WASHINGTON (4/27/12)--The Small Business Credit Availability Act (H.R. 3336), which would preserve the rights of credit unions and other small financial institutions to use swaps to hedge interest rate risk, will move on to the Senate after it passed a U.S. House vote this week.
The bill passed by a 312 to 111 vote, with 8 members of the House abstaining.
The Credit Union National Association (CUNA) supports the legislation, which would grant credit unions and other small financial institutions with under $1 billion in cumulative current uncollateralized credit risk exposure and potential future credit risk exposure an exception from portions of the Dodd-Frank Act that barred certain institutions from engaging in swap transactions.
"The House considered this legislation to reinforce that small financial institutions, including the credit unions eligible to engage in this activity, receive the exemption that Congress intended to provide under the Dodd-Frank Act," said Ryan Donovan, CUNA's senior vice president of legislative affairs.
The National Credit Union Administration (NCUA) currently allows a limited number of federal credit unions to engage in derivatives through an investment pilot program, and is considering expanding credit union derivative investment authority. CUNA has commended the agency for taking on the derivatives issue, and said it supports allowing well-managed credit unions to invest in derivatives through third-parties. (See related April 5 News Now story: Allow CU derivative investments as risk management tool: CUNA to NCUA)