Advocacy Alert- 03/31/2003

Call to action: Please contact your state legislators regarding Credit Union Study Assembly Bill 1226 (Montanez)

Now is the time to contact your state Senator and Assembly Member and ask them to support AB 1226 (Montanez) which directs the Legislative Analyst to undertake a study of the anticompetitive effects of credit unions and their tax subsidy on community banks in California.

The California Credit Union League will be conducting their Legislative Day in Sacramento on April 8, 2003. They will send hundreds of credit union members to the Capitol to lobby their representatives to vote against AB 1226. Accordingly, it is imperative that you contact your legislator by phone, fax or mail to urge them to support our bill as soon as possible.

The first policy committee hearing for the bill will take place in Assembly Banking Committee. It would be very helpful to send a copy of your letter to the Assembly Banking Committee members identified below. In addition, a sample letter is provided for your information and is available on our website at (http://www.calbankers.com/content/governmentandlegalaffairs_sampleletter.asp); however, be sure to personalize your letter with your own bank's experience with the competitive disadvantage it faces in the marketplace.

Assembly Banking and Finance Committee:
Chair - Patricia Wiggins
Vice Chair - Russ Bogh
Members - Ronald Calderon, Wilma Chan, Ed Chavez, Ellen Corbett, Lou Correa, Guy Houston, Tim Leslie, Cindy Montanez, Tony Strickland, Juan Varga

Regulatory relief legislation on fast track in Congress; government leaders push regulatory restructuring too

As the House Financial Services Committee tees up a regulatory relief package, both its chairman and Sen. Richard Shelby, the Senate Banking Committee chairman, are promoting a restructuring of the regulatory system itself.

The House is considering a virtual carbon copy of its regulatory relief bill from last year. It provides expanded lending and investment authority for both thrifts and credit unions. Non-federally insured credit unions, for example, would be authorized to join Federal Home Loan Banks and credit unions would be permitted to make unlimited loans to religious groups regardless of how the proceeds of the loans were invested. Thrift business lending powers would be expanded, and small business loans would not count at all against limits on business lending. There were reports that the credit union industry, arguing that parity demands it, was seeking an amendment that would increase its business lending powers to the same levels as the bill would provide for thrifts. Interstate branching restrictions that still exist for banks would be virtually eliminated, and a new provision in the bill this year would authorize national banks to be chartered or restructured as limited liability corporations.

The Ackerman amendment, which would have required financial institutions making "adverse" reports to credit reporting agencies to notify their customers, has been eliminated from the bill this year. Another addition to the bill would provide credit unions with the same securities acts exemptions as federal thrifts get under the bill. The House subcommittee was scheduled to hear from regulatory witnesses on the relief bill Thursday afternoon.

Meanwhile, Senator Shelby has indicated in appearances this week before an ABA group in Washington that his committee is likely to take up and pass a regulatory relief bill as well. He also indicated his support for regulatory restructuring, following up on strong expressions of support from FDIC Chairman Powell and House Chairman Oxley.

Ironically, a proposal from Sheila Baer, who was Assistant Treasury Secretary for Financial Institution last year, would combine the OTS with the Federal Housing Finance Board and the Office of Federal Housing Enterprise Oversight. One of the first steps Congress took in dealing with the thrift crisis of the 80's was to separate the regulation of the thrift industry from the regulation of the Home Loan Bank System (and to combine BIF and SAIF at the FDIC). The Baer proposal would recombine these regulatory functions and add regulation of Fannie Mae and Freddie Mae to the mix. Other proposals would combine OTS with OCC. FDIC favors a restructuring that would create a single agency to regulate banking and separate agencies to regulate and supervise securities and insurance.

Chicago Home Loan Bank and others purchase first mortgage pools under new shared funding program; Korsmo to meet with officials of FHLB Boards

Though details of the program have still not been made public, the Home Loan Banks of Chicago, Des Moines and Pittsburgh have purchased the first mortgage-backed securities under a newly-approved program. The mortgages were contributed by subsidiaries of National City Bank of Cleveland and Wells Fargo.

