GAC: Promises, Promises
Now comes the hard part.
Former New York Governor Mario Cuomo famously said that "you campaign in poetry and govern in prose."
While there wasn’t much poetry uttered at the Governmental Affairs Conference–if there are any politicians out there with poetic licenses, the licenses have most likely expired–there was a lot of rhetoric and promises in some of the speeches.
That was the easy part. Holding their feet to the fire is another story.
In an environment where there are popular interest groups on opposite sides of an issue, such as debit interchange, the expedient thing for some politicians may be to do nothing.
Community banks and credit unions regularly remind lawmakers that they are locally-based financial institutions that are the lifeblood of their cities and towns. You are about as likely to find the big banks playing a visible role in this debate as you are likely to see the Pittsburgh Pirates in the World Series this year.
As for the retailers, they want you to forget that the big box stores even exist for purposes of this discussion. It’s that locally owned gas station or bookstore that is seeing its profits taken away by those greedy financial institutions.
Therefore, politicians with many vital matters on their plate–such as trillion dollar deficits and two foreign wars–might not want to tackle interchange again. Also, politicians might well ask themselves, Why bother sticking their neck out on an issue that the general public doesn’t care much about?
That’s why the two most prominent House Republicans who spoke at GAC, Speaker John Boehner (R-Ohio) and Financial Services Committee Chairman Spencer Bachus (R-Ala.) were careful about what they said about the subject.
In the case of Boehner, he didn’t address the issue at all. In fact, his speech could have been delivered (and undoubtedly has been) at the annual conference of any trade association that was meeting. Although he did praise the efforts of credit unions in helping to defeat measures that would have allowed bankruptcy judges to reset the terms of mortgages during the previous Congress.
Bachus made no promises about interchange. He urged attendees to lobby the Senate on the issue and did say that "if we don’t get it [debit interchange] right, that credit union or community bank in your town isn’t going to be there, and you will be left with larger institutions."
Bachus has given credit unions and banks two prominent opportunities to air their concerns on the issue–at hearings of his panel’s subcommittee on Financial Institutions and Consumer Credit–but that doesn’t mean that delaying implementation of the Fed’s rule is a done deal.
On member business lending, the two leading backers of raising the cap–Sen. Mark Udall (D-Colo.) and Rep. Ed Royce (R-Calif.)–used their GAC speeches to announce that they will reintroduce their bills. They didn’t discuss the prospects for passage.
That’s because the bankers (who sometimes seem to have veto power over the credit union agenda) are again going to fight the effort with the vehemence of a five-year-old whose favorite toy is being taken away from him by one of his playmates.
Lawmakers weren’t the only speakers at GAC who made promises.
NCUA Board Member Gigi Hyland received an enthusiastic response to her speech in which she extolled the virtues of having the government put the brakes on its efforts to add to the regulatory burden of financial institutions and other businesses.
Her endorsement of a pay-as-you-go approach to regulation and suggestion that the NCUA update its regulatory review process was received with more than polite applause.
However, given the agency’s recent tendency toward increasing its regulatory oversight (a trend that NCUA Chairman Debbie Matz celebrated in her GAC speech), it is not clear whether Hyland will be able to persuade her colleagues to help her keep her promises. She is also fighting the clock, as her term expires this summer, though she could stay longer if President Obama is slow in appointing a successor.
In calling for a smaller role for government, Hyland is advocating a similar philosophy to that of her fellow College of William and Mary alum Thomas Jefferson. He maintained that government should have a minimal role in the lives of individuals and that society would prosper if the government’s powers were strictly contained.
Of course, Jefferson didn’t always follow his own advice. The Louisiana Purchase was deemed constitutionally questionable (the Constitution contained no provision for land purchases), yet Jefferson defended the deal and borrowed $15 million from Britain to pay for the more than 828,000 square miles.
Will Hyland push for a similarly dramatic move during her final months at the agency?
If she did, she’d be breaking a promise. Of course, she wouldn’t be the first–or the last–GAC speaker to do so.