Capital Access for Small Community Financial Institutions Act of 2014

Madam Speaker, I thank my friend, Mr. Royce of California, for his remarks, and I yield myself such time as I may consume. As I say: ``Two Eds are better than one.'' So we will start with that.

This bill is designed to create parity between certain accounts held at credit unions and those held at FDIC insured banks.

As a preliminary matter, I introduce into the Record six letters.

The first is a letter dated September 17, 1996, signed by Richard Schulman, the associate general counsel of the National Credit Union Administration.

Second is a letter dated October 8, 2008. That is from Sheila A. Albin, associate general counsel.

A letter dated May 6, 2014, from the American Bar Association, signed by the president, James R. Silkenat.

A letter dated May 5, 2014, signed by Brad Thaler of the National Association of Federal Credit Unions.

A letter dated May 5, 2014, signed by Bill Cheney, president of the Credit Union National Association.

And finally, a letter signed by Scott Earl from Mountain West Credit Union Association.

September 17, 1996.

Re Interest on Lawyers Trust Accounts (``IOLTA''), (Your

August 22, 1996, Letter)

Elyse E. Rogers, Esq.,

Mette, Evans & Woodside,

Harrisburg, PA.

Dear Ms. Rogers: In your letter, you requested our opinion

as to whether Pennsylvania attorneys can maintain client

trust funds, in association with Pennsylvania's IOLTA

Program, in share draft accounts at credit unions regulated

by the National Credit Union Administration. As discussed

below, the answer depends upon the credit union membership

status of the clients whose funds are contained in the IOLTA

account.

Specifically, the bill extends insurance coverage to Interest on Lawyer Trust Accounts, as Mr. Royce said, and I will call those ``trust accounts or similar escrow accounts,'' those that are held at credit unions that are otherwise fully insured at FDIC-insured banks up to $250,000.

As a practicing lawyer for 25 years, I know Lawyer Trust Accounts in Colorado as COLTAs, or Colorado Lawyer Trust Accounts, which we established for our clients so that interest can be earned for various charities that might exist. For instance, legal aid which provides assistance to veterans or people involved in domestic violence situations.

Under our bill, if a credit union were ever to fail and needed to be resolved, then the client funds held in an escrow account would be insured and thus protected, regardless if the beneficiary is a member of the credit union or not. In my instance, if I had a trust account which had a number of different clients, some clients might be members of the credit union, others are not. Only those under current law that are members of the credit union are covered by share insurance. Those that are not members of the credit union are not covered. So we are trying to stop this differentiation between banks and credit unions.

Currently, the NCUA's regulations and legal opinions as established in 1996, which is one the letters we are introducing today, do not allow Federal deposit insurance equal to the coverage provided by the FDIC for accounts held by credit union members that contain funds owned by one or more nonmembers.

IOLTA accounts often contain funds from many clients, some of whom may not be members of the particular credit union where the attorney or the escrow agent has opened the account.

With an IOLTA account or other escrow accounts held in trust, under current law, the membership status of the client/beneficiary, and not of the agent or the attorney, is determinative as to whether an IOLTA account can be properly maintained. In order for a law firm or a real estate escrow company to maintain an IOLTA account at a credit union, either all of the clients whose funds would be deposited must be members of that credit union or the credit union must be designated as a low-income, which would allow it to accept nonmember funds.

Many States or bar associations require the funds in an IOLTA to be fully insured, meaning a lawyer may not be able to use a credit union for these accounts if they can't be fully covered.

It is important to note that this legislation should not be seen as an authorization to take nonmember deposits beyond the current regulatory limits, nor should it be seen as an authorization for the NCUA to increase those thresholds.

What we have before us today is a negotiated compromise. The language as introduced in the manager's amendment narrowly defines which accounts will be extended Credit Union Share Insurance Fund coverage. This includes IOLTA/COLTAFs and other escrow accounts held in trust.

I thank my friend from California for bringing this legislation. It is time that there be parity and that all of the clients be covered by the Share Insurance Fund.

I urge quick passage of H.R. 3468, the Credit Union Share Insurance Fund Parity Act.

I yield back the balance of my time.

Madam Speaker, I would like to thank Ranking Member Waters for all of her support and her leadership.

Madam Speaker, I rise today in strong support of H.R. 3584, the Capital Access for Small Community Financial Institutions Act, as amended.

Today I stand here, joining my colleague from Ohio, Congressman Steve Stivers, in support of final passage of this bipartisan legislation. I thank the gentleman for introducing this bill on which I partnered as the lead Democrat. In a show of bipartisanship, we were able to work together to have the legislation unanimously reported out of the Financial Services Committee, as it is certainly worth noting again, with a vote of 55-0.

