Letter to Representative Michael Oxley Chairman of the House Financial Services Committee in response to regulatory relief proposal

Letters to Congress

Letter to Representative Michael Oxley, Chairman of the House Financial Services Committee in response to regulatory relief proposal

February 4, 2002

Dear Chairman Oxley,

On behalf of the Credit Union National Association (CUNA) and the nation's 82 million credit union members, I again applaud you for your leadership in promoting legislation to provide financial institutions with relief from unnecessary or unworkable regulations. As one of our key speakers on February 27 at our Government Affairs Conference, I invite you to urge the 3,000 attendees to strongly lobby on behalf of this important legislative initiative.

In reviewing the preliminary draft of your proposal, credit unions are very pleased that several of the provisions would directly amend the Federal Credit Union Act. Your efforts are an important adjunct to the recent efforts of National Credit Union Administration (NCUA) Chairman Dennis Dollar, who is currently implementing a regulatory flexibility plan that would also provide a measure of reduced regulation for some credit unions. We are very supportive of each of the credit union provisions in the draft, including the incorporation of H.R. 2796, the Federal Home Loan Bank Membership Act of 2001, introduced by Rep. Bob Ney (R-OH), which would provide state-chartered, privately insured credit unions with the same access to the FHLB as other credit unions. I also encourage you to incorporate H.R. 760, the Faith- Based Lending Protection Act, introduced by Rep. Ed Royce (R-CA), which would exclude loans made to non-profit religious organizations from the member business loan caps.

We also agree with the comments of the NCUA after its review of the proposal regarding permitting credit unions to cash checks for individuals who are not members, but who are within the credit union's field of membership. We think that this service, as well as providing remittance services, would be strictly used by those who, because they have low incomes and for some reason don't trust mainstream financial institutions. It is our hope that after using these services that these individuals would become credit union members, which in turn would help them avoid the traps of predatory lending practices.

We also support the NCUA's request for allowing the voluntary mergers of healthy credit unions and the removal of the reasonable proximity limitation, both of which can currently result in creating a safety and soundness problem.

Finally, as a result of meetings with your staff designed to explore the possibility of including additional provisions to ease the regulatory burden of credit unions, I am enclosing several suggestions with explanations of how they would help further the goals of your important legislation. Several of these provisions would correct some of the worst examples of statutory micromanagement that have placed unreasonable constraints on the ability of credit unions and their boards to function efficiently and in the best interests of their members. In addition, while we understand your desire to keep "controversial" items from being included in this bill, I hope that we can meet shortly to discuss the possibility of future consideration of some provisions of the Federal Credit Union Act which we believe need addressing, such as the arbitrary cap on member business loans and the inability of credit unions to raise some form of secondary capital.

I also want to take the opportunity to thank you for making sure that as part of the deposit insurance reform proposal that the increases in coverage proposed for the Federal Deposit Insurance Fund (FDIC Fund) are the same for the National Credit Union Share Insurance Fund (NCUSIF). This parity in coverage is important to maintain the confidence of credit union members in the safety of their deposits.

Thank you again for your leadership, and we look forward to your appearance at our Government Affairs Conference. If we can be of any further assistance, please call me or Gary Kohn of my staff at 202-508-6721.

Daniel A. Mica
President & CEO


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