Kansjorski Wants Private Insurance Brought up in Full Mark-up of Reg Relief

WASHINGTON-Congressman Paul Kanjorski (D-Pa.) introduced and then withdrew-as part of his strategy to get the issue on the table-an amendment (CU Times, April 16) to H.R. 1375, the Financial Services Regulatory Relief Act to strike the section of the bill permitting privately insured credit unions to join the Federal Home Loan Bank System. Kanjorski’s comments were not available as of press time for Credit Union Times April 16 issue. During the House Financial Services Subcommittee on Financial Institutions and Consumer Credit mark up of H.R. 1375, Kanjorski, a strong credit union supporter, acknowledged that the issue “has generated considerable debate and emotion in the credit union movement,” and that he hoped the issue will be raised during the full committee mark up. He explained that he had several concerns about privately insured credit unions including congressional policy that membership should only include federally insured financial institutions; the undermining of Gramm-Leach-Bliley; encouraging credit unions to escape federal regulation; failure of these credit unions would cause systemic problems for all credit unions; previous experiences with private insurance, such as RISDIC; and the non-enforcement of consumer protection provisions in the Federal Deposit Insurance Corp. Improvement Act. Kanjorski also raised concerns about the private insurance system during last year’s full committee mark up of the regulatory relief bill. “I have strong philosophical concerns regarding this section because it contains nothing to create genuine federal supervision over private deposit insurance,” Kanjorski remarked. “Should the private insurance system fail, it would likely cause great adversity and turmoil for all credit unions, as well as potentially severe implications for the Federal Home Loan Bank System.” House Financial Services Financial Institutions and Consumer Credit Subcommittee Chairman Spencer Bachus (R-Ala.) reminded the lawmakers that there are currently nonfederally insured members of the FHLBs. Kanjorski noted that some credit unions that have converted to private insurance have done so to avoid Prompt Corrective Action requirements and the member business lending cap. He pointed out that flight from the federal charter and its deposit insurance were the first signals of the thrift crisis two decades ago. He also brought up NAFCU, Federal Reserve Board Chairman Alan Greenspan, and the Consumer Federation of America’s objections to private insurance. In addition, the NCUA Board has let its strong support for federal insurance be known. “Nonetheless, I will withdraw my amendment at this time with the understanding that we will continue to examine this issue and work toward a compromise before consideration of this bill by the full committee,” the lawmaker concluded. A full committee mark up is expected to come shortly after the spring recess, ending April 28. [email protected]