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CUNA urges senate banking commitee to consider bills impacting credit unions
(May 19, 2014) — Today, the Credit Union National Association (CUNA) sent a letter to Senate Banking Committee Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) urging the committee to consider two regulatory relief bills that positively impact credit unions, H.R. 3468, the Credit Union Share Insurance Fund Parity Act and H.R. 3584, the Capital Access for Small Community Financial Institutions Act. Both bills sailed through the House of Representatives earlier this month.
Below is the text of the letter to the Senate Banking Committee:
The Honorable Tim Johnson
Chairman
Senate Banking Committee
United States Senate
Washington, DC 20001
The Honorable Mike Crapo
Ranking Member
Senate Banking Committee
United States Senate
Washington, DC 20001
Dear Chairman Johnson and Ranking Member Crapo,
On behalf of the Credit Union National Association (CUNA), I am writing to encourage the Senate Banking Committee to consider two regulatory relief bills that will have a positive impact on credit unions, H.R. 3468, the Credit Union Share Insurance Fund Parity Act and H.R. 3584, the Capital Access for Small Community Financial Institutions Act. CUNA is the largest credit union advocacy organization in the United States, representing America’s state and federally chartered credit unions and their 99 million members. Both of these bills passed the House of Representatives overwhelmingly earlier this month.
H.R. 3468 – Credit Union Share Insurance Fund Parity Act
H.R. 3468 would extend National Credit Union Share Insurance Fund (NCUSIF) coverage for trust accounts, such as Interest on Lawyer Trust Accounts (IOLTAs) and other similar accounts, even if the account includes funds owned by a nonmember of the credit union. This legislation is necessary because the National Credit Union Administration (NCUA) has interpreted that it does not have authority under the Federal Credit Union Act to extend such coverage. This legislation would provide coverage on par with the coverage that the FDIC extends to similar accounts held at banks. This legislation passed the House of Representatives by voice vote.
H.R. 3584 – Capital Access for Small Community Financial Institutions Act
H.R. 3584 would correct a drafting error in the Federal Home Loan Bank (FHLB) Act that prohibits state chartered, privately insured credit unions from joining the FHLB system. If enacted, 132 small privately insured credit unions across the country would be eligible for membership in the FHLB system and have additional opportunities to provide mortgage credit to their members. This legislation is noncontroversial, having passed the House of Representatives by a vote of 395-0. It has also been included as part of regulatory relief measures passed by the House in 2004 and 2006. Senators Brown and Portman have introduced companion legislation (S. 1806) in the Senate.
The legislation presents no risk to the FHLB system or the taxpayer because all advances from the FHLB system must be fully collateralized and subject to their strict uniformly applied standards. In addition, the bill specifically states that the FHLB will have a superior lien position over any asset that it may hold as collateral, irrespective of how the credit union’s deposits are insured.
In addition, privately insured credit unions would not be the first type of non-federally insured institution that would be able to gain access to the FHLB system. Under current law, insurance companies which are not federally insured, may join the FHLB system. In fact, insurance companies borrow more from the FHLB system than every credit union that is currently a member of the FHLB. Privately insured credit unions are licensed and regulated by state financial service regulators, much like insurance companies.
Conclusion
Both bills would greatly benefit credit unions, and more importantly, the members they serve. We urge the Senate Banking Committee to consider and pass these two important pieces of legislation so that they move on for full Senate consideration as soon as possible.
On behalf of America’s credit unions and their 99 million members, thank you for your consideration of our views.
Best regards,
Bill Cheney
President & CEO