Meanwhile, in what some believe to be an effort to bypass the Federal Home Loan Bank presidents, FHFB Chairman John Korsmo has invited all chairmen and vice-chairmen of the System to a meeting in Washington. He is likely to seek support for a controversial proposal to have the Banks register their equity securities with the SEC.

Treasury strategy: Combine identity protection with FCRA extension

Wayne Abernathy, the Assistant Treasury Secretary for Financial Affairs, indicated last week in a speech before Washington's Exchequer Club that the Administration will seek to package new proposals designed to protect identities with an extension of the pre-emption provisions of the Fair Credit Reporting Act which expire at the end of this year. He called the extension of FCRA "an ideal vehicle" for new identity theft protections the Administration will soon unveil. Abernathy's remarks follow up on a recent speech by Treasury Secretary Snow in which he pledged strong Administration leadership on an effort to extend FCRA. A new coalition has been formed in Washington that is running advertisements in Washington (even at the Capitol Hill metro station), calling for an extension of FCRA. However, Abernathy was cool to the idea of additional federal pre-emptions. He indicated that it might be necessary to improve Gramm-Leach-Bliley-Act privacy notices, but he indicated that attempts to add additional privacy pre-emptions this year might derail efforts to extend the pre-emptions in FCRA.

HUD signals it may change controversial RESPA proposal

HUD Secretary, Mel Martinez, reeling from criticism of a controversial proposal to enable lenders and others to package settlement services in return for a RESPA safe harbor, and from a "friendly" suggestion during a hearing last week from Senate Banking Chairman Shelby that HUD should not "rush," has signaled that HUD may reissue the proposal for comment. Many larger lenders strongly support the proposal, but some have raised concerns that realtors and other unregulated or minimally capitalized entities that the proposal authorizes to provide packaged services might not always be reliable.

Grassroots Update

The following meetings have been scheduled between CBA members and their elected officials. If you would like more information on these meetings, or would like to participate in any of the meetings, please contact Mary Boruff at (916) 441-7377, ext. 207. If you are not available, please consider sending an officer from your bank.

You are welcome to phone in to a grassroots conference call (1-888-903-2663) every Thursday afternoon (4:00 pm - State Legislature / 4:30 pm - House of Representatives) prior to a scheduled district office meeting(s) to discuss CBA's priority issues and to answer any questions you may have regarding meeting with your legislator.

