Long To Do List, but Elections and Gridlock May Prevent Action
So much to do, so many potential distractions.
That’s the outlook facing Congress as it returns to work after its holiday break.
Credit unions will be seeking an increase in member business loans, the right to appeal certain regulatory examinations and housing finance reform that ensures that they will have access to a secondary market.
The House was due back on Jan. 17 and the Senate on Jan. 23.
Every four years the convergence of presidential and congressional elections can cause Congress to do very little. Members want to spend the maximum amount of time campaigning, and when they are in Washington, they don’t want to do anything that might hurt their campaigns or help their opponents.
In addition, Republicans will try to block most Democratic initiatives and appointees, thinking that there is a reasonable chance the GOP will win the presidency in November and can have more control of the agenda. The Democratic-controlled Senate, which last year buried many of the bills passed by the GOP-controlled House, could well continue that practice in 2012.
The fate of Carla Decker, who President Obama nominated in October to succeed Gig Hyland as an NCUA board member, is unclear.
Neither the Obama administration nor the Senate Banking Committee has made any additional comments about the appointment, including scheduling a confirmation hearing. Her nomination stalled after Credit Union Times reported the contents of an NCUA examination that showed management problems at the credit union she runs, District Government Employees FCU.
NAFCU President/CEO Fred Becker said during a speech at the Jan. 9 MACUMA meeting that “the closer we get to the election, the harder it might be for a new board member to be confirmed.”
Whoever succeeds Hyland, a Democrat appointed by President Bush, will determine which party controls the NCUA board. Therefore, Republicans might not allow anyone to be confirmed until after the election.
While the Senate confirmed Michael Fryzel as chairman in July 2008, also a presidential election year, the partisan stakes were different. Fryzel, a Republican, succeeded Joann Johnson, another Republican, as chairman. And Democrats knew that if then-candidate Obama were elected, he would soon have the chance to name a Democrat and make the board majority Democratic when NCUA Board Member Rodney Hood’s term expired. Obama did just that when he named former NCUA board member Debbie Matz to be the NCUA’s chairman in May 2009, and she was confirmed later that summer.
On policy issues, the outlook is also murky.
Lawmakers at House and Senate hearings were skeptical about the need for legislation raising the cap on member business loans from 12.25% of assets to as much as 27.5%. Much of the debate focused on how much unmet loan demand existed. In addition, the two main bank lobbying groups reiterated their strong opposition to the measure.
There may be room for compromise since the bankers are pushing hard for a regulatory relief bill that would also provide relief to credit unions.
The regulatory provisions include would make it easier for the Financial Stability Oversight Council to overturn regulations of the Consumer Financial Protection Bureau; exempt from escrow or impound requirements any loan held by a creditor with assets of $10 billion or less; and exempt community banks and credit unions from furnishing annual privacy notices.
In addition, the House Financial Services Committee may hold a hearing on a measure praised by CUNA and NAFCU that would give financial institutions the right to appeal their examinations.
A financial institution that is unhappy with the results of their examination would have the right to appeal it to an administrative law judge who would submit his or her findings to the ombudsman of the Federal Financial Institutions Examination Council. The FFIEC is made up of representatives of federal and state regulatory entities. Matz is the council’s current chairman.
Under the measure, which has 66 co-sponsors in the House, the NCUA and other regulators would have to do a more thorough job of explaining the reasons behind their examination findings and give financial institutions more latitude on certain transactions.
The NCUA hasn’t taken a position on the measure.
Although Congress isn’t likely to pass measures to overhaul the housing finance system, despite GOP efforts, both chambers are likely to continue discussing it.
CUNA and NAFCU have urged the government to revamp the housing finance system in a way that keeps a strong government presence in the market.