WASHINGTON-Many pieces of legislation did not get completed during the first session of the 108th Congress and as we head into the second session, many issues that concern credit unions remain unresolved. One of credit unions' newer and most directly impacting pieces of legislation is the Credit Union Regulatory Improvements Act (H.R. 3579), which was introduced at the very tail end of last session. Though credit union lobbyists agree the legislation is unlikely to be signed into law during this session, its prospects in the future are good. Lawmakers have promised hearings on CURIA this spring. One of the key provisions in the bill would raise the cap on credit union member business loans from 12.25% of assets to 20%, the same level provided to the thrifts in H.R. 1375, the Financial Services Regulatory Relief Act. CUNA Vice President of Legislative Affairs and Senior Legislative Counsel Gary Kohn acknowledged that just about 16% of credit unions are into member business lending, “but there are a lot of credit unions that want to be able to do it and want to have that option to do it.” He added that CUNA would really prefer removing the statutory cap on business loans altogether. NAFCU Senior Vice President and General Counsel Bill Donovan added that the risk-based net worth provision was a common sense provision that “reflects an understanding of what a credit union balance sheet really is comprised of.” More than half of the members of the House Financial Services Committee have joined on since the passage of H.R. 1151, NAFCU Senior Legislative Representative Murray Chanow commented. “You might be surprised how little some of these offices know about credit unions,” he said, particularly when you get down to the specifics of the credit union and bank differences. The possibilities for H.R. 1375, the overall regulatory relief bill, are a bit brighter than for CURIA in the near term. Donovan explained, “The fact of the matter is, the House Financial Services Committee under Chairman [Mike] Oxley's (R-Ohio) leadership has gotten the reg relief bill out of committee once again poised and ready to go to the floor.” He said it is expected to go to the House floor in March. In addition, Donovan pointed out that Senate Banking Committee Chairman Richard Shelby (R-Ala.) has listed the bill among his priorities for the second session of the 108th Congress. Senator Mike Crapo (R-Idaho) has been charged with drafting the bill and his staff is already consulting with interested parties. Kohn made the observation that the bankers seem to have come around a little in their position on the regulatory relief bill since the introduction of CURIA. Last year the banking trade groups refused to support the bill, mainly because of the credit union-friendly provisions. The lobbyist added that the interstate branching of industrial loan companies provision in the bill is still a sore spot with community banks and even has some credit unions watching it closely. Though some credit unions are interested, Kohn said that CUNA has not taken a position on the ILC debate because credit unions do not want banks telling credit unions how to run their business. Feelings are also mixed on the issue within Congress. However, House Financial Services Committee Ranking Member Barney Frank (D-Mass.) said during CUNA's Governmental Affairs Conference that a compromise is in place in the House bill, but there is no telling whether the Senate will accept it or not. Bankruptcy Abuse Prevention and Consumer Protection Act of 2003 (H.R. 975) is another perennial hot topic for credit unions and others. “Bankruptcy without a doubt remains a top priority for us,” Kohn remarked. “It takes up a considerable amount of my time. I've been focusing on it quite a bit lately, making a lot of Hill visits on the Senate side in particular because that is where it is stalled.” He added that CUNA has not ignored the House side either and pointed out the trade group's efforts in getting the bill passed to the family farm extension. “I would definitely say it's still a top priority for NAFCU,” Chanow agreed. He pointed to statistics from the Administrative Office of the U.S. Courts, which showed more than 1.6 million bankruptcy filings for 2003.