Bright Lines? More like dark shadows. Answering `how will we know what to originate’ is easy once we understand who’s behind the Hagel Bill: big banks and the Mortgage Bankers Association of America. If S.190 becomes law, U.S. mortgage lending will be controlled by the largest lenders. Smaller lenders – credit unions – will have little choice but to use the Bank’s proprietary systems. And, since credit unions will want to keep underwriting decisions at the point of sale, it’s highly likely we’ll have to use bank-controlled origination systems as well. That’s shadowy, yet there’s more. The proposed legislation extends to the new GSE regulator another power: Prior Approval. Sounds benign? It’s not. Herein lies the death of innovation. Let’s say credit unions were interested in working with Fannie Mae on a new loan product designed to make housing more affordable, like the 40-year mortgage. Fannie Mae did just that, without asking permission from OFHEO. Prior Approval changes that. How well could your credit union serve its members if it had to ask NCUA’s permission for every new loan or savings product? It’s easy to see what’s going on. Big banks want GSEs activities curtailed so that they control housing finance. Once the GSEs’ ability to provide lenders with loan programs and lending technologies is erased, the Big Banks will step in to fill the void. Sound familiar? It should. The American Banker’s Association has been tireless in its years-long effort to curtail credit union activities. They pre-date HR 1151. They’re at it still with `Operation Credit Union’. Often times one of the most successful strategies a foe can employ to defeat its opponent is by attacking on two fronts: one overt – Operation Credit Union – and the other covert – GSE Reform legislation.