As tough it was passing regulatory reform in the House, that may have been the easy part.
When the Senate begins in earnest to deal with the issue early next year, the fate of provisions of importance to credit unions-to say nothing of the overall bill-is still very much unknown.
The Senate has been mostly preoccupied with health care legislation and hasn't focused much on regulatory restructuring. CUNA and NAFCU are hoping they can keep credit unions from facing additional compliance burdens and examinations.
The draft bill unveiled by Senate Banking Committee Chairman Christopher Dodd (D-Conn.) is more burdensome and would require all credit unions to be subject to an examination by the proposed Consumer Financial Protection Agency.
But members of Dodd's committee and staff are already working on revisions to the proposal because it was criticized by Democrats and Republicans alike, albeit for different reasons.
“He put a turkey on the table, and it didn't taste good,” quipped Bert Ely, a Virginia-based consultant to and analyst of the financial services industry.
On Dec. 11, the House passed legislation that would dramatically revamp the way the government regulates financial services. A key component of the measure, which passed 223-202, is the creation of the CFPA.
Lobbyists for CUNA and NAFCU succeeded in helping persuade lawmakers to pass an amendment ensuring that credit unions with assets of $10 billion or less wouldn't be subject to an examination by the CFPA. All credit unions would have to comply with the rules issued by the new agency, but examinations would be done by the NCUA for all those with assets of less than $10 billion. But lobbyists note that the $10 billion figure isn't indexed for inflation, so while only three credit unions are subject to examination by the CFPA right now, that number could increase as asset sizes grow.
“The goal is to minimize damage to credit unions. I hope the Senate uses the House as a starting point,” said CUNA Vice President for Legislative Affairs Ryan Donovan.
But Donovan said there is strong case to be made for all credit unions to be excluded from CFPA examinations, and he hopes the Senate includes language encouraging the agency to delegate all credit union examinations to the NCUA.
NAFCU Director of Legislative Affairs Brad Thaler said his group is still pushing to have credit unions from all regulations issued by the CFPA.
Both Donovan and Thaler predicted that because of the Senate's rules and the political climate in that chamber, the legislative process on the bill will likely be more bipartisan than it was in the House, where the House voted mostly along party lines.
In the Senate, Dodd has broken down the bill and assigned different sections to two-member teams, one lawmaker from each party. He and the panel's top Republican-Richard Shelby of Alabama-are negotiating the section on the CFPA. Shelby and all the other Republicans on the committee have expressed strong opposition to the 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 the provisions for financing the fund aimed at unwinding businesses deemed too big to fail that are close to collapse. The House bill charges all financial institutions with assets of $50 billion or more-which excludes all credit unions-and CUNA and NAFCU are pushing for similar language in the Senate.
Both groups also want to be sure that there is no attempt to try again to include a provision giving bankruptcy judges the right to reset the terms of mortgages. An amendment that would have accomplished that was defeated on the House floor on Dec. 11, though a similar amendment had been passed there earlier this year.
Thaler predicts that the Senate is likely to pass some kind of bill, but it could be vastly different than what the House produced. The two versions would likely be reconciled in a conference committee.
“The Senate measure may not go as far as the House bill did, but that's the nature of the Senate,” Thaler said.
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