To forecast what lies ahead in 2010, one has to consider theenormous legislative and regulatory challenges of 2009. Work onlegislation to overhaul the regulatory restructuring of thefinancial services system and the conservatorship of the twolargest corporate credit unions were significant factors. At thesame time, share insurance and stabilization fund assessmentsburdened credit union balance sheets. NAFCU worked intensely tocounter regulatory reforms that would negatively impact creditunions and their members. Nevertheless, we fully expect that thestage has been set for what promises to be a tumultuous environmentfor our industry in 2010.

NAFCU took a very visible leadership role in ensuring the defeatof mortgage bankruptcy cram-down legislation. We have steadfastlymaintained that mortgage cram-downs should be limited to subprimeor nontraditional mortgages. We were successful in advancing ourcase by twice defeating efforts to pass legislation creating broadcram-down authority, first in the Senate and then in the House. Weare cautiously optimistic that Congress now recognizes that this isnot the way to remedy the foreclosure situation, but we will keep akeen eye on any developments in this front.

Another issue that impacts credit unions is the proposedcreation of a Consumer Financial Protection Agency to assume theconsumer protection responsibilities of all the current federalfinancial institution regulators, including the NCUA. NAFCUsuccessfully won a provision in the House-passed Wall Street Reformand Consumer Protection Act that effectively excludes all creditunions from paying into a dissolution fund for the wind-down oflarge firms. It also got a clarification by Rep. Gary Peters(D-Mich.) that another provision dealing with Troubled AssetsRelief Program shortfalls only affects institutions that pay intothat fund.

Challenges with the CFPA proposal remain, however, including anexemption from primary CFPA examination authority that only appliesto credit unions with less than $10 billion in assets. Thisexemption is not inflation-adjusted, and over time many more creditunions would be subject to CFPA examination. Even more troubling isthe arbitrary $10 billion ceiling that could divide our industry inthe future on a wide range of issues. As I have always said, “Acredit union, is a credit union, is a credit union.”

We also have a number of other important concerns with the CFPA.While an amendment on the House floor attempted to restore somefederal preemption standards for banks, it remains unclear howfederal preemption standards for credit unions would be impacted.The House-passed version of the CFPA also impacts all credit unionsin these areas: the ability to strip oversight of NCUA should theCFPA director believe an NCUA exam to be inadequate; the ability toinitiate enforcement proceedings if the NCUA does not act; andauthority to broadly regulate areas like fair lending. In addition,the House-passed bill mandates 5% credit risk retention onmortgages with the ability of the regulators to createexemptions.

As a result, when the Senate takes up financial reform, NAFCUwill continue to strongly advocate for a CFPA exemption for creditunions.

Last year's economic conditions limited capital sources forsmall businesses. NAFCU seized opportunities to reach out to thenational media and inform lawmakers of our industry's willingnessto help. We made numerous and repeated contacts with lawmakers andthe administration to raise the credit union member businesslending cap and suggested ways to expand credit unions'participation in SBA programs. NAFCU continues to push forlawmakers' support for H.R. 3380, the Promoting Lending toAmerica's Small Businesses Act, and S. 2919, the Small BusinessLending Enhancement Act. Both measures would raise the MBL cap from12.25% of total assets to 25%.

In 2009, merchants again successfully lobbied the House and theSenate to introduce legislation that would artificially capinterchange fees. While a hearing was held on a House bill thispast fall, no action has occurred on any of these bills as of yet.We continue to work towards defeating any proposed interchangelegislation independently, as well as through our activeparticipation in the Electronic Payments Coalition.

NAFCU was also successful in pressing for industry-wide supportfor an alternative capital proposal that was delivered to the NCUAfor its consideration. Following these efforts, the agency hasforwarded proposed legislation to Congress that we are hopeful willreceive legislative action this year.

In 2010, it is unlikely that either Congress or theadministration will relent in their efforts to reform the financialservices industry. NAFCU recognizes that credit unions were notresponsible for the practices that led to this crisis. Ourobjective remains clear and unrelenting-ensuring that credit unionsare not swept into any broad legislative or regulatory proposalsthat would only add to their already significant regulatory burden.A regulatory burden that is, in fact, already the greatest amongall depository institutions.

The good news is that credit unions' outstanding service andwork is serving as an example to others in the financial servicesindustry and is being increasingly noticed and commented upon inthe national media and among our nation's leaders. By upholdingyour commitment to responsible fiduciary management and exceptionalmember service, you are in fact squelching the critics.

Fred Becker is president of NAFCU. He can be reached at703-522-4770 or [email protected]