Politics is a funny game to watch, probably even more bizarre from the inside.
On one hand we have Sen. Chris Dodd (D-Conn.), chairman of the Banking Committee no less, railing against the subprime lenders for their unethical behavior, while taking a sweet deal on two mortgages. The fact that he reportedly received those mortgages at a pretty deep discount from what any other prime borrower could have gotten and never considered it favoritism blows my mind. What's worse than him even remotely believing that is his thinking that the American public, including his constituents, will believe it.
And Senate Budget Committee Chairman Kent Conrad (D-N.D.) contacts a former Fannie Mae chief who is reportedly talking at that moment with Countrywide's CEO about a mortgage and doesn't expect to be receiving preferential treatment? The same Countrywide that was going bankrupt earlier this year with 7.2% of its servicing portfolio delinquent and was bailed out by Bank of America. The same Countrywide currently under investigation.
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Another observation: NCUA and other nominations are being mired down in the politics du jour. From what I can glean, none of the lawmakers really has an objection to Michael Fryzel. However, he's one of a handful of nominations packaged together. Any one senator who has a problem with any one of those nominations will bog things down.
The presidential election year complicates matters further. The Democrats could allow the Republican nominee through in exchange for other open slots at the agencies, like the Securities and Exchange Commission; let's face it, NCUA is a relatively small player among the government agencies but could be held up because of disagreements over other agency positions.
Permitting Fryzel through the nomination process would seat two Republicans on the NCUA Board with current NCUA Vice Chairman Rodney Hood. However, Hood's term is up in April 2009. So if the Dems win the White House, and likely an even larger portion of the House and Senate, they will easily be able to get almost anyone they'd like into the open seat.
The package deal has been on again-off again, according to sources. As I write this, I'm hearing it's off, but by the time you're reading this, it may very well be on again.
And going back to Dodd, he could lay low for a while given the situation with Countrywide, in which case, there might not be an opportunity for Fryzel's nomination to get out of committee.
Don't forget the other side of that coin, too. I'm sure it's making current NCUA Chairman JoAnn Johnson's life quite interesting. She has got to be wondering when her employment will end, when she'll be heading back to Iowa, and the like. Not that she doesn't enjoy serving her country and the credit union movement, but no one could be OK with such life changing matters up in the air.
My last thought, for this column anyway, on the intriguing web that is American politics is the CURRA/CURIA legislative battle. The Credit Union Regulatory Relief Act is this watered-down version of the Credit Union Regulatory Improvements Act, which doesn't do anybody–particularly the credit unions with larger fields of membership (i.e. possible voters)–much good. CURRA is more a show piece for legislators to say they were able to accomplish something for credit unions.
Problem is there's very little meat to it. Without the capital reforms and business lending provisions, it contains a few things that would be nice for credit unions to have but nothing crucial. If CURRA passes through as is, noncontroversial as House Financial Services Committee Chairman Barney Frank (D-Mass.) would like, the important parts of CURIA will be left swaying in the wind with none of the less controversial items to shelter them.
I've heard talk that CURRA could even get stripped down further in this deal. Considering the last effort led to banker fly-ins and credit union grassroots getting slammed, I'm not surprised.
So not only is it difficult to rally credit unions behind CURRA, if it does pass and become law–which Frank is a master at accomplishing–he'll be expecting something in return. And the one key area that credit unions and Frank stand at odds on is the Community Reinvestment Act. He loves it but credit unions argue it's unnecessary and CRA had been intended as a punishment for the redlining bankers. Still, Frank will be able to say, 'Look what I did for you.'
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