Senate in Final Stages of Regulatory Overhaul
At press time, the Senate was putting the final touches on the bill to change the way financial services are regulated.
Lawmakers were wrangling mostly on issues that were not directly relevant to credit unions-such as the regulation of derivatives-and that was preventing the resolution of other parts of the bill.
CUNA and NAFCU were waiting to find out if lawmakers will change a provision in the bill that they say would prevent unions from offering wire transfer services. The associations say that it would hurt U.S.-based financial institutions because it would classify certain transfer services-such as Fedwire and ACH-as remittance services and make institutions that provide them liable for disclosing all costs up front. The trades, and their allies in the banking community, maintain that because credit unions don't control the entire transaction process, they may not know the total transaction costs at the time the member initiates the transaction.
The trades and the NCUA were waiting to find out if the chairman of the NCUA will be included in the council of regulators that could make decisions on systemic risk and hear appeals of rules by the new consumer financial regulator.
Previously, credit unions and suffered a big setback when a bipartisan majority in the Senate voted 64-33 to pass an amendment to the regulatory overhaul bill that will restrict interchange fees.
The amendment, sponsored by Senate Majority Whip Richard Durbin (D-Ill.), authorizes the Federal Reserve to ensure that debit card fees are "reasonable and proportional" in relation to processing costs. It excludes credit unions and community banks with assets of less than $10 billion. It also allows merchants to set a minimum or maximum amount for each transaction and let them offer additional discounts for using a certain type of card or cash.
The amendment was supported by 49 Democrats and 17 Republicans; three members did not vote. The Senate has 57 Democrats, 41 Republicans and two independents who caucus with the Democrats for purposes of organizing the chamber.
There is no similar amendment in the bill that was passed by the House last year, so the differences would have to be resolved in a conference committee.
Another difference between the House and Senate versions is the set up of the new agency aimed at regulating consumer financial products.
Under the House-passed version, the regulator is an independent agency.
The Senate bill houses the agency inside the Federal Reserve headed by a presidential appointee.