WASHINGTON — House Financial Services leadership had good newsfor credit unions during CUNA Governmental Affairs Conferencegeneral sessions, with congressional leaders expressing support forlegislative causes that are near and dear to credit unions.

Financial Services Committee Chairman Jeb Hensarling (R-Texas)pledged Feb. 26 during a morning general session that he opposestaxing credit unions.

The conservative House leader said one of the causes ofAmerica's slow recovery is bad public policy, specifically, taxation on small businesses.

“But if I have anything to do with it, there will not betaxation on our credit unions,” Hensarling said, drawing applausefrom the crowd.

He also discussed three goals he has for the House FinancialServices committee: reduce regulatory burden on small, communityfinancial institutions, reform the housing market and challenge theFederal Reserve's monetary policy.

Hensarling, a vocal critic of the Dodd-Frank Act and ConsumerFinancial Protection Bureau, said he disagrees with the premisethat Dodd-Frank was necessary because regulators lacked theauthority to prevent Wall Street from taking outsiderisks. 

“There are very few instances of a lack of regulatory authorityleading to the financial crisis,” he said.

Rather, Hensarling blamed the financial meltdown on FederalReserve monetary policy that lowered rates and “kept money toocheap” and housing policies that “incented financial institutionsto lend money to people to buy homes that they could notafford.”

He also criticized the “Orwellian” CFPB and Director RichardCordray, saying the agency has the “ability to outlaw creditproducts that could help fulfill the American dream for many ofyour members.”

 “How making consumer credit more expensive and lessavailable, how that has anything to do with advancing consumerinterest is beyond me,” he said.  Instead, he saidcompetitive, transparent innovative markets that are vigorouslypoliced for fraud is the best way to help consumers.

Rep. Spencer Bachus (R-Ala.), chairman emeritus of the HouseFinancial Services Committee, also drew applause when he said theHouse “may revisit the Durbin amendment” because restrictions on debit card revenuehave affected local institutions, not large financial institutionsas intended.

He also said he thinks there will be bipartisan support toremove some parts of the Dodd-Frank Act that apply to small creditunions and banks. 

Bachus also spoke extensively on the looming sequestration deadline of March 1, when automatic spending cutswill go into effect.

“No one thought we would be where we are,” Bachus said ofCongress' inability to resolve budget issues before thedeadline. 

“That's one thing Democrats and Republicans agreed upon, thatthis won't happen. We were told by our leadership this won'thappen. And the president never thought it would happen. We thoughtit would give us two months to come together and reduce the deficitby $1.4 trillion to $2 trillion. But that's not happening, and nowwe're facing March 1.”

Bachus said cutting discretionary spending, particularly to thecountry's infrastructure, was a big mistake. While it's good newsdiscretionary spending cuts have cut the annual deficit from $1.6trillion in 2009 to an estimated $800 billion this year, he warnedthat the country will eventually have to make up postponedinfrastructure improvements.

Instead, mandatory spending on entitlement programs, which aredriving the country's long-term debt, should be cut instead.

 “The only way we've been able to exist and run withthe deficits we have is because of the Federal Reserve,” he said.“They get a lot of blame, but they've held interest rates very low.That's allowed us to finance our debt at a much lower cost. But Ican tell you it would be an accounting and economic nightmare ifinterest rates kick up.”

In fact, because so many countries have followed the samemonetary policy, Bachus warned that the U.S. could get caught up incurrency wars as countries try to devalue their currency. Thatcould lead to trade wars and inflation, he said.