Madam Speaker, H.R. 3584, if enacted, would permit privately insured credit unions to apply for membership in the Federal Home Loan Bank system. It would not, however, mandate that these privately insured credit unions become members of the Federal Home Loan Bank. Currently, out of roughly some 6,000 credit unions across the country, there are 132 privately insured credit unions operated in nine States. These States include Alabama, California, Idaho, Illinois, Indiana, Maryland, Nevada, my home State of Ohio, and Texas.

In particular, this bill would improve access to home mortgage loans for members of the three privately insured credit unions that are based in my Third Congressional District of Ohio. H.R. 3584 is an extremely important piece of legislation for these privately insured credit unions because it will help give members and businesses greater access to credit in a tight credit market.

Additionally, this legislation would also benefit the exclusive insurers of privately insured credit unions across the country, which are based in central Ohio, just north of my congressional district, which provide employment for many Ohioans.

In addition, Madam Speaker, in order to ensure the best-drafted bill, Congressman Meeks and I offered amendments that were accepted during the committee markup.

My amendment does two things. First, it removes any language referencing the National Credit Union Administration from the text of the legislation--clarifying that this legislation would not grant any supervisory jurisdiction to the NCUA over privately insured credit unions.

Secondly, it created a Government Accountability Office study and report to Congress on the adequacy of insurance reserves held by the private insurer of these credit unions and also on the compliance of these credit unions with Federal regulations requiring consumers to receive disclosures explaining that such credit unions are privately-- not federally--insured.

These changes were supported by the NCUA and unanimously by the entire Financial Services Committee.

Indeed, H.R. 3584, the Capital Access for Small Community Financial Institutions Act, as amended, comes to the floor today because of the efforts of many members of the Financial Services Committee who worked to advance the legislation through regular order of the committee.

I would urge support of H.R. 3584 because this bipartisan legislation is good policy, it is good for small credit unions, and it is an easy and effective way to demonstrate bipartisan, nationwide support for local communities and businesses.

Madam Speaker, I believe this legislation is a perfect example of the type of regular order, committee-driven action that we should use as a template for bipartisan cooperation in the House, and which, if enacted, would bring real benefits to the national housing markets. I urge all of the Members to vote ``yes'' on H.R. 3584, as amended.

Madam Speaker, I would thank the gentlelady from West Virginia for her support.

I rise in support of H.R. 3584, the Capital Access for Small Community Financial Institutions Act. This bill simply makes a statutory change that would allow nonfederally insured credit unions the right to apply for membership with the Federal home loan banks. It does not guarantee that they would receive membership. They would have to go through the membership application like everyone else. Similar legislation passed the House in 2006, with a bipartisan vote of 415 for, none against.

Purchasing a home is part of the American Dream, and this bill will help these small credit unions be able to make more mortgage loans as they use the Federal Home Loan Bank for liquidity and help more people live the American Dream. This bill would help those credit unions be able to have the liquidity that they don't have today.

The Federal Home Loan Bank, which was established in 1932, has been an important part of credit and liquidity for mortgage lending for the past 80 years for most Main Street institutions. Unfortunately, 132 small credit unions don't have that support right now. While most large and small institutions who are members of the Federal Home Loan Bank are able to use it every day for liquidity and to serve their customers, these 132 small credit unions in nine States with assets that total about $11 billion are left out because of a glitch in the law.

There will not be any additional risk to the Federal Home Loan Banks as a result of this. No more than $4 billion would be pledged, probably, as a result of this. So there is no real concentration risk.

I do want to thank Mr. Meeks from New York for his amendments that helped strengthen the bill. And while these credit unions don't have, I think, much risk to the institution, I think Mr. Meeks' amendments will ensure that the Federal Home Loan Bank is never put at risk by the authorizing language in this legislation.

You know, credit unions didn't have Federal insurance until the 1970s, and many small credit unions have continued to have private insurance and remain State-regulated. Those are the institutions we are talking about today, and there is precedent for institutions like them to join the Federal Home Loan Bank. So I believe that it is appropriate to allow them to not be discriminated against and allow them to use the Federal Home Loan Bank and ensure that they can serve their customers the same way other Main Street banks and credit unions can.

Again, this bill does not guarantee that any institution will become a member of the Federal Home Loan Bank; it simply gives them the ability to apply.

I want to thank Mrs. Beatty from Columbus, Ohio, and Ranking Member Waters for their support in the Financial Services Committee. I want to thank Mrs. Capito and Mr. Meeks for working with me on this bill.

