WASHINGTON (6/23/08)—The U.S. House of Representatives has scheduled a Tuesday vote on important legislation for credit unions—the Credit Union, Bank and Thrift Regulatory Relief Act (CUBTRRA)—introduced late last week. The bill (H.R. 6312) would allow all federal credit unions to apply to serve underserved areas and would exempt member business loans made in underserved areas from a statutory 12.25%-of-assets cap. It also would grandfather previously approved underserved fields of membership for credit unions. H.R. 6312 proposes to allow short-term payday loan alternatives within a credit union's field of membership. And it addresses the current investment limit in credit union service organizations (CUSOs) and proposes to raise it to 3% of unimpaired capital and surplus, up from 1%. The Credit Union National Association (CUNA) supports the bill and has commended its authors for “their solid steps toward regulatory relief for credit unions, bank and thrifts.” The legislation was introduced late Thursday by Reps. Paul Kanjorski (D-Penn.), Ed Royce (R-Calif.), and Dennis Moore (D-Kan.). When the bill was unveiled, CUNA Senior Vice President of Legislative Affairs John Magill said, “These members of the House Financial Services Committee have shown with the introduction of this measure their commitment to credit unions to obtain regulatory relief– particularly in the midst of a tough presidential election year. “ “Along with Chairman Barney Frank (D-Mass.), these three deserve the thanks and appreciation of credit unions for taking action to give us more flexibility to serve our members," Magill said. CUBTRRA, as its full name indicates, also has relief provisions for banks and thrifts. For instance, it proposes to remove the current thrift caps on auto and business lending. For commercial banks it would, most notably, authorize the payment of interest on reserves by a federal reserve bank at least quarterly on balances maintained there on behalf of a depository institution. It proposes to allow banks to pay interest on business checking accounts. Other provisions for credit unions include ones that would:
* Enhance the 2006 regulatory relief provisions that allowed the National Credit Union Administration (NCUA) to increase the 12-year maturity limit on non-real estate secured loans to 15 years, Section 104 would further permit the agency to issue regulations providing for loan terms exceeding 15 years for specific types of loans; (Give the NCUA with greater flexibility to respond to market conditions; *Clarify existing law that permits credit unions to participate in loan programs secured by the insurance, guarantees, or commitments of State or Federal governments, such as the Small Business Administration's 504 program. The section provides that the loan maturities, terms, and conditions on these loans may be specified in applicable regulations; and *Encourage small business development in underserved urban and rural communities by excluding from the statutory cap any member business loans made to members in underserved communities. The bill's language clarifies that business loans made to businesses operating on a nationwide basis would not be exempt from the cap, but business loans made to locally owned franchises of businesses operating on a nationwide bases would be exempt if in an underserved area.
Use the resource link below for more CUNA information on the bill. Also, see related stories in this edition of News Now