It’s the time of the year when pundits are analyzing the recent election and predicting what will happen in the new Congress during 2013.
I heed you a warning in the words of Winston Churchill, “Politics is the ability to foretell what is going to happen tomorrow, next week, next month and next year. And to have the ability afterwards to explain why it didn’t happen.”
There has been a significant amount of discussion and speculation surrounding the political ramifications of what appears to be, a status quo election. Yes, the mix of Republicans and Democrats has not significantly changed. Yes, as I’ve said before, we are still dealing with 535 women and men. However, I challenge the concept that we will see legislative initiatives dealt with in the same manner as past congresses. I know from experience that the composition, character and activities of the House and Senate are driven by individual members, often only a handful of which can have a significant impact.
For credit unions, the picture is starting to come into focus. Measuring success within the 113th Congress may well be a matter of what does not happen as opposed to new legislative accomplishments. To this end, the major area of activity will likely be in the regulatory arena as opposed to Capitol Hill. Even so, some of the new players and leadership on the Hill could have an impact on regulatory initiatives as well.
So let’s look at what has changed. First and foremost, there are almost 100 brand new names in the House and Senate. Furthermore, the 14 new Senators and 84 new House members represent one of the ethnically and gender diverse congresses ever. Second, each of these individuals, along with all of the other House members, and a third of the Senate, just experienced one of the most grueling political campaigns in recent history. The last election season was longer, more intense and more expensive than anything most of the newly re-elected have ever encountered.
I do not believe a single one of them comes back to Washington with the same attitudes that they carried one year ago. Some will be embolden and some will be enlightened to the fickle nature of the electorate. This combination will hopefully create impetus to drive legislation and the necessary humility to compromise.
Digging a bit deeper, there are changes in leadership at the committee level that could have significant impact both generally and for credit unions in particular.
First, a look at the House. Leadership is changing in the critical U.S. House Financial Services Committee. Rep. Spencer Bachus (R-Ala.) has termed out in position as chairman and will be replaced by Jeb Hensarling (R-Texas).* Bachus is considered a credit union supporter and has been open and accessible on all credit union issues.
Hensarling has been a strong supporter of maintaining the credit union tax status yet he has expressed concern regarding several credit union issues. The feedback I have received is that he has great respect for the Texas Credit Union League and this could play a role in how he approaches credit union issues in the future.
The committee’s ranking Democratic member, Rep. Barney Frank (D-Mass.), who is a staunch credit union supporter, has retired from the Congress and will be replaced by Congresswoman Maxine Waters (D-Calif.). Waters is considered a credit union ally and also appears to have strong interests in financial consumer protection. Hensarling and Waters represent widely divergent constituencies and it remains to be seen if their working relationship will develop and allow the committee to be as proactive as it had under Bachus and Frank.
A note to debate around the water cooler: depending on your perspective, the House Financial Services Committee over the last two or three years has been one of the most active and productive in the entire Congress.
On the Senate side, with Democrats still in control, Sen. Tim Johnson (D-S.D.) will continue as chairman of the powerful Senate Banking Committee. Johnson has been open and accessible on credit union issues with a very independent approach. He often adopts a measured approach, and plays his cards very close to his chest.
The ranking Republican Richard Shelby (R-Ala.) will be replaced by Sen. Mike Crapo (R-Idaho). Shelby, as the ranking member, has walked a very fine line between banks and credit unions and constantly pushed for credit unions and community banks to find a common ground. Crapo, like Johnson, is always open to discussion with credit unions and he appears to have a strong understanding of our issues. Crapo supported the credit union position on debit interchange.
The Senate also has a newly elected and publicly vocal credit union supporter in Elizabeth Warren (D-Mass). Credit unions believe in Warren and her commitment to their position in the marketplace. Credit union support during the election played a significant role. As the architect of the Consumer Financial Protection Bureau, Warren is expected to carry the flag on consumer issues and many have expressed concerns about possible regulatory efforts that could be hurtful to smaller financial institutions. Warren is fully knowledgeable about credit union issues and ready to engage and discuss them as they arise.
The new lineup at the committee level is certainly promising and I believe new credit union champions, like Warren, will emerge as time goes on. For now, though, the fact is that credit unions and their legislation are not on the agenda of either committee or the leadership of the House or Senate. Congress is totally focused on upcoming fiscal issues including the debt limit, spending cuts, and revenues. Of course, revenues means taxes and even though credit unions’ tax status if fully justified and seems secure, opponents plan to take every opportunity to make credit unions and their tax status a part of any and all fiscal discussions.
For several years, the tax issue has been just below the surface but the American Bankers Association recently sent a memo to its members indicating they will be carrying this message everywhere and anywhere on Capitol Hill. And their message will include a call to action. Some believe that all industries, including credit unions, are now at risk for increased taxation. Others believe that there is no appetite in Washington for a bank vs. credit union tax battle during this cycle.
*The Republican Caucus adheres to self-imposed six year term limits. Bachus was ranking member of the House Financial Services Committee from 2007-2010 and chairman from 2011-2012.
Dan Mica is president/CEO of The DMA Group and former president/CEO of CUNA.
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