Financial services trade groups are urging the Senate to consider a bipartisan regulatory overhaul bill, but deep divisions continue to fester and could help derail the bill.
"At a time of frequent congressional gridlock in Washington, this bipartisan legislation is a shining example of how our elected leaders can advance necessary solutions by working together and across the aisle," the trade groups, including CUNA and NAFCU, wrote to Senate Majority Leader Mitch McConnell (R-Ky.) and Minority Leader Charles Schumer (D-N.Y.).
The legislation includes a credit union-specific provision that provides that a one-to-four family dwelling that is not the primary residence of a member will not be considered a member business loan under the Federal Credit Union Act.
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The bill also includes a provision that "provides that certain mortgage loans that are originated and retained in portfolio by an insured depository institution or an insured credit union with less than $10 billion in total consolidated assets will be deemed qualified mortgages under the Truth in Lending Act (TILA) while maintaining consumer protections," according to a summary of the bill.
The bill also would increase the so-called "too big to fail" threshold from $50 billion in assets to $250 billion in assets. Those institutions are the ones targeted for the toughest regulatory scrutiny.
The bill is much more modest than a House-passed regulatory overhaul bill that would repeal large parts of the Dodd-Frank Act and reduce many of the powers of the CFPB.
The