DATE	TIME	LEGISLATOR	LOCATION
March 31	1:45 p.m.	Assembly Member Hannah-Beth Jackson (CBA Facilitator: Mike Jones)	Santa Barbara
April 3	1:30 p.m.	Senator Rico Oller (CBA Facilitator: James Clark)	Farmers & Merchants Bank Elk Grove
April 4	10:30 a.m.	Senator Dede Alpert (CBA Facilitator: Rich Jett)	San Diego
April 4	10:00 a.m.	Assembly Member Ron Calderon * (CBA Facilitator: Rick McGill, Quaker City Bank, Whittier)	Montebello
April 4	11:00 a.m.	Assembly Member Ellen Corbett (CBA Facilitator: Leland Chan)	San Leandro
April 4 ***	10:00 a.m.	Senator Joe Dunn (CBA Facilitator: Mike Jones)	Garden Grove
April 4	1:00 p.m.	Senator Dennis Hollingsworth (CBA Facilitator: Rich Jett)	El Cajon
April 4	11:00 a.m.	Assembly Member Tony Strickland (CBA Facilitator: Shari Skinner, Ojai Valley Bank, Ojai)	Westlake Village
April 10 ***		Assembly Member Darrell Steinberg (CBA Facilitator: James Clark)	State Capitol Sacramento
April 11 ***		Senator Roy Ashburn (CBA Facilitator: Bob Longatti)	Bakersfield
April 11	9:00 a.m.	Senator Liz Figueroa (CBA Facilitator: James Clark)	Fremont
April 11	2:00 p.m.	Assembly Member Gloria Negrete McLeod (CBA Facilitator: Mike Jones)	Montclair
April 11	11:00 a.m.	Assembly Member Fabian Nunez * (CBA Facilitator: Rich Jett)	Los Angeles
April 11	9:30 a.m	Senator Gloria Romero (CBA Facilitator: Rich Jett)	Rosemead
April 11	11:00 a.m.	Senator Jackie Speier (CBA Facilitator: James Clark)	San Mateo
April 16 ***	11:30 a.m.	Senator Denise Moreno Ducheny * (CBA Facilitator: Mike Jones)	Chula Vista
April 17 ***	2:00 p.m.	Congresswoman Zoe Lofgren (CBA Facilitator: Doug White)	San Jose
April 18 **	2:30 p.m.	Assembly Member Lynn Daucher (CBA Facilitator: Rich Jett)	Brea
April 18 **	10:00 a.m.	Assembly Member Manny Diaz (CBA Facilitator: Bob Longatti)	San Jose
April 18	10:00 a.m.	Assembly Member Abel Maldonado (CBA Facilitator: Mike Jones)	San Luis Obispo
April 18	10:00 a.m.	Assembly Member Barbara Matthews (CBA Facilitator: Doug White)	Stockton
April 24 ***	12:00 noon	Senator Jeff Denham * (CBA Facilitator: Doug White)	Modesto
April 25	10:30 a.m.	Senator Jim Battin (CBA Facilitator: Doug White)	Palm Desert
April 25 ***	10:30 a.m.	Assembly Member Sally Lieber * (CBA Facilitator: Leland Chan)	San Jose
April 25	1:30 p.m.	Assembly Member George Nakano (CBA Facilitator: Rich Jett)	Torrance
April 25	10:00 a.m.	Assembly Member Robert Pacheco (CBA Facilitator: Rich Jett	City of Industry
April 25	10:30 a.m.	Assembly Member Pat Wiggins (CBA Facilitator: James Clark)	Santa Rosa
May 14 ***	4:00 p.m.	Assembly Member Darrell Steinberg (CBA Facilitator: James Clark)	State Capitol Sacramento
May 16	10:00 a.m.	Assembly Member Bob Dutton * (CBA Facilitator: Rich Jett)	Rancho Cucamonga
May 16 ***	1:00 p.m.	Assembly Member Tom Harman (CBA Facilitator: Rich Jett)	Huntington Beach
May 16	2:00 p.m.	Assembly Member Jay La Suer (CBA Facilitator: Doug White)	La Mesa
May 16 ***	10:00 a.m.	Assembly Member Keith Richman (CBA Facilitator: John Reardon, Union Bank of California, Santa Clarita)	Granada Hills
May 30	2:00 p.m.	Senator Dick Ackerman (CBA Facilitator: James Clark)	Tustin
May 30	3:00 p.m.	Assembly Member John Campbell (CBA Facilitator: James Clark)	Irvine
May 30	11:00 a.m.	Assembly Member Dario Frommer (CBA Facilitator: Ray Dumser, Verdugo Banking Company, Glendale)	Glendale
May 30 ***	2:00 p.m.	Senator Sheila Kuehl (CBA Facilitator: Don Robinson, Bank of the West, Los Angeles)	Los Angeles
May 30 ***	10:00 a.m.	Assembly Member Sarah Reyes (CBA Facilitator: Bob Longatti)	Fresno
June 13	10:00 a.m.	Assembly Member Ed Chavez (CBA Facilitator: Rich Jett)	City of Industry
June 13	10:00 a.m.	Assembly Member Rick Keene (CBA Facilitator: Steve Johnson, Butte Community Bank, Chico	Chico
June 20 ***	10:00 a.m.	Assembly Member Christine Kehoe (CBA Facilitator: Mike Jones)	San Diego
June 20	10:00 a.m.	Assembly Member Carol Liu (CBA Facilitator: Rich Jett)	Pasadena
June 27 ***	2:30 p.m.	Assembly Member Paul Koretz (CBA Facilitator: Tom McCullough, First Regional City, Century City)	West Hollywood

*          Freshman legislator

**        Meeting rescheduled – new time

***      Meeting rescheduled – new date/time