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NFIP CLF other CU issues addressed by spending bill
WASHINGTON (12/19/11)--The National Flood Insurance Program (NFIP) has been extended until May 31 after the U.S. Congress approved a $1 trillion omnibus federal government funding bill late last week, and several other credit union priorities will also be impacted by this bill.

The NFIP was set to expire on Dec. 16. That program has been funded by short-term resolutions for months, as both Democrats and Republicans, including Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking minority member Richard Shelby (R-Ala.), have called for the program to be reformed.

Legislation that would extend the NFIP until September of 2016 also remains active in Congress.

The NFIP is important to credit unions because the mortgages they write for properties in a floodplain are required to have flood insurance. Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs Ryan Donovan said CUNA backs the short term extension, but added it is "important that Congress consider a long term extension of this program to provide stability and predictability."

Other credit union priorities that are addressed by the omnibus bill include the National Credit Union Administration's (NCUA) Central Liquidity Facility (CLF), the NCUA's Community Development Revolving Loan Fund (CDRLF), the U.S. Treasury Department's Community Development Financial Institution (CDFI) Fund, and the Cooperative Development Program (CDP).

The CLF's current lending authority, which stands at up to 12 times of its paid-in capital, will remain at this level in 2012 under the terms of the omnibus bill. Funding for the CDRLF, which provides loans and technical assistance to federal and state credit unions that are designated as a low-income credit union, as defined by NCUA regulations, would drop slightly to $1.25 million. Funding for the CDFI Fund would also be reduced.

Funding for the CDP has not been determined, but the 2012 budget for the U.S. Agency for International Development will be cut by 13% under the omnibus bill. However, the omnibus bill directs $10 million in funds to cooperatives and credit unions that take part in overseas development assistance programs.

The omnibus appropriations bill also includes language directing the Federal Trade Commission (FTC) to study the impact and effectiveness of the small issuer exemption to the debit interchange regulation. Specifically, the FTC will report to Congress on the steps it has taken to ensure compliance by payment card networks, and will look for any proof that the payment card networks have favored larger institutions over credit unions that are exempt from the terms of the interchange cap.

CUNA's Donovan said this language "could be valuable in ensuring that the payment card networks continue to operate a two tier system and may help make the small issuer exemption more meaningful," and that CUNA will work with the FTC as this report is developed.


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