Federal & State
Legislation/Regulation Updates
The
Financial Services Regulatory Relief Act of 2003 (HR
1375) passed the House of
Representatives on March 18th by a vote of 392 to 25. There
were several credit union provisions in the bill. It allows
privately insured credit unions to become members of a
federal home loan bank; expands investment authority in
securities; increases a general 12-year loan term limitation
to 15 years; excludes loans or loan participations to non-profit
religious organizations from the MBL limit. There are several
other provisions, however, all of them only affect federally
chartered credit unions.
The
C.U. Regulatory Relief Act or CURIA – HR 3579
has added 38 Representatives as co-sponsors to the bill.
CA (9) and NV (1) co-sponsors include: Reps. Joe Baca,
Bob Filner, Robert Matsui, Millender-McDonald, Adam Schiff,
Maxine Waters, Jim Gibbons, Barbara Lee, Brad Sherman and
Lynn Woolsey. In NV, Reps. Jon Porter and Shelley Berkley
have verbally committed to add their names.
This legislation incorporates most provisions pertaining
to credit unions contained in the regulatory relief bill,
plus an expansion of member business loan authority. CURIA
also authorizes the National Credit Union Administration
(NCUA) to implement a risk-based net worth system for PCA.
If enacted, credit unions would only have to reserve against
risk assets as opposed to the current system, which requires
reserves against all credit union assets. While passage
of CURIA in 2004 is unlikely, hearings are currently scheduled
for late May or June.
Bankruptcy Reform has cleared the House of Representatives
and, like the regulatory relief bill, is awaiting action
by the U.S. Senate. Both chambers have adopted versions
of bankruptcy reform and we are awaiting a conference to
iron out differences before a final bill can be sent to
and signed by President Bush. It is unclear if differences
between the respective bodies and between the political
parties will prevent enactment.
The
credit union tax exemption is again under considerable
attack. Bankers have launched a major campaign to repeal
the federal income tax exemption while a number of states
are witnessing similar action. Congressman Bill Thomas
(R-Bakersfield) recently announced an intention to study
the tax exemptions of not-for-profit 501c organizations
and he suggested hearing might be held later this year.
Credit unions have mounted an aggressive response, including
running advertisements in major Washington, DC political
newspapers as well as grassroots outreach to other members
of Congress. Because of these efforts as well as the
fact that it’s
an election year, it seems unlikely that a hearing will
be held this year, but stranger things have happened.
Our perspective is more WHEN hearings will be held (this
year or next) rather than IF they will be held. This
is an issue that we are going to continue to focus on
because of its importance to the credit union industry.
SB 1292 would permit credit unions to provide financial
services that are highly utilized in low-income communities,
like check cashing, issuing money orders, and transferring
money to foreign countries, to all persons eligible for
membership in the credit union, regardless of whether they
have opened an account. The bill was heard May 5 in the
Senate Banking Committee where it passed, 8-1. The full
Senate and then go will next vote the bill on to the Assembly
Banking Committee and full Assembly.
AB
1839 creates the "Car Buyer's Bill of Rights",
which provides that purchasers of used or pre-owned cars
may cancel the motor vehicle sale contract prior to midnight
of the 3rd business day after the buyer signs the agreement
or offer to purchase and may obtain a refund from the seller.
The sale contract must contain certain language regarding
the cooling off period.
Also, new, used, and pre-owned motor vehicle sale contracts
must disclose the buyer's credit score and lowest rate
available to the buyer. Sellers, with respect to a car
loan, conditional sales contract, or any other mode of
vehicle purchase financing, are prohibited from accepting
a commission, up-charge, dealer reserve, or similar compensation
for arranging financing or making a credit sale or similar
transaction.
This bill would require credit unions to arrange a three-day
window in the financing of used automobiles, during which
buyers could return their car and have their money refunded.
Adjustments would have to be made to the disclosures in
the conditional sales contracts issued by credit unions.
The greatest affect on credit unions would stem from the
prohibition on providing a commission to an auto dealer
for arranging credit union financing for a purchaser.
The bill passed the Assembly Judiciary Committee, 6-3.
The bill will now be heard in the Appropriations Committee.
Stakeholders in the bill are claiming there will be significant
amendments shortly. The CCUL does not support the bill
in its current form but it may change its opinion once
the GRC sees the actual amendments.
AB 2435 would require the state to adopt a course of study
for grades 7 to 12 that would cover personal financial
planning. The bill has significant budgetary implications
and may fail for fiscal reasons. The bill is currently
on the Appropriations Suspense file for further review.
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