House and Senate Pass Spending Bills, Including Study on Enforcement of FDICIA Section 151

WASHINGTON-Three items of particular interest to credit unions were included in the recently approved fiscal year 2003 budget. Very significant was the request by Congress for a General Accounting Office study of the enforcement of Section 151 of the Federal Deposit Insurance Corporation Improvements Act of 1991, which requires several disclosures to members of the fact that a privately insured financial institution is not backed by the federal government. However, the bill still contains language prohibiting the funding of implementation of the provision. The conference committee to the bill recognized that “the consumer protection intent of this law may be going largely unenforced” and that the Federal Trade Commission may not be the proper agency to enforce it. The conferees requested the GAO “study enforcement of this provision, evaluate the risk to consumers if this provision is not enforced, and make recommendations on which Federal agency could most effectively enforce this provision.” The study is due to Congress within 180 days of the enactment of the bill. “NAFCU’s position is that section 151 of the FDIC Improvements Act should be enforced,” NAFCU President and CEO Fred Becker said. He added that NAFCU had been speaking with the appropriate members of Congress, pushing for enforcement of the provision. CUNA Vice President of Legislative Affairs and Senior Legislative Counsel Gary J. Kohn responded, “Why not?” to news of the study. He pointed out that a study of private insurance is already in the current GAO study, requested by then-Senate Banking Committee Chairman Paul Sarbanes, except for the FTC oversight portion. He added that CUNA believes that states should be able to determine if their credit unions can carry private deposit insurance coverage. In addition, funding for the Community Development Revolving Loan Fund was maintained at $1 million, with $300,000 earmarked for technical assistance grants. The Central Liquidity Facility was also granted a borrowing authority of $1.5 billion again for FY 2003.