CUNA-NAFCU letter on "unbalanced" amendment for reg relief

February 13, 2008

FOR IMMEDIATE RELEASE
Contact: Patrick Keefe -- (202) 508-6765
pkeefe@cuna.com

CUNA and NAFCU have together signed a letter to Senate Banking Committee Chairman Chris Dodd (D-Conn.) urging him to make regulatory relief a priority for the committee, but also advising him that the two groups cannot support an unbalanced approach in which credit unions do not receive the same level of relief as other financial institutions.

The letter refers to an amendment offered by Sen. Mike Crapo (R-Idaho) to the industrial loan company (ILC) bill which expands business lending authority for thrifts (as well as auto lending investment for the institutions), but holds no parallel increase in credit union business lending caps. The ILC bill also contains no modification of credit union prompt correction action (PCA) requirements to facilitate a risk-based approach.

"Providing a modest increase in the credit union member business lending limit is good public policy," the two groups wrote. "Credit union member business lending is safe and targeted to small businesses. The average credit union member business loan is less than $192,000. And, the most recent 12-month member business loan charge off (September 2006-2007) rate is 0.08 percent. Furthermore, a 2001 Department of Treasury study entitled ‘Credit Union Member Business Lending’ found that credit union member business lending ‘has no effect on the viability and profitability of other insured institutions.’

CUNA President and CEO Dan Mica noted that credit unions applauded and thanked Sen. Crapo for his leadership on the overall issue of regulatory relief for financial institutions, especially credit unions. "However, regulatory relief among financial institutions must be in equilibrium in order for all to have the same opportunities to thrive. In short, we cannot support legislation that does nothing to expand credit union business lending authority to the same level as that proposed for thrifts."

He added that, in the meantime, credit unions will be working with senators to achieve regulatory relief that is balanced, and appreciated the opportunity to broach this issue in the Senate.

The full text of the CUNA-NAFCU letter follows:

February 12, 2008
The Honorable Christopher Dodd
Chairman
Committee on Banking, Housing and Urban Affairs
United States Senate
Washington, DC 20510

Dear Chairman Dodd,

The Credit Union National Association (CUNA) and the National Association of Federal Credit Unions (NAFCU) are writing to you on behalf of America’s 8,400 credit unions and 90 million credit union members regarding the Crapo Amendment (#4) to the Industrial Bank Holding Company Act of 2008. We urge you to make regulatory relief for all financial institutions a top priority for the Senate Committee on Banking, Housing and Urban Affairs.

Credit unions applaud Senators Crapo, Hagel, Johnson and Tester for their leadership on this issue. We believe that it is imperative that any regulatory relief measure provide meaningful and balanced relief to all financial institutions. While we recognize the intent of Crapo amendment #4 to the ILC bill, we do not support it as submitted because we believe it is unbalanced by including provisions which would increase the business lending limits and auto lending investment limits for thrift institutions while providing no parallel increase in credit union business lending caps or modification of the credit union prompt corrective action (PCA) system to a risk- based approach. We continue to view it as inappropriate for Congress to consider a substantial expansion in thrift business lending, and a significant enhancement of the thrift charter, in the absence of similar substantial relief for America’s credit unions.

Providing a modest increase in the credit union member business lending limit is good public policy. Credit union member business lending is safe and targeted to small businesses. The average credit union member business loan is less than $192,000. And, the most recent 12-month member business loan charge off (September 2006-2007) rate is 0.08%. Furthermore, a 2001 Department of Treasury study entitled "Credit Union Member Business Lending" found that credit union member business lending "has no effect on the viability and profitability of other insured institutions."

Credit unions are well suited to help during these difficult economic times when credit is becoming scarce. We believe that providing balanced and meaningful even-handed regulatory relief to all financial institutions would provide significant economic stimulus at no cost to taxpayers. We urge you to support such efforts. We would welcome the opportunity to work with the Banking Committee to provide such regulatory relief to all financial institutions.

Sincerely,

# # #

About CUNA
With its network of affiliated state credit union leagues, Credit Union National Association (CUNA) serves about 90 percent of America's 8,500 credit unions, which are owned by more than 90 million consumer members. Credit unions are not-for-profit cooperatives providing affordable financial services to people from all walks of life. For more information, visit www.cuna.org.

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