House, Senate Banking Panels Took Divergent Paths
The House Banking Committee focused on oversight and trying to undo or modify some of President Obama’s initiatives while the Senate Banking Committee focused on less sweeping efforts in 2011.
Both panels paid some attention to credit union issues, though neither held an oversight hearing on the NCUA.
Legislation that would raise the cap on member business loans–from 12.25% of assets to as much as 27.5% of assets–was the subject of hearings by both panels. NCUA Chairman Debbie Matz testified in favor of the measures, arguing that it would fill a demand among small business and would help credit unions by diversifying their portfolios.
Both sessions featured lively discussions with pointed questions by opponents of raising the cap and strong testimony by witnesses representing the banking industry. Neither panel has voted on the bill.
However, it is possible that the member business lending bill will be combined with a measure that would provide regulatory relief to banks and credit unions. When the House panel considered the bank bill, the CEOs of CUNA and NAFCU testified on it, the first time in recent years that credit unions were invited to weigh in on a bank measure.
The House Financial Services Committee, as befits a Republican-controlled panel at a time of a Democratic presidency, focused a great deal of attention on what the panel sees as the negative effect of the Obama administration’s policies.
Even before the Consumer Financial Protection Bureau began its operations in July, the panel and its subcommittees–and the House Oversight Committee–held hearings questioning the need for the agency. Several lawmakers also expressed concern that the agency would unnecessarily limit consumer choice.
The House Financial Services Committee, and subsequently the full House, passed a bill that would restructure the bureau to have it run by a five-member board rather than a director; allow the bureau’s decisions to be overturned by a majority vote of the Financial Stability Oversight Council rather than two-thirds currently required; and delay some of the CFPB’s operations until it has a confirmed director in place.
The Senate Banking Committee hasn’t taken up the measure and the unwillingness of Senate Democrats to consider it as a reason why Republicans in that chamber are blocking the confirmation of a permanent director of the CFPB.
The House panel has also held a series of hearings on how legislation and regulations supported by the Obama administration have stifled the growth of companies and financial institutions.
Central City CU President/CEO Patricia Wessenberg told the panel’s subcommittee on Financial Institutions and Consumer Credit in October that the “barrage of regulations creates an unnecessary burden without any measure of the effectiveness of these changes. They are costly, both in time and personnel to implement, and they are confusing to our membership.”
Wessenberg, a CUNA Board member whose Marshfield, Wis.-based credit union has $179 million in assets, added that the CFPB will issue rules that will cost credit unions more money.
The Senate Banking Committee, as befits a panel controlled by Democrats, has focused less on regulatory burden and more on how to use government to relieve some of the financial burdens facing the middle class.
Wright-Patt CU President/CEO Doug Fecher told the panel’s subcommittee on Financial Institutions and Consumer Protection that he hopes the CFPB issues regulations that “empower consumers without adding to our regulatory costs.”
He said that his $2.1 billion Fairborn, Ohio-based credit union helps its members by disclosing the cost of loans and other products up front. But he noted that while his credit union will change some terms of mortgages, he opposes reducing the principal because the costs will just be shifted to another part of the economy and that will be a net negative.
Both the House and Senate panels held hearings on revamping the way the housing finance system operates.
The House committee focused on more comprehensive overhaul plans. By contrast, the Senate panel held a series of informational sessions at which it explored different aspects of the problem and possible solutions.
In October, Affinity FCU President/CEO John Fenton urged members of the Senate committee to ensure that any changes in the housing finance system don’t jeopardize the existence of the 30-year mortgage.
“It’s consumer friendly, straightforward and easy to understand. It’s necessary for the health of the housing market that it remain a viable product,” said Fenton, whose Basking Ridge, N.J., credit union has assets of $2 billion.
The Senate Banking Committee declined to hold a hearing on one subject of great interest to credit unions.
Though the panel never formally announced a hearing, several sources indicated that it planned to hold one in late November on the nomination of Carla Decker to succeed NCUA Board Member Gigi Hyland.
However, when the hearing’s witness list was announced, Decker’s name wasn’t on it.
Decker, the president/CEO of the District of Columbia Government Employees FCU, was nominated by President Obama in October.
The momentum of her nomination slowed following a Credit Union Times report about a 2010 NCUA examination of Decker’s credit union that rated it a CAMEL 3 and concluded that it was a “high strategic risk.”