Regulatory Relief

Congress continues to recognize that insured financial institutions, including credit unions, are overburdened by antiquated, and sometimes unworkable, regulations. Credit unions remain the most highly regulated and restricted of all insured financial institutions, particularly after the passage of the Credit Union Membership Access Act, which imposed new, severe restrictions on credit unions in several areas. The House Financial Services Committee has considered legislation to ease that burden. This legislation is consistent with the needs of credit unions to help their ability to better serve their members in the 21st century.

Many of the provisions under consideration would help eliminate 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.

The Credit Union Regulatory Improvements Act (CURIA) was introduced by Reps. Ed Royce (R-Calif.) and Paul Kanjorski (D- Pa.) to address many antiquated constraints. The main provisions of the bill include:

  • More flexibility on capital and growth through reform of current constraints under prompt corrective action (PCA),
  • An increase in the member business loan (MBL) cap to 20 percent of assets from 12.25 percent and an exemption from the cap for loans under $100,000,
  • A requirement that 30 percent of a credit union’s members participate in a conversion vote, and
  • A clarification to the 1998 Credit Union Membership Access Act to allow any credit union, regardless of charter type, to serve underserved areas.

Bipartisan support for CURIA has been building rapidly and has nearly one-third of the House as co-sponsors.

A Senate version of CURIA – nearly identical to the House bill (H.R. 1537) – was introduced by Sen. Joe Lieberman (I- Conn.) in May 2008.

Rep. Kanjorski also introduced the Credit Union Regulatory Relief Act (CURRA), H.R. 5519, in March 2008 to ease some regulatory burdens on credit unions. It has some of what’s in CURIA, but also some new issues. For example, it would omit member business loans to underserved areas from counting toward the current cap. And it would let federal credit unions offer payday loan alternatives to nonmembers in their field of memberships.

CURRA, however, does not include PCA reform or raise the member business loan threshold, as CURIA would.

On March 6, 2008, the House Financial Services Committee held a hearing entitled, “The Need for Credit Union Regulatory Relief and Improvements.” CUNA Chairman Tom Dorety, president and CEO of Suncoast Schools Federal Credit Union in Tampa, Fla., testified on behalf of the association at this hearing.

CUNA strongly supports efforts to provide credit unions with relief from unnecessary or unworkable regulations and encourages Congress to enact these important pieces of legislation this year. We will continue to urge the House and Senate to pass regulatory relief provisions independently or attached to other pieces of legislation coming out of the House Financial Services Committee and the Senate Banking Committee.

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