Renaissance: Charting the Progress

Issue Leaders / Sources Status
Regulatory Relief Legislation Rep. Capito
(R-W.V.)
Rep. Ross
(D-Ark.)
Rep. Oxley
(R-Ohio)

Financial Services Regulatory Relief Act of 2003 (H.R. 1375)		 Like the regulatory relief bill passed by the House Financial Services Committee in the last Congress, most of the credit union provisions in the new Capito-Ross bill reflect suggestions identified by CUNA’s Renaissance Commission to ease regulatory burdens.

Provisions carried over would allow credit unions to:
  • Offer check-cashing and money orders for everyone in the field of membership;
  • Offer wire transfers for everyone in the field of membership;
  • Keep loans for 15 years or longer;
  • Make loans to non-profit religious groups and not count them against member business loan caps;
  • Apply for equal access to the Federal Home Loan Bank System;
  • Invest more in Credit Union Service Organizations (CUSOs);
  • Invest more in securities;
  • Enter into voluntary mergers regardless of size;
  • Recruit new members from existing membership groups, even after mergers or community charter conversions;
  • Save up to $280,000 in federal merger fees;
  • Reimburse directors for wages lost while volunteering on credit union business;
  • Exercise the option to consider term limits for directors;
  • Expel members for just cause.
New provisions would:
  • Grant federally insured credit unions the same exemptions as banks in anti-trust laws for pre-merger filing notification and fees;
  • Extend federally insured credit unions the same exemptions as banks for the Securities & Exchange Commission’s broker-dealer and investment advisor requirements.
Serving People of Modest Means Survey: Serving Members of Modest Means

CUNA’s Federal Credit Unions Subcommittee		 The Renaissance Vision Statement on the Mission of Credit Unions reaffirms that “The purpose of credit unions is to promote the economic well-being of all people, including those of modest means…”

CUNA Market Research has completed the first nationwide survey of how credit unions are serving members of modest means. It provides quantitative data showing that credit unions are offering multiple services to attract low-income consumers in their fields of membership. It also shows that credit unions expanding into low-income communities attract more low-income members than higher- income prospects from those communities.

To help credit unions reach even more people of modest means, CUNA’s Federal Credit Unions Subcommittee is exploring changes whereby more credit unions could qualify for a low-income designation.

In Congress, CUNA’s legislative team is advocating for expanded Individual Development Accounts (IDAs) to be enacted. Expanded IDA provisions were approved as part of the CARE Act in the Senate by a vote of 95-5.

To encourage member education, CUNA’s Home & Family Finance Resource Center is promoting a statement stuffer, Low-Income Households Can Save with IDAs.
Fields of Membership NCUA Chairman Dollar

CUNA’s Federal Credit Unions Subcommittee		 The Renaissance Vision Statement on Membership maintains that “credit union boards of directors must have significantly greater flexibility to determine their fields of membership to enhance safety, soundness and service.”

CUNA strongly advocated NCUA’s final rule to ease many unnecessary membership limits. Key changes:

  • Specifically define the size of communities that meet the requirement of interaction--thereby making it easier to obtain community charters.
  • Allow federal credit unions with a single occupational common bond to include a trade, industry or profession (TIP) within their geographic service area.
  • Streamline additions to multiple-group federal credit unions for employers with less than 3,000 potential members.
  • Permit associational common bonds to be based on “totality of circumstances” rather than a limited number of factors.
  • Give many federal credit unions authority to branch around a wholly owned ATM.
  • Allow federal credit unions to branch around a shared service center as long as they have a shared ownership interest in the center.
  • Eliminate outdated overlap protection requirements that NCUA says “have proven unworkable and unenforceable.”
  • Eliminate “time-in-place” restrictions on occupational, associational or multiple-group federal credit unions that wish to convert to another type of charter.
  • Allow state-chartered CUs converting to federal charters to retain groups added through emergency field-of-membership provisions.
Business Lending & Business Services SBA Administrator Barreto

CUNA’s Business/SEG Services Committee		 The Renaissance Vision Statement on Powers & Authorities envisions credit union services evolving to meet members’ changing needs.

Since millions of members are starting small businesses, CUNA led efforts with the Small Business Administration to allow all credit unions to apply for federal guarantees on member business loans through SBA’s 7(a) program. Up to 85% of each loan can be guaranteed. Whatever percentage of the loan is guaranteed, that portion will not count against the credit union’s member business loan cap.

The new CUNA Member Business Services pilot program allows any credit union to make business loans in less than an hour. The program offers a menu of small business loan services:
  • Underwriting;
  • Approval;
  • Participations;
  • Funding; and
  • Servicing.
CUNA also encouraged NCUA to propose a new regulation to remove unnecessary restrictions on member business loans (MBLs). Among the key changes NCUA has proposed:
  • When a credit union purchases a participation interest in a loan made by another lender, it would not count toward the credit union’s aggregate statutory MBL cap.
  • CUSOs in which a federal credit union invests may be authorized to originate MBLs.
  • Loans by a federal credit union to another credit union or CUSO would not count toward the FCU’s statutory MBL limit.
  • Risk-based net worth requirements associated with MBLs would be less stringent.
Investments CUNA’s Examination & Supervision Subcommittee NCUA’s proposed rule on investment & deposit activities includes many activities suggested by credit unions during Renaissance. CUNA’s comment letter suggests lifting restrictions on 6 investments that could be less risky than changes NCUA is already proposing: asset-backed securities, short-term corporate commercial paper, corporate notes and bonds, non-agency mortgage-backed securities, shares and stock of other financial institutions, and real estate investment trusts.

In addition, CUNA strongly advocated a final NCUA rule that allows federal credit unions to fund employee benefit plans with investments that would otherwise be impermissible.
Safety & Soundness CUNA’s Examination & Supervision Subcommittee

Comments on NCUA Strategic Plan for 2003-2008		 In official comments and face-to-face meetings with top regulators, CUNA’s Examination & Supervision Subcommittee recommended changes in NCUA's Strategic Plan. As Renaissance envisioned, CUNA asked regulators to focus more on safety & soundness. This includes more guidance on risk
Brokerage Fees CUNA’s CUSO Brokerage Activities Task Force (BAT Force) The Securities & Exchange Commission is planning to discontinue a license exemption to CUSOs offering brokerage services. Without an exemption, CUSOs would have to pay substantial licensing fees. CUNA’s BAT Force met with SEC to advocate a solution that would ensure no hardships for credit unions or CUSOs versus other financial providers.
Deposit Insurance Reform Rep. Bachus (R-Ala.)
(H.R.. 522)

Sen. Johnson (D-S.D.)
(S. 229)		 CUNA succeeded in including the National Credit Union Share Insurance Fund in deposit insurance increases for financial institutions. House and Senate bills would raise coverage for all institutions to $130,000 per savings account and $250,000-$260,000 per retirement account. The House bill was approved by a vote of 411-11.
State Charters State credit union leagues

Bills in 8 state legislatures		 State leagues have been working on bills that would give state-chartered CUs more control over fields of membership, share insurance, member business loans, and new powers. 16 bills are moving in 8 states to positively amend state CU acts in the spirit of Renaissance.

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