National Credit Union Administration 1998 Legislative Update

Legislation in 1998



December 1998
Bill #Latest Action Major provisionsOther actions Comments
H.R. 1151






Public Law 105-219 August 7, 1998Allows for multiple-group CUs and imposes new safety and soundness standards on CUs.-House passed 8/4

-Senate passed 7/28, 92-6

-S. Rept 105-193 filed 5/21

-Senate Banking approved 4/30, 16-2

-Senate Banking hearings 3/26, 4/2

-House passed 4/1, 411-8

-H. Rept. 105-472 filed 3/30

-House Banking approved 3/26

-House Banking hearing 3/11

After the Supreme Court decision in the AT&T case was handed down February 25, Congress acted swiftly to reverse the decision and codify NCUA's multiple-group chartering policy. New restrictions on member business lending, audit requirements, prompt corrective action "substantially similar" to that for banks, and easier conversion procedures for credit unions seeking to become other types of institutions were part of the legislative package permitting expanded FOM powers.
H.R. 4194



FY 1999
Public Law 105-276

October 21, 1998

Appropriates an additional $2 million to NCUA's CDCU Revolving Loan Fund.
-Conference Report (H Rept 105-769), filed 10/5

-Senate passed conf report 10/8, 96-1

-House passed conf report 10/6,



-Senate passed 7/30

-House passed 7/29, 259-164

-H. Rept. 105-610 filed 7/8

-House Approps approved 6/25

-S. Rept. 105-216 filed 6/12

-Senate Approps approved 6/11

For the third straight year, NCUA received additional monies for the RLF. The House version of the bill provided an addition $2 million for the CDCU Fund while the original Senate version provided only an additional $1 million. The House version prevailed in conference.

Although NCUA and the trades attempted to eliminate the CLF borrowing cap language in the appropriations bill, and key appropriations and banking committee staff were initially supportive, opposition to lifting the cap eventually killed the proposal.

The conference report language on the CDFI section contains the following language: "The conferees encourage the CDFI to give full and equal consideration to credit unions and specialized community development credit unions as eligible entities for grants, loans, and technical assistance. By their very existence, credit unions are grassroots community development institutions, and the CDFI should encourage and assist credit unions in taking a lead in their communities."

H.R. 3116
Public Law 105-164

March 20, 1998

Allows the OTS and NCUA to examine vendors for Y2K readiness.--Senate passed 3/6

--House passed 2/24

-House Banking approval and

hearing 2/5 (H. Rept. 105-417)

NCUA's new authority will sunset on December 31, 2001.
H.R. 3150,

S. 1305



Senate cloture vote on conf report 94-2, 10/9The bill would have made Chapter 13 filing mandatory for debtors who earn more than the median income and who can pay off at least 20% of their unsecured debt.-House passed conf rept 10/9,


-Conference Report (H. Rept. 105-

794) filed 10/7

-Senate passed S. 1301 9/23, 97-1

-House passed H.R. 3150 6/10, 306-118

-S. Rept. 105-253 filed 7/21

-Senate Judiciary approved 5/21

The bill died as a result of last-minute opposition to the conference report in the Senate. Rather than making Chapter 13 mandatory as in the House bill, the Senate bill encouraged Chapter 13 filing for debtors able to pay off at least 30% of their debt. The conference report largely followed the original House bill and a number of Senators, including original bill sponsor Dick Durbin, thought the conference report treated debtors too harshly.
S. 318,

H.R. 607
Public Law 105-216

July 29, 1998

Requires lenders to cancel private mortgage insurance when borrower has 20% equity and good payment history.-House passed 7/16

-Senate passed 7/15

-House passed 7/14

-Senate passed 11/9/97

-S. Rep. 105-129 filed 10/31/97

-Senate Banking approved 10/23/97

-House passed 4/16/97, 421-7

-House Banking approved 3/20/97,


-Senate Banking hearing 2/25/97 (S. Hrg. 105-215)

Credit union trade groups supported this measure.
H.R. 10Senate voted 88-11 to proceed to debate on the bill 10/7Loosens current restrictions on affiliations between banks, securities firms, and insurance companies by creating a new financial holding company structure.-Senate invoked cloture on a

motion to proceed to the bill,

93-0, 10/5

-S. Rept. 105-336 filed 9/18

-Senate Banking Cmte approved

9/11, 16-2

-Senate Banking Cmte hearing 6/17/98

-House passed 5/13, 214-213

-H. Rept. 105-164 (4 parts) filed

between 7/3/97 and 1/28/98

-House Commerce approved

10/30/97, 33-11

-House Commerce FI Sbcmte

approved 10/24/97, 23-2

-House Commerce FI Sbcmte

hearing 6/17/97

-House Banking approved

6/30/97, 28-26

-House Banking hearing 5/7/97

After the banking and insurance agencies called a truce to their decades-long disagreement on financial modernization and announced their joint support for the measure, chances for passage of this legislation seemed better than ever before. However, the announcement came so late in the legislative session that no time remained to work out other issues.