(See related story page 10) “The first bankruptcy bill came around in 1997 after the National Bankruptcy Commission released their report.The bill has gotten better and better since 1997,” he said. “It's also gotten longer and longer and longer and more complicated as it's gone down the line.” Chanow continued, “A lot of different people have gotten their hands in the pot on this one, which makes it even more difficult to pass which you've seen over the last two or three years.” However, Kohn said that supporters of H.R. 975 are not ready to throw in the towel on delivering this bill to the president's desk. “The most logical way seems to be to bring the first House passed bill to the floor and then to allow the Senate to bring it directly to the floor and then to provide for an opportunity to have a vote on his amendment plus a limited number of other amendments so that this wouldn't take anymore than two to three days floor time,” he said. But, he added, “We're getting mixed messages at this point about whether that is a possibility and if that option doesn't work then we'll get creative and look for other options. We're not giving up on this.” One of the main obstacles for this bill is the election year, including a presidential election, which has legislators antsy to push through the 13 appropriations bills and get back to their districts to campaign. “Because it's an election year and there is going to be a push to make sure they pass all 13 spending bills this year-I don't think the Republicans want to go into a presidential election and another election without passing the spending bills-it's going to be very hard for people to get floor time in the Senate,” Chanow predicted. He went further to say he would not be surprised to see a lame duck session after elections. The other big stumbling block for the bankruptcy reform bill is the threat of Senator Charles Schumer's (D-N.Y.) abortion clinic violence amendment. It is aimed at preventing those convicted of violence against abortion clinics from seeking bankruptcy protection from the fines incurred by their acts. CUNA Senior Vice President of Governmental Affairs John McKechnie stated, “I think some Senators who are hung up about the Schumer issue are opposed to the bill for other reasons. I'm not trying to be overly diplomatic about it, but I think if there weren't the Schumer issue some of these people would try to find other obstacles to strew in the path of this bill.” He said that the reform bill has been given a lengthy debate, the opponents have lost, but, “Instead of taking that as a fair debate, some people have tried to side track the process.” Credit unions have also been closely following the savings legislation meandering through Congress. “It's kind of out there all floating around and nobody's quite sure where it all is,” Kohn said. In addition to the Portman-Cardin (H.R. 1776) legislation carried over from last year regarding retirement accounts, President George W. Bush is now pushing his own legislative proposal, including lifetime, retirement and employer savings accounts. Portman wants “to try and craft a package and take some of the things from 1776, some of the different ideas the president has out there and try and move some savings proposal forward this year,” NAFCU Director of Legislative and Political Affairs Brad Thaler said. He added that it is a bipartisan issue in an election where legislators can go home and say we did this for you. Additionally, Kohn said, the legislation including Individual Development Accounts is ready for a conference though conferees have not been appointed. The IDAs would provide credit unions a tradable tax credit so they could get for-profit entities to provide the matching funds. Institutions offering IDAs could also receive a tax credit of $50 for the operation and financial education costs associated with the accounts. Deposit insurance legislation may also be resurrected this congressional session. While credit unions are not seeking it, the trade associations remain vigilant to ensure the National Credit Union Share Insurance Fund maintains parity with the Federal Deposit Insurance Corporation. Because of the controversy surrounding the coverage increase, Thaler said there is not much hope for an increase, but legislation to merge the Bank Insurance Fund and the Savings Association Insurance Fund, along with other operational issues, may come into play. Though both CUNA and NAFCU are watching the progress of the housing Government Sponsored Enterprise oversight hearings and potential legislation, it probably will not have much of an impact on credit unions so long as it does not affect their business operations, according to the lobbyists. One new issue coming down the pike that could affect credit unions is the recent legislative proposal by the Small Business Administration to cut the 7(a) loan guarantee back to 50% in order to spread the wealth. “As credit unions become involved in SBA lending, it's obviously an issue that we're going to be paying attention to and seeking input from our members on how they feel this issue will impact them and how they're doing SBA loans,” Thaler said. Other congressionally related items that are not necessarily legislation but could impact credit unions is the General Accounting Office's secondary capital study Congressman Brad Sherman (D-Calif.) has said he would like to see out sometime in May; GAO's study on the state of corporate credit unions; and financial regulatory oversight hearings that have been rescheduled twice already. Hearings are also expected at some point on predatory lending, and federal preemptions. [email protected]