Although credit union trade associations are still pushing for a vote on Senate Bill 2231, which would raise the member business lending cap from 12.25% of assets to 27.5%, the congressmen and women who spoke at NAFCU’s Congressional Caucus Sept. 12-14 had other topics on their minds.
Here’s a look at what other legislative issues Caucus speakers said would affect credit unions in the coming months.
1. Tax reform
Several Caucus speakers, including Rep. Ed Royce (R-Calif.), Rep. Tom Price (R-Ga.), Rep. Patrick McHenry (R-N.C.), Rep. John Campbell (R-Calif.), Rep. Gary Peters (D-Mich.), Rep. Gary Miller (R-Calif.) and Rep. Shelley Moore Capito (R-W.V.), said tax reform debates next year could mean lawmakers reconsider the credit union tax exemption. Others said banking lobbyists are already talking up the topic. However, all speakers affirmed their support of keeping credit unions not-for-profit.
Peters said he thinks there are exclusions and deductions he thinks should be eliminated from the tax code. However, he added that “as we are debating that tax code reform, I’m going to continue to stand firm that credit unions should continue to get the tax exemption. You provide a very important role that needs to be protected.”
Credit union supporter Royce urged credit unions to explain to their members of Congress that the credit union tax exempt status “correlates exactly with the essence of a credit union’s structure, which is a cooperative model.” So long as credit unions stay true to their original mission, Royce said, the taxation argument “will continue to fall short.”
The lame duck session is expected to be dominated by debate over how to resolve the so-called fiscal cliff, which would occur if legislation that mandates tax increases and spending cuts next year isn’t remedied. While the changes would reduce the federal deficit, most economists say it would also trigger a double-dip recession in 2013.
Rep. John Campbell (R-Calif.) said there isn’t a lot of time to pass legislation this year, because after the elections Congress will have a few short weeks between Thanksgiving and Christmas to “get stuff done.” He added that making matters worse, when a huge issue like the fiscal cliff hangs like a cloud over Washington, it “tends to suck all the oxygen out and keep other things from getting done.”
Rep. Ed Perlmutter (D-Colo.) said the lame duck session will be dominated by deficit reduction deal making. But, he added that the Senate is putting together a package that will appeal enough to both parties to propose by the end of the year.
“I don’t think we’ll kick the can down the road as some people fear,” he said.
Regardless, the fiscal cliff issue is certain to take priority over credit union issues.
3. CFPB and Dodd-Frank
Talk about the Dodd-Frank Act and Consumer Financial Protection Bureau was predictably partisan, but should Republicans gain control of the White House, build upon their control of the House or take control of the Senate, pulling back the reins on the CFPB would be a priority.
Rep. Jason Chaffetz (R-Utah) said in order to justify its existence, CFPB officials “wake up every morning and regulate things.” Rather than address problems on Wall Street and beef up the SEC, Congress instead “created another bureaucracy that has untold consequences”.
Rep. Jeb Hensarling (R-Texas) drew applause from the audience when he referred to the CFPB and Dodd-Frank as a “legislative drive-by shooting”. He described the Dodd-Frank Act as an outline of a law aimed at guiding bureaucrats in the creation of more bureaucracy. The problems with the CFPB and the Dodd-Frank, in his view, are that the agency is an attack on individual liberty and that the act is nothing more than a wave of additional regulations.
Campbell said dismantling and rewriting Dodd-Frank is on his list of priorities for 2013, and other fellow Republicans feel the same way.
“Too big to fail wasn’t helped by Dodd-Frank, it was entrenched,” he said.
Rep. Sean Duffy (R-Wis.) said he doesn’t think government can do a better job of setting fees than the market can. And, he said, reducing interchange income has resulted in an increase in the cost of checking accounts and credit cards, which doesn’t benefit consumers.
Tucker Foote, head of U.S. government affairs and vice president, public policy for MasterCard Worldwide said despite receiving an $8 billion windfall from the Durbin Amendment and another $7.5 billion from the interchange settlement, merchants want more.
“They will continue to try to take profits from the card industry to offset their expenses,” he said.
Rep. Scott Garrett (R-N.J.) brought along a PowerPoint presentation to drum up support for H.R. 3644, the Private Mortgage Market Investment Act. Garrett said credit risk for the secondary mortgage market should be transferred from taxpayers, who are supporting the conserved Fannie Mae and Freddie Mac, to private investors.
He asked credit unions to propose ways a privatized secondary market could be structured so small institutions could access such a market.
Garrett was followed by Ted Tozer, president of Ginny Mae, who said the HUD-owned corporation was considering a partnership with credit unions to designate a large credit union to serve as a lead aggregator for pooling mortgages from small credit unions into securities.
Tozer said most credit unions he’s aware of work with big banks to aggregate 30-year fixed mortgages they don’t want to keep on their books. The problems in the housing market were created by services that saw borrowers as a number and dehumanized the process.
“But for credit unions, they’re your neighbors, and you care how they’re treated,” he said.