CUs Keeping an Eye on Leftover Congressional Business; Flood Insurance Passes House

WASHINGTON-Credit unions had plenty to keep them busy in the first week of the 108th Congressional Session (see special pictorial pages 18-19). Congress reconvened last week with the usual ceremonial swearing in of the freshman, but legislative work seeped into lawmakers’ plans. As expected, Financial Services Committee Chairman Mike Oxley (R-Ohio) and Ranking Member Barney Frank (D-Mass.) introduced a bill reauthorizing the National Flood Insurance Program through the end of this year on the opening day of Congress. The bill sailed through to House approval last Wednesday by voice vote. It is retroactive to Dec. 31, 2002. Lenders must have flood insurance for mortgages secured by property in a flood hazard area. The NFIP provides over 90% of the nation’s flood insurance. The two-page, uncontroversial bill was expected to pass the Senate shortly after deadline or this week. “Congressmen Oxley and Frank are pushing this on the House side and the Senate will follow suit.” CUNA Vice President and Senior Legislative Counsel Gary Kohn explained. “We’re not aware of a single objection to it.” NAFCU Director of Legislative and Political Affairs Brad Thaler added, “There is some talk that the Senate may stick the reauthorization measure onto the continuing resolution and then the House would agree to it as part of that process. Otherwise, they will probably try to make quick work in both chambers by bringing it directly to the floor in both chambers.” Of course there is also the matter of 11 appropriations bills that were never passed last session. To bridge the funding gap, Congress is expected to pass a continuing resolution through the end of the month, according to credit union lobbyists. They also expected the appropriations bills to be packaged together into one large omnibus bill. Congress, facing drastic cuts this fiscal year, will need to slash appropriations. However, credit union lobbyists are reasonably confident that credit union money will not be affected. Kohn said, “They’re looking at $10 to $15 billion in cuts and it depends on where those cuts come from. We haven’t heard that the things that we look at-the CLF, the funding for WOCCU efforts, in particular. We’re not aware that those are in danger and they’re such small potatoes anyway that they’re probably not going to be where they focus, because it takes a lot longer to do that kind of nickel and dime-ing than it would be to find bigger hits someplace else and come up with $10 billion.” CUNA is keeping an eye on the spending cuts. So as not to overdo it, Congress probably will not meet most of the month, but will return in time for the State of the Union at the end of January. Privacy will be a top priority for Senate Banking Committee Chairman Richard Shelby (R-Ala.) and Ranking Member Paul Sarbanes (D-Md.). The chairman of Wells Fargo has floated a compromise that is opposed by many smaller institutions because it would provide for an opt-in arrangement for third parties and an opt-out provision for affiliates, which many smaller institutions do not have. The credit union trade associations are keeping an eye on that, as well. The interminable bankruptcy reform bill is also expected to cause a stir again this year (See related story this page), as will regulatory relief. Kohn said CUNA is looking to make additions to last year’s regulatory relief bill, including amending the member business lending cap and providing for some type of alternative capital. He said that Shelby had begun drafting legislation at the end of last congressional session, which he anticipates will be introduced in the Senate this year. Last year the bill flew through the House, but was halted rather abruptly in the Democrat-controlled Senate. In the current economic climate, the credit union community is also pushing for amendments to retirement savings packages. NAFCU recently urged the Congress in a letter to consider a bill from last session to increase the mandatory account withdrawal age for retirement savings from age 70-1/2 to 75. NAFCU wrote co-authors Congressmen Ben Cardin (D-Md.) and Rob Portman (R-Ohio) pressing them to reintroduce the Protecting America’s Savings Act of 2002. “Raising the mandatory withdrawal age from 70-1/2 to 75 will benefit many of those who have spent years if not an entire lifetime saving for retirement, only to turn 70 1/2 in a down market and be forced to withdraw their funds before the market rebounds,” NAFCU wrote. NAFCU also reminded the legislators that American’s private savings rate is the lowest in over four decades. [email protected]