The Senate last Thursday overcame strong Republican opposition and passed comprehensive regulatory overhaul legislation 60 to 39. All but one of the 58 Senate Democrats supported the measure, and all but three of the chamber's 41 Republicans opposed it. The House had passed the measure on June 30.
Now comes the even harder part.
Because the bill will touch on all sectors of the financial system, policy experts and credit union specialists are still working out the implications for credit unions.
The areas of the legislation likely to have the greatest impact on credit unions are the creation of the new Consumer Financial Protection Bureau and the granting of the power to regulate interchange fees to the Federal Reserve.
The CFPB, which will be housed in the Fed, is mandated by the bill to issue at least 24 sets of rules, according to an analysis by the law firm of Davis Polk & Wardwell. All credit unions have to comply with the bureau's rules and regulations, but the bureau itself will only handle the enforcement at credit unions with assets of more than $10 billion. Enforcement at all other credit unions will be handled by the NCUA.
Former NCUA Board Member Geoff Bacino said the new rules will increase compliance costs and cause a realignment of responsibilities at many credit unions.
"There will be a range of additional things they will have to do to comply and there is no doubt that the NCUA will be enforcing the rules closely," he said. "Because of the additional rules, the compliance people and internal auditors will be even more important cogs in the credit union machine."
The CFPB will assume the consumer protection functions of most existing government agencies and is expected to draw personnel from those agencies.
John McKechnie, NCUA director of public and Congressional affairs, said it remains to be seen how many NCUA employees will go to the bureau. The agency created an Office of Consumer Protection at the beginning of this year with 33 full-time equivalent employees.
Davis Polk estimates that the federal government will issue approximately 243 new sets of rules, most of them coming from the Securities and Exchange Commission and the Commodities Futures Trading Commission.
In addition, the law requires 67 one-time studies and 22 additional periodic reports.
The path to passage was rocky at times.
When President Obama unveiled his initial proposal in June 2009, credit unions felt they dodged a bullet because the NCUA was kept an independent agency, and that never changed throughout the legislative process.
However, CUNA and NAFCU went to work to lessen the impact of the proposed CFPB, which Obama originally wanted to have as a stand-alone agency.
The trades were able to secure an exemption from direct examination for credit unions with assets equal to or less than $10 billion.
The House passed an initial version of the bill Dec. 11, mostly along party lines. Action in the Senate was slower and Senate Banking Committee Chairman Christopher Dodd (D-Conn.) didn't unveil a bill until March.
The Senate passed a bill on May 21 and during deliberations in that chamber CUNA, NAFCU and NCUA succeeded in obtaining several amendments that benefited credit unions. One such amendment gave the NCUA chairman a seat on the council empowered to determine if a failing institution poses a systemic risk and to hear appeals of rules issued by the CFPB. Another eased some of the demographic data reporting requirements.
The Senate also added an amendment on interchange, which prompted a full-blown but ultimately unsuccessful lobbying campaign by credit unions.
A conference committee spent most of June reconciling the House and Senate versions of the bill. In the end, most of the provisions pushed for by CUNA and NAFCU survived, but so did the interchange provision, which prompted them to oppose the bill.
Bacino said that while the loss of interchange revenue will hurt credit unions in light of the sluggish economy, he hopes it will encourage some of them to adjust their revenue models to be less reliant on interchange fees.
The House approved the revised version of the bill on June 30, mostly along party lines.
Final passage in the Senate proved more difficult.
Although Democrats have 58 seats (including two independents who caucus with the party), the rules of the chamber require 60 votes whenever the minority party wants to filibuster, as the GOP did in this case.
And with Sen. Russ Feingold (D-Wis.) criticizing the bill as not tough enough, the Democrats needed to win some Republican support.
To accomplish this, they reopened the conference committee to eliminate a tax increase strongly opposed by Sen. Scott Brown (R-Mass.).
Brown ultimately announced his backing of the bill, as did Sens. Susan Collins and Olympia Snowe (R-Maine).