A bill to broaden the ability of credit unions to apply for Federal Home Loan Bank membership, passed the House Financial Services Committee 55-0 and now goes to the House floor where it will likely gain wide support.
The Credit Union National Association supports the measure because it would put the country's privately insured credit unions on the same footing as their federally insured counterparts where it come to membership in the Federal Home Loan Bank system.
“There are 130 credit unions that don't have Federal deposit insurance,” said Pat Keefe, senior vice president of the Credit Union National Association, though almost all have private insurance. “This gives those 130 access to the Federal Home Loan Banks. It will help their liquidity and to expand their mortgage lending.”
The bill states that a privately insured credit union will be considered to have met the eligibility criteria for federal home loan bank membership if, six months after its application date, the state supervisor has failed to act upon the application.
CUNA and the state credit union leagues and credit unions across the country supported the measure, hoping that when it becomes law, it will potentially provide significant relief for credit unions from their regulatory burden.
In a markup session Thursday for the FHLB bill, House Financial Services Committee Chairman Jeb Hensarling, R-Texas, said approval of H.R. 3584 would correct a "drafting oversight" that occurred years ago.
The new bill, introduced by U.S. Rep. Steve Stivers, R-Ohio, amends the Federal Home Loan Bank Act to authorize privately insured credit unions to become members of an FHLB.
CUNA says the bill creates no additional risk of loss to any FHLB or to taxpayers.
In the Thursday committee markup session Stivers underscored that there is only $11 billion total in privately insured credit union assets.
U.S. Rep. Joyce Beatty, D-Ohio, a bill co-sponsor, said the measure only affects credit unions in nine states and they represent less than 2% of all credit unions in the nation.