FOR IMMEDIATE RELEASE                   March 15, 2007           

Contacts: Gretchen Wintermantel (Kanjorski) - (202) 225-6511
              Greg Keeley (Royce) - (202) 225-4111

Kanjorski, Royce Unveil Bill to Enhance Credit Union Oversight and Powers
New CURIA will allow credit unions to better serve their 89 million members

WASHINGTON - Congressmen Paul E. Kanjorski (D-PA) and Ed Royce (R-CA), two of the most senior Members of the House Financial Services Committee, today unveiled a revised bill that will enhance the quality of service that our nation's credit unions provide.

Often referred to by its acronym of CURIA, the new Credit Union Regulatory Improvements Act of 2007 [H.R. 1537] combines a series of regulatory enhancements that will allow credit unions to operate more effectively and efficiently. Specifically, CURIA modernizes credit union net worth standards; advances credit union efforts to promote economic growth; and modifies credit union regulatory standards by eliminating unnecessary, burdensome and outdated regulations, as well as making other needed reforms to credit union oversight and governance.

"We developed the new CURIA to address concerns raised by leaders in the credit union community and others," noted Congressman Kanjorski. "Previously, only some credit unions could expand into underserved areas. The new bill would allow all credit unions to operate in such places enabling them to assist in community revitalization and economic renewal efforts."

The new version of CURIA updates current law to allow all types of credit unions to expand their fields of membership in order to better serve underserved areas. The bill also unifies and strengthens the definition of an "underserved area" within the Federal Credit Union Act.

"The new CURIA is a comprehensive bill that will help credit unions to provide better services to their 89 million members," added Congressman Royce. "CURIA's improved safety-and-soundness provisions are of the utmost importance to me. Based on the recent recommendations of the federal credit union regulator, these enhanced risk-based and prompt corrective action standards will ensure the efficient allocation of capital, while protecting taxpayers."

CURIA improves upon similar bipartisan legislation introduced in the 109^th Congress in the area of credit union capital standards. In order to make these standards comparable to those now in place for FDIC-insured financial institutions, the new CURIA implements a risk-based capital system for credit unions. The bill's provisions establish risk-based capital requirements and revise the minimum capital standards for credit unions. These changes are based on recent recommendations by the National Credit Union Administration.

Like the prior legislation, the new CURIA slightly raises the arbitrary cap on member business lending by credit unions imposed by Congress during consideration of the Credit Union Membership Access Act of 1998.

The new CURIA would also reform credit union conversion standards in several ways. First, it would increase the minimum member participation requirement in a vote to approve a conversion to 30% of the membership. It would also require a credit union considering a conversion to hold a general membership meeting at least 30 days prior to sending out any ballots. It would additionally bar an insured credit union proposing to convert from using or providing any incentive in any form of prize raffles, contests, giveaways, or other voting incentives in connection with the member vote on conversion.

"Credit union members should have more of a say in whether the institution converts to a mutual savings bank. The new CURIA will work to allow for more notice of and help ensure that a conversion vote reflects the real interests of credit union members," added Congressman Kanjorski.

"As a long time credit union executive, I know first-hand that credit unions exist exclusively to serve their members." said Mike Connery, President/CEO of United Nations Federal Credit Union in Long Island City, NY. "CURIA is a vital piece of proposed legislation that will help allow my credit union to continue to serve the needs of our members in this increasingly complex and ever-changing world of financial services. This will, in turn, enable us to offer useful, sound, and responsible financial products to future generations of credit union members. The entire credit union community is once again grateful for the leadership of Representatives Kanjorski and Royce on behalf of 89 million credit union members like myself."

A bipartisan group of ten Members joined Congressmen Kanjorski and Royce to introduce the improved bill, signaling that momentum for the new CURIA is already building. The attached summary provides further details about the comprehensive bill's many elements.

Congressman Royce concluded, "In the last Congress, similar legislation garnered the support of 126 Members of Congress. The new CURIA is greatly improved and builds upon recommendations made by many experts, including credit union regulators and executives. We therefore hope to get even greater support in the 110^th Congress for the new CURIA and enact this important bipartisan legislation into law."

*** Editor's Note: See attached one-page summary for specific details of H.R. 1537. ***

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Summary of the Credit Union Regulatory Improvements Act of 2007

The Credit Union Regulatory Improvements Act of 2007 (H.R.1537) consists of three titles that (1) modernize credit union capital and net worth standards, (2) advance credit union efforts to promote economic growth, and (3) make needed modifications to credit union activities, governance, and oversight.  The bill is often referred to by its acronym - CURIA.

Capital Modernization

The first title of CURIA would update current capital requirements for credit unions.  The title incorporates the net worth and Prompt Corrective Action (PCA) reform proposals of the National Credit Union Administration (NCUA), the federal regulator responsible for the safety and soundness of the credit union system.  In an April 2005 report, NCUA determined that the PCA system created by Congress in the 1998 Credit Union Membership Access Act was too inflexible and that a more fully risk-based system would both foster healthy capitalization levels and encourage more effective capital management.

CURIA would replace the current "one-size-fits-all" leverage capital requirement for credit unions with a more rigorous two-part net worth structure that would more closely monitor actual asset risk.  The revised credit union capital/PCA structure would incorporate the relevant international risk-based standards for BASEL I and IA financial institutions and closely resemble the current risk-based capital standards for FDIC-insured banks and thrift institutions.

Economic Growth

The second title of CURIA would help America's credit unions promote local economic growth by providing for modest expansion in credit union business lending.  The title would increase the 12.25% of assets limit on credit union business lending put in place by Congress in 1998.  A 2001 Treasury study found that credit union business loans are "generally smaller and fully collateralized" and tend to more closely resemble consumer loans rather than traditional business loans.  The study concluded that business lending "is a niche market" for credit unions that presents no threat "to the viability or profitability on business lending by other insured depository institutions."  In response, CURIA would replace the arbitrary 12.25% business lending cap with a higher 20% of total assets limit, which is comparable to the current limit on non-real estate commercial lending for thrift institutions.

The title also includes three provisions to permit credit unions to extend services to areas with high unemployment and below median incomes that are generally underserved by other depository institutions.  It would reverse a recent NCUA rule change to restore the ability of all credit unions to expand their membership to designated underserved areas.  It would permit a credit union with offices in an underserved area to lease excess space to other commercial businesses.  It would also expand the criteria for determining eligible underserved areas.

Regulatory Modernization

The final title of CURIA would provide credit unions with limited relief from certain specific outdated regulatory burdens and make other necessary changes to the credit union regulatory system.  Among other things, CURIA would provide NCUA with increased flexibility in setting maximum loan terms and interest rates, increase credit union investments in credit union service organizations, allow limited investments in securities, improve credit union governance, and increase credit union conversion voting requirements.