As tough it was passing regulatory reform in the House, that mayhave been the easy part.
When the Senate begins in earnest to deal with the issue early nextyear, the fate of provisions of importance to credit unions-to saynothing of the overall bill-is still very much unknown.
The Senate has been mostly preoccupied with health care legislationand hasn't focused much on regulatory restructuring. CUNA and NAFCUare hoping they can keep credit unions from facing additionalcompliance burdens and examinations.
The draft bill unveiled by Senate Banking Committee ChairmanChristopher Dodd (D-Conn.) is more burdensome and would require allcredit unions to be subject to an examination by the proposedConsumer Financial Protection Agency.
But members of Dodd's committee and staff are already working onrevisions to the proposal because it was criticized by Democratsand Republicans alike, albeit for different reasons.
“He put a turkey on the table, and it didn't taste good,” quippedBert Ely, a Virginia-based consultant to and analyst of thefinancial services industry.
On Dec. 11, the House passed legislation that would dramaticallyrevamp the way the government regulates financial services. A keycomponent of the measure, which passed 223-202, is the creation ofthe CFPA.
Lobbyists for CUNA and NAFCU succeeded in helping persuadelawmakers to pass an amendment ensuring that credit unions withassets of $10 billion or less wouldn't be subject to an examinationby the CFPA. All credit unions would have to comply with the rulesissued by the new agency, but examinations would be done by theNCUA for all those with assets of less than $10 billion. Butlobbyists note that the $10 billion figure isn't indexed forinflation, so while only three credit unions are subject toexamination by the CFPA right now, that number could increase asasset sizes grow.
“The goal is to minimize damage to credit unions. I hope the Senateuses the House as a starting point,” said CUNA Vice President forLegislative Affairs Ryan Donovan.
But Donovan said there is strong case to be made for all creditunions to be excluded from CFPA examinations, and he hopes theSenate includes language encouraging the agency to delegate allcredit union examinations to the NCUA.
NAFCU Director of Legislative Affairs Brad Thaler said his group isstill pushing to have credit unions from all regulations issued bythe CFPA.
Both Donovan and Thaler predicted that because of the Senate'srules and the political climate in that chamber, the legislativeprocess on the bill will likely be more bipartisan than it was inthe House, where the House voted mostly along party lines.
In the Senate, Dodd has broken down the bill and assigned differentsections to two-member teams, one lawmaker from each party. He andthe panel's top Republican-Richard Shelby of Alabama-arenegotiating the section on the CFPA. Shelby and all the otherRepublicans on the committee have expressed strong opposition tothe CFPA, but Shelby has told people he is “cautiously optimistic”that they can reach an agreement on the overall bill.
In addition to CFPA, credit unions are also closely monitoring theprovisions for financing the fund aimed at unwinding businessesdeemed too big to fail that are close to collapse. The House billcharges all financial institutions with assets of $50 billion ormore-which excludes all credit unions-and CUNA and NAFCU arepushing for similar language in the Senate.
Both groups also want to be sure that there is no attempt to tryagain to include a provision giving bankruptcy judges the right toreset the terms of mortgages. An amendment that would haveaccomplished that was defeated on the House floor on Dec. 11,though a similar amendment had been passed there earlier thisyear.
Thaler predicts that the Senate is likely to pass some kind ofbill, but it could be vastly different than what the Houseproduced. The two versions would likely be reconciled in aconference committee.
“The Senate measure may not go as far as the House bill did, butthat's the nature of the Senate,” Thaler said.
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