Senators Phil Gramm and Richard Shelby opposed a provision that would have extended CRA to the new financial conglomerates created by the legislation and used parliamentary maneuvers to block its consideration in the Senate. Also, the Administration had issued a veto threat because of Treasury Secretary Rubin's insistence that new financial services offered by banks be conducted in operating subsidiaries of the parent bank rather than by companies affiliated in a holding company structure.

H.R. 4364,

S. 1405


House passed 10/9This legislation would have required the Fed to pay interest on sterile reserves, allowed banks to pay interest on business checking accounts and simplified disclosures under the Truth-in-Lending Act.-S. Rept. 105-346 filed 9/24

-House Banking FI Sbcmte

approved 8/4, 15-7

-Senate Banking approved 7/30

-Senate Banking hearings 3/3, 3/10

Stalled for months after the House Financial Services Subcommittee added a controversial provision exempting most banks from the CRA, there was not time to move the bill once agreement was reached to strike the provisions.

The House-passed version of the bill also included a guarantee of the confidentiality of financial institution examination information and a prohibition on insider profits from credit union conversions.

S. 2392
Public Law 105-271

October 19, 1998

Provides protection from liability for Y2K disclosures.-Senate passed 10/1

-House passed 9/28

NCUA Chairman D'Amours testified in support of this bill at a September 17, 1998, House Banking Committee hearing on Y2K.

S. 1021, H.R. 240
Public Law 105-3xx

October 31, 1998

Strengthens and broadens the applicability of veterans' preference. Creates a uniform redress mechanism for both hiring and RIF complaints and allows appeals to the Merit Systems Protection Board and the U.S. District Court.-House passed 10/8

-Senate passed 10/5

-S. Rept 105-340 filed 9/21

-Senate Veterans Affairs approved

7/28 (hearing 3/24)

-House passed 4/9/97

-H. Rept. 105-40 filed 3/20/97

-House Govt Reform approved


-House Govt Reform Civil Service

Sbcmte approved 2/26/97

Extends veterans' preference to certain nonpolitical positions in the White House, General Accounting Office, and Congress.
H.R. 4756
House passed 407-3, 10/19Calls for national Y2K strategy for critical infrastructure such as telecommunications and power.NoneWhile this measure was very popular, the clock ran out before the Senate could act on it.
H.R. 4151

Identity Theft
Public Law 105-3xx

October 30, 1998

Provides protection against "identity theft" by making it a federal crime to use any name or number to assume the identity of another.-Senate passed 10/14

-House passed 10/7

The Federal Trade Commission is required to establish a tracking and referral system for complaints filed by those who believe they are the victims of identity theft.
H.R. 4321,

S. 2433
-H. Rept. 105-701, Part 2, filed 9/25

-House Commerce approved 9/24

Makes obtaining consumer information from financial institutions under false pretenses a crime.-H. Rept. 105-701, Part 1, filed 8/21

-House Banking approved 8/5

The Federal Trade Commission and the federal financial institution regulators, as well as the States, would have enforcement responsibility.
H.R. 3495,

S. 885

ATM Fees
Offered as amendment to H.R. 10 in Sen. Banking mark-up but defeatedProhibits ATM owners from imposing surcharges on ATM use by customers/members of other financial institutions.-Senate Banking hearing 6/11/97Although Senator D'Amato threatened to attach the ATM fee prohibition to any banking legislation, he lacked the votes because of the unified opposition of every other Banking Committee Republican. Credit union trade groups did not oppose this measure.
H.R. 3003

Exam Protection
Provisions incorporated in House-passed reg relief billGuarantees the confidentiality of financial institution examination information.-Provisions of the bill would likely have been added as a floor amendment to the Senate's reg relief bill, S. 1405, had reg relief come to the Senate floor.Chairman D'Amours wrote to Rep. McCollum in support of this measure and NCUA staff met with both House and Senate staff to express support.
H.R. 2552

CU Audits
Some provisions incorporated in CU Membership Access Act., P.L. 105-219Imposes a range of new audit requirements on credit unions.-None; only two cosponsors.H.R. 2552 went even further than the provisions included in the CU Membership Access Act. For example, the bill would have required CUs to prepare an annual written assertion about CU internal controls and obtain an attestation report on this information.

September 2, 1998

TO: Distribution


RE: Legislative Update

While the major event of 1998 was the enactment of H.R. 1151 into law, PACA has also been monitoring a number of other issues which could still see action this year; highlights are below.

Revolving Loan Fund: For the first time, both the House and Senate versions of the VA-HUD Appropriations bills for fiscal year 1999 contain funding for NCUA's Community Development Revolving Loan Fund. The Senate version, passed July 17, would grant the fund an additional $1 million. The House version, passed July 30, would grant the fund an addition $2 million. The final amount will be determined by the House-Senate conference to resolve differences between the two bills, but it seems extremely likely that the CDRLF will receive additional money in FY 1999.

