(Artwork: Long Island Bankruptcy Blog)
Washington's two main trade associations representing credit unions are at odds over a controversial bill under tense negotiations in the Senate.
The Credit Union National Association (CUNA) and National Association of Federal Credit Unions (NAFCU) have taken different positions on a bill that would empower judges to rewrite the principal and interest rate payments of home mortgages.
After passing the House in March, the bill, known as "cramdown" in the industry, has been stalled in the Senate amid strong opposition from the industry. Senate Majority Leader Dick Durbin (D-Ill.) has engaged in weeks of negotiations with a handful of banks and the credit union associations to strike a compromise, but they have yet to settle on a deal. The credit unions' differences could further derail the negotiations.
On Wednesday morning, NAFCU's board of directors voted unanimously to oppose a set of draft principles for a compromise bill that has been discussed between Durbin, JPMorgan Chase & Co., Wells Fargo, Bank of America and CUNA. NAFCU had been in some of the earlier discussions as well.
By Wednesday afternoon, CUNA slammed NAFCU for the opposition. "This is not the time to merely walk away; there is too much at stake for credit unions," said CUNA President and Chief Executive Dan Mica in a statement.
NAFCU President Fred Becker had written to Durbin that the association's directors had questions over how the bill would affect subordinate liens and private mortgage insurance contracts. "Unfortunately, at this time, there do not appear to be details available on these important issues," Becker wrote. "I should note that this does not mean we oppose your efforts to get to a compromise."
Mica said CUNA remains in "good faith negotiations" and "we believe we are very close to acceptable resolutions on the two issues mentioned by NAFCU."
"NAFCU is continuing its efforts to work towards a compromise agreement," the association said in a statement. "Credit unions did not cause this crisis and we continue to support a bill that would be limited in scope to subprime or Alt-A (nontraditional) mortgages, an approach that the credit union industry and others had agreed to last year.
"NAFCU looks forward to an ongoing dialogue with Senator Durbin and his staff regarding bankruptcy legislation."