These have included the Federal Reserve’s proposed rule regulating debit interchange fees, the new bureau that will regulate consumer financial products and the safety and soundness of financial institutions.
Capito, who chairs the House Financial Services Committee’s Subcommittee on Financial Institutions, has been in Congress since 2001. She recently sat down with Credit Union Times to discuss some of the issues on the committee’s agenda.
Credit Union Times: So what’s the next step for the bill to delay the implementation of the Fed’s interchange rule that you introduced?
Rep. Capito: Right now the legislation, which calls for a one-year delay, is still getting co-sponsors. We have 59 right now and it is bipartisan and we are adding a couple in a day. We are watching very closely what’s happening in the Senate. I think it’s very important for the Senate to make that first move, at least on the floor, because they are the one here that’s going to have the steepest hill to climb, I believe. I’ve spent the last week meeting with my constituents, the retailers, credit unions, and I am looking for a fair way to move forward on this as this is a fairly controversial issue.
CU Times: Do you have a sense if it is introduced in the House that there will be enough support to pass it?
Capito: I don’t really know, but I know that by the Fed pushing back on the date when they will release the final rule, with all the groups weighing in, it shows the broad-based skepticism about moving forward with the rule as printed. So I think there would be a lot of support for it in the House; whether there will be full support for it remains to be seen.
CU Times: Your panel has broad purview over credit unions, banks and the like. What will you be looking at over the next couple of months?
Capito: The area I represent is mostly served by community banks and credit unions so it is important to me that they have the ability to lend, create mortgages and offer the personalized services that I think in a lot of ways they are well positioned to do. We will look at whether certain programs, such as the [community bank] small business lending program are really doing what they are supposed to. Also, the exemptions that were carved out for community banks and credit unions may not be being applied, so we are going to look at that more deeply. And we will look at the setting up of the Consumer Financial Protection Bureau as well.
CU Times: The House Republicans have been very critical of the bureau and would like to scale it back or repeal it. But the sentiment is different in the Senate. Do you see a way to reconcile the different positions between the chambers?
Capito: I don’t think that dismantling the bureau, while some of us want to do that, we’ve got to deal in reality here. We’ve put forth some ideas, to have a five-person board and spread the responsibility over the agency over an array of decision makers. We also want to change the funding mechanism. It is currently funded by the Fed, but we want to have it funded by Congress. Because by having it as part of the appropriations process it is an important means of oversight.
CU Times: What about the Senate?
Capito: We do talk to the Senate and these issues are important there. But being able to assess the Senate [and the chances of our bills passing there] is way beyond my level of responsibility.
CU Times: Any other changes?
Capito: We will put forward legislation to change the number of votes on the regulatory council to overturn a bureau decision from two-thirds to a majority. Also, I am concerned that we still don’t have a director nominated, and if we don’t have one soon. we may start the bureau without a permanent director and that would be a bad position to be in.
CU Times: You mentioned regulations by the bureau, but credit unions and banks already face a myriad of regulations from the NCUA and FDIC. Are you pleased with the way those regulators have handled their responsibilities?
Capito: What we learned over the last several years is that credit unions mostly have stayed within their missions, governed by their members and have been diligent at playing by the rules. But sometimes they have been adversely impacted by those who didn’t play by the rules. So what I want is a nimble and efficient regulator that will closely watch financial institutions.
CU Times: Anything you’d like to see done differently?
Capito: Not by the NCUA. I think things have been moved along and overseen quite reasonably. The FDIC is going in a different direction because of what Congress mandated in terms of ordered liquidation. The current system gives an advantage to larger institutions over smaller banks and credit unions, and I don’t like that.
CU Times: On regulations, how do you strike a balance between enough regulation to ensure safety and soundness and avoid another financial meltdown and not so much that you stifle innovation?
Capito: What doesn’t help is creating a one-size-fits-all plain vanilla financial product that goes across the spectrum of all banks and credit unions is not the way to help my constituents who are relying on those smaller institutions to be the economic developers and personal financiers. At credit unions, when the member walks in the door, the employees know them and know their circumstances. What will work for them is different than for another person. So you don’t want to lose the flexibility.
CU Times: Credit unions have been pushing for a long time for the right to accept secondary capital and they would like Congress to give them the ability to do that. What are your thoughts about the subject?
Capito: That’s been in the committee for five or six years. As we move along, first we are trying to address the issues around Dodd-Frank and credit issues and lending issues. As we move to the next year and a half this might be something we can look at. I have not formulated an opinion on it yet. I need to learn more about it. There are two different positions on it, as you know.