The Obama administration and House Financial Services Committee Chairman Barney Frank (D-Mass.) reversed course last week on key provisions of a measure creating a new regulatory agency on financial products but credit unions could still face additional compliance costs.Frank unveiled a summary of proposed revisions to the original measure, which included the elimination of the restriction on the sale of certain financial products and the inclusion of the NCUA on the board of the proposed Consumer Financial Protection Agency.The original measure had mandated that financial institutions only sell "plain vanilla" products such as 30-year mortgages. Credit unions and other financial service providers had objected to that provision and said it would inhibit their ability to provide the products that are most appropriate for their members or customers. Frank's proposal would also exempt retailers and retirement plan providers from the purview of the new agency.Treasury Secretary Timothy Geithner praised Frank's changes. "There has been a lot of concern that if you invest the government with the ability to decide what's appropriate here and there, that will lead to less competition and choice," Geithner told the House Financial Services Committee last Wednesday. "The chairman's proposals, which I've had a chance to quickly read, provides a better balance of choice and protection."Frank said he hoped his panel would begin marking up the measure next month. Under the revised proposal, credit unions would still be placed under the purview of the new agency, and they would have another layer of regulation.In testimony before the Small Business Committee, representatives of CUNA and NAFCU said the agency could limit credit unions' ability to serve their members."As the only not-for-profit institutions that would be subject to CFPA, credit unions would stand to get lost in the enormity of the proposed agency," said Price Choppers Employees FCU President/CEO Dawn Donovan, who testified on behalf of NAFCU.CUNA Senior Vice President Bill Hampel said the agency should be able to preempt state regulations so that there is "regulatory simplicity," and credit unions aren't subject to overlapping or contradictory regulations. But in a statement to the House Financial Services Committee, NASCUS urged lawmakers not to allow such preemption."The dual chartering system is threatened by the preemption of state laws and the push for a more uniform regulatory system.It is also important that new policies do not squelch the innovation and enhanced regulatory structure provided by the dual chartering system."On the Senate side, Banking Committee Chairman Christopher Dodd (D-Conn.) said he plans unveil legislation that would consolidate all bank regulators into one agency-an idea both the Obama administration and Frank oppose-but lobbyists for CUNA and NAFCU said they had been assured that Dodd's bill would retain the NCUA as an independent agency.–[email protected]