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Senate card bill includes NCUA emergency borrowing
WASHINGTON (4/1/09)—Voting 12 to 11 in favor of a credit card best practices bill, the Senate Banking Committee passed legislation Tuesday that included consideration of amendments important to credit unions, including creating National Credit Union Administration (NCUA) emergency lending authority. S. 414 would amend the Consumer Credit Protection Act to ban abusive credit practices, enhance consumer disclosures and protect underage consumers. During the committee’s consideration of the bill, the panel voted unanimously to adopt the Crapo-Corker Federal Deposit Insurance Corp. (FDIC) and NCUA Borrowing Authority amendment. Offered by Republican Sens. Mike Crapo (Idaho) and Bob Corker (Tenn.), the amendment would increase NCUA's authority to borrow from the U.S. Treasury to $6 billion from $100 million and the FDIC's authority to $100 billion from $30 billion. Equally significant, or perhaps even more so, the amendment would establish for NCUA an emergency borrowing authority of $18 billion—or three times the $6 billion that would be available during normal times. While nowhere near the $30 billion requested by the agency, NCUA Chairman Michael Fryzel noted after the unanimous vote that the Crapo amendment represents the first time any language on NCUA emergency borrowing authority has appeared in this Congress. Addressing another huge issue for credit unions, the amendment also would provide express authority for NCUA to spread out the impending premium assessment on credit unions over five years, which the NCUA feels it cannot do under current law. Fryzel said the strong and accompanying discussion sent “a strong indication that the Senate wants to address the need for NCUA to have greater borrowing authority and have greater flexibility on premium assessments.” He said he is encouraged for future action on the NCUA-drafted Corporate Credit Union Stabilization Fund legislation, which would allow credit unions to spread the cost of the National Credit Union Share Insurance Fund (NCUSIF) replenishment over as many as seven years. The Credit Union National Association (CUNA) also called the amendment a significant step forward in providing credit unions relief from the immediate impact of the premium assessment to fund NCUA’s actions to stabilize the corporates. However, in letters to Crapo and Corker, CUNA President/CEO Dan Mica said CUNA would welcome an opportunity to discuss further legislative steps that cold be taken to address corporate credit union issues. (See related story: Mica tests waters: Higher borrowing, longer write-off.) Also of interest to credit unions, the banking panel considered, then withdrew, an amendment to clarify that the bill does not expand the Federal Trade Commission's mortgage-lending rulemaking powers to credit unions or other depository institutions. The amendment would also have specified that the bill does not increase state attorneys’ general authority to enforce the Truth-in-Lending Act, the amendment notes. That amendment, backed by CUNA, was also co-offered by Crapo and Corker. On the Senate floor during debate on an omnibus spending bill, senators including Christopher Dodd (D-Conn.), Daniel Inouye (D-Hawaii) and Byron Dorgan (D-N.D.) promised the FTC issue would be addressed. At the heart of S. 414 are provisions to crack down on abusive credit card practices. CUNA supports efforts to end discriminatory, predatory, deceptive and abusive lending practices. Such efforts should be balanced, however, to avoid unintended consequences that ultimately would be adverse to consumers, including making credit more expensive and less available for consumers. (See related story: CUNA seeks balance in card protections.)
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