As you heard, this bill passed the Financial Services Committee by a vote of 55-0. I would ask my colleagues to support this legislation and correct an oversight that doesn't allow these institutions to use the Federal Home Loan Bank and doesn't allow many of their customers to live the American Dream. So hopefully we can correct that today by supporting this.

Madam Speaker, I move to suspend the rules and pass the bill (H.R. 3468) to amend the Federal Credit Union Act to extend insurance coverage to amounts held in a member account on behalf of another person, and for other purposes, as amended.

Madam Speaker, I ask unanimous consent that all Members have 5 legislative days in which to revise and extend their remarks and to include extraneous materials on the bill, H.R. 3468.

Madam Speaker, I yield myself such time as I may consume.

I rise in strong support of the Credit Union Share Insurance Fund Parity Act. This is a bill which passed out of the Financial Services Committee on a voice vote. This is bipartisan, commonsense legislation. The bill is supported by the Credit Union National Association, the National Association of Federal Credit Unions, the California and Nevada Credit Union Leagues, as well as the American Bar Association.

What this bill does is to ensure that there is parity in the treatment of trust accounts covered by the National Credit Union Share Insurance Fund and the Federal Deposit Insurance Corporation, the FDIC.

The Financial Services Committee has heard the testimony of credit unions from West Virginia to Texas that:

There is no public policy reason for deposit insurance

purposes to distinguish credit union interest on lawyer trust

accounts (IOLTAs) from those insured by FDIC. It is essential

for the NCUA's share insurance fund to be treated identically

in order to maintain parity between the two Federal insurance

programs.

Specifically, the bill amends the Federal Credit Union Act to require that pass-through share insurance coverage be provided when a credit union member holds funds on behalf of a nonmember in an IOLTA or other similar account.

Unlike FDIC coverage, currently the National Credit Union Administration treats funds held by credit union members on behalf of those who are not federally insured credit union members as not covered by the National Credit Union Share Insurance Fund. This has created, of course, a disparity in coverage, specifically when looking at IOLTAs and prepaid debit master accounts.

Part of the mission of credit unions from their very beginning has been to reach out to the community around them, especially to reach out to the underserved. Maintaining a strong commitment to the IOLTA community and removing a barrier to greater participation sustains that very mission.

I urge my colleagues to support this bill, a bill which corrects a technical disparity between the way trust accounts are federally insured at credit unions and at banks.

I look forward to the statement of the other Ed, the gentleman from Colorado, my friend, who has been a champion of this important bill.

I reserve the balance of my time.

Madam Speaker, I yield back the balance of my time.

Madam Speaker, I move to suspend the rules and pass the bill (H.R. 3584) to amend the Federal Home Loan Bank Act to authorize privately insured credit unions to become members of a Federal home loan bank, and for other purposes, as amended.

Madam Speaker, I ask unanimous consent that all Members have 5 legislative days within which to revise and extend their remarks and submit extraneous materials for the Record on H.R. 3584, as amended, currently under consideration.

Madam Speaker, I yield myself such time as I may consume.

I would like to thank the gentleman from Ohio (Mr. Stivers) and the gentlewoman from Ohio (Mrs. Beatty) for their efforts in drafting the legislation before us this afternoon.

The Capital Access for Small Community Financial Institutions Act is bipartisan legislation that passed the House Financial Services Committee by a vote of 55-0 earlier this spring. This bill will provide meaningful regulatory relief for privately insured credit unions by allowing them to become members of the Federal Home Loan Bank system.

There are approximately 130 privately insured credit unions, with nearly $13 billion in assets in nine States across the country. These credit unions currently cannot join the Federal Home Loan Bank system, which provides an additional source of mortgage funding for its members. Allowing privately insured credit unions to join the Federal Home Loan Bank system will allow these credit unions to increase the availability of mortgage credit in the communities that they serve.

I commend the office for identifying this inequity and putting forth this legislation. This issue is not new. Similar provisions were included in the previous regulatory relief measures that passed the House with overwhelming support.

I urge my colleagues to support this legislation, and I reserve the balance of my time.

Madam Speaker, I would now like to yield such time as he may consume to the gentleman from Ohio (Mr. Stivers), the author of this bill.

Madam Speaker, I have no further speakers. I am prepared to close, so if the gentlelady would like to close, then I will follow.

I want to thank both the sponsors, as well, and the committee chair and Ms. Waters for her work on this bill. I echo her sentiments. I would like to urge support and yield back the balance of my time.