Lately the opposition has been deepening and stiffening.” Neither of the associations indicated having heard from NCUA about their proposals and NCUA declined comment until they had a chance to analyze them. “We support the associations making the suggestions,” said Clifford Northup, NCUA’s Director of Public and Congressional Affairs. “We think the interest they show gives more impetus to the regulatory relief process, but we won’t be able to comment on individual proposals until after we have reviewed them more thoroughly,” he said. Though NASCUS did not take this opportunity to tell the committee what it wanted in reg relief legislation, it does have a few issues that it hashed out at a recent NASCUS Government Relations Committee meeting it wants to get across. “Specifically, these include the inclusion of other capital in the credit union’s net worth calculation, and relief from the oppressive 12.25 member business lending restrictions. We will also be asking the Committee to look seriously at the current system, which commingles the NCUA’s role as both the supervisor of federal credit unions and administrator of the share insurance fund,” said Jonathan Lindey, NASCUS Vice President.</p>