Congress has placed financial service providers on the defensive during the past four years. But with an election scheduled for this year, the political pressures will be even greater.
This month's special U.S. Senate election in Massachusetts and early primaries in large and important states such as Illinois and Texas (February and March, respectively) are causing political calculations to kick into the legislative process earlier than in previous years.
For one of the credit unions' top priorities?raising the cap on member business lending?the political pressures could help get a bill passed. Lawmakers are under pressure to show that they are doing something to encourage businesses to create more jobs, and that's why CUNA and NAFCU think this may be their best opportunity to advance the legislation.
"We're framing this as way to help create 108,000 new jobs at no cost to the taxpayers. That makes it a win-win for all involved, especially when many of them [lawmakers] have to face the voters. That's a win-win,'' said CUNA Senior Vice President of Legislative Affairs John Magill.
The House didn't include the language in the bill it passed last month, but the Senate is still working on its version of the measure.
House Financial Services Committee Chairman Barney Frank said he might support the move in part because banks aren't doing enough business lending. But such a decision would set up a battle between banks and credit unions, which lawmakers like to avoid in an election year.
ABA Economist Keith Leggett in his blog "Credit Union Watch" telegraphed his group's argument by noting that giving credit unions additional lending capabilities won't "increase the size of the business loan pie," because "credit unions would continue to compete for the same customers."
Voter disgust with the actions of big banks will likely shape the Senate debate on regulatory restructuring.
The House passed a comprehensive bill on the subject in December, but the Senate is starting from scratch.
"People are still angry and concerned about the economy. They are ticked off that some of the big guys were bailed out. This will hopefully cause Congress to want to enact reforms that won't hurt those who didn't cause the crisis, like credit unions," said NAFCU Executive Vice President of Government Affairs Dan Berger.
Lobbyists for both CUNA and NAFCU said the fate of the proposed Consumer Financial Protection Agency, which was part of the House bill, is not at all clear. Senate Republicans unanimously oppose the provision and that chamber's rules give the minority power extensive powers to kill legislation.
The Senate is likely to take action on the measure during the second quarter of 2010.
Both trade associations said there could be congressional action to regulate interchange, limit overdraft fees and mandate that credit unions comply with the Community Reinvestment Act.
There is a greater chance for action on those issues in the House, where legislation can be passed along party lines.
Berger noted that Frank "has a strong philosophical belief that all financial institutions should have to comply with the CRA and that could drive action in that chamber. But I've heard no rumblings about the issue in the Senate."
CUNA and NAFCU both plan to be active in this year's elections, which feature an array of high profile federal and state contests. All 435 House seats are up this November, as are 36 of the 100 Senate seats and 37 of 50 governorships.
CUNA Senior Vice President of Political Affairs Richard Gose said his group's political action committee, which was one of the top 10 PACs in the 2008 cycle, hopes to match its performance or improve on it.
He estimated that between 60 and 70 House and Senate races will be the most competitive contests next year. Berger said he expected NAFCU's PAC will also spend about as much as it did in the last cycle and will also use its members to volunteer in the races of credit union allies.