House Begins Work on CFPA
The amendment, sponsored by Reps. Brad Miller (D-N.C.) and Dennis Moore (D-Kan.), would require those institutions to comply with regulations that the agency issues, but the examinations would be done by their safety and soundness regulators, although the CFPA could have someone on the examination team.
Miller told his colleagues that he was introducing the amendment because small banks and credit unions mostly didn't cause the problems that held to the nation's economic downturn and many of them are concerned about the existing regulatory burden.
At press time, the committee had yet to debate other key amendments to the legislation creating the agency, including one to exempt federally chartered financial institutions from certain state laws.
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Miller's views on the subject have changed. During an interview following an appearance at NAFCU's Congressional Caucus, he said that exempting credit unions was unlikely because it would weaken the legislation.
The community bankers had been among the strongest opponents of the new agency, while CUNA and NAFCU had taken a more nuanced approach, saying they don't oppose the agency but there should be exceptions made for credit unions because they are already overregulated.
It is unclear if the Obama administration would agree to a provision if passed. Assistant Treasury Secretary Michael Barr said, "There's got to be the core principal that the Consumer Financial Protection Agency can examine and enforce and write rules for banks and nonbanks, regardless of size."
Rep. Melissa Bean (D-Illinois) is proposing an amendment to exempt federally chartered banks and credit unions from additional state regulations. This so-called "preemption'' measure has been endorsed by CUNA and NAFCU as a way to ease the regulatory burden on credit unions.
Bean has said the amendment is needed because "if you have 50 different regulatory regimes that an institution has to comply with, every new offering they make, every new service they want to provide, there [would be] 50 different sets of forms with 50 different sets of training."
Consumer groups oppose the amendment and say it wouldn't give state and local governments enough authority to fight abusive practices.
Credit unions have redoubled their lobbying on the CFPA. They raised the issue during visits with members of Congress in Washington at NAFCU's Congressional Caucus and CUNA's Hike the Hill.
Republican lawmakers who addressed NAFCU's Congressional Caucus were greeted with enthusiastic applause when they criticized the proposed agency.
During the committee's opening meeting last Wednesday, Rep. Jeb Hensarling (R-Texas) said it would create a "brand new, large draconian federal agency with new sweeping powers'' to regulate 15% of the economy.
While the measure is expected to pass in some form in the House, its fate is less clear in the Senate. It is unclear if there is enough support there to attain the 60 votes needed to end a Republican-led filibuster.
Though most Democrats have expressed support for the measure, some moderates and conservatives have said they are leery of adding to the regulatory burden of financial institutions.
House Financial Services Committee Chairman Barney Frank (D-Mass.) already scaled back the original proposal in the wake of those concerns. Frank and other Democrats have cited strong public support for the agency.