Bankruptcy Reform, H.R. 3150/S. 1301: The House passed the "Bankruptcy Reform Act" June 10 by a 306-118 vote. Senate Majority Leader Trent Lott (R-MS) has committed to Senate consideration of the Senate version of bankruptcy reform, S. 1301, in September, and debate is expected to start this Friday, September 4. However, the House and Senate bills are different, so any measure approved by the Senate would then have to go back to the House.

Financial Services Industry Restructuring: Despite reports of its demise after the House passed it by only a one-vote margin on May 13, the Senate Banking Committee appears to be headed toward action on this measure which would permit closer affiliations between banks, securities firms and insurance companies. A Senate Banking Committee mark-up is scheduled for Thursday, September 3. Proponents of the bill, chiefly the insurance industry, have suggested that the full Senate could pass the bill shortly thereafter and have the house re-pass it, avoiding a conference. However, the bill faces a veto threat from the Administration because of Treasury Department concerns, so enactment of a bill seems unlikely this year. The restructuring bill has currently has no provisions that will directly affect credit unions.

Regulatory Relief, H.R. 4364/S. 1405: Major provisions of both the House and Senate bills would allow banks to pay interest on business checking accounts and allow the Fed to pay interest on sterile reserves. Provisions that would apply to credit unions include minor changes to disclosures required under the Truth-in-Lending Act. The House version also includes provisions to ensure the confidentiality of financial institution exam information.

The House version of the bill contains one item of interest particular to credit unions. H.R. 4364 would prohibit directors and senior management officials from receiving any economic benefit due to a conversion to a non-credit union for five years. After his efforts to include it in the managers amendment at the Subcommittee mark-up were rebuffed, Ranking Member John LaFalce (D-NY) may offer an amendment during full Committee mark-up to require at least 50% of credit union members vote on conversion to a non-credit unions. Senate Republicans, who amended the conversion section of H.R. 1151, will strongly encourage House Banking Committee Republicans to oppose the measure. Staff for Senate Banking Committee Republicans have indicated to PACA that any provision to increase the voting requirement is unacceptable.

After the Subcommittee approved an amendment offered by Rep. Spencer Bachus (R-AL), which would make CRA inapplicable to all banks under $250 million, the regulatory relief bill is in for a tough ride. Banking Committee Chairman Jim Leach (R-IA) has suggested that any regulatory relief this year will probably come from attaching provisions to other measures such as H.R.10, rather than considering the now-contentious H.R. 4364.

Bank Examination Report Protection Act (BERPA): This legislation, introduced by Rep. Bill McCollum (R-FL) in response to court decisions which call into question the confidentiality of financial institution examinations, would protect exam results from disclosure during lawsuits by codifying and strengthening the examination privilege. Despite its name (and unfortunate acronym), this proposal would protect credit union examinations as well. It was included in the House regulatory relief bill, H.R. 4364; Senator Shelby's staff are strongly considering offering it as an amendment to the regulatory relief bill on the Senate floor.

ATM Fees, S. 885: Senate Banking Committee Chairman D'Amato (R-NY) remains determined to see action on his bill to ban ATM fees assessed to non-customers this year. As all Senate Banking Committee Republicans are opposed to the measure, S. 885 is unlikely to survive Banking Committee action, so Senator D'Amato has pledged to offer S. 885 as an amendment on the Senate floor to any relevant legislation. Likely candidates include the bankruptcy bill, the regulatory relief bill or H.R. 10. Rep. Maurice Hinchey (D-NY) introduced a companion bill, H.R. 3495, in March, but the House is unlikely to act on this legislation unless it is incorporated into another bill by the Senate.

Private Mortgage Insurance, PL 105-216: Signed into law July 29, 1998, this bill would require the cancellation of private mortgage insurance (PMI) upon the borrower's request when a borrower has 20% equity in the property and good payment history. Annual mortgage disclosures must include notice to the borrower of the right to request cancellation, and lenders must automatically cancel PMI at the midway point of amortization if payments are current. NCUA is the enforcement authority for CUs, but the provisions of the bill are not effective until July 29, 1999.

Y2K Disclosure Bills, S. 2392/H.R. 4445: In response to concerns about liability which are hindering communication about Y2K efforts, the Administration has proposed legislation to protect companies and entities that provide information about their Y2K readiness. The Administration proposal would prohibit the use of Y2K disclosures in subsequent lawsuits in order to encourage information sharing about Y2K issues. S. 2392 is identical to the Administration proposal, but H.R. 4445 goes beyond the Administration proposal in providing protection to more activities and making it more difficult to consider Y2K statements in lawsuits and establish liability for statements. The bills will be among the issues discussed at a September 17 House Banking Committee hearing at which Chairman D'Amours will testify.

Member Business Loans: Senator Jeff Sessions (R-AL) may offer an amendment to one of the banking bills regarding member business loans. The amendment would exempt from the MBL cap in PL 105-219 any loan a credit union purchases through a participation agreement, if the loan is to a non-profit entity. This amendment is being promoted by a large church-based credit union in California, which lends to churches for buildings and then sells the loans to other CUs through participation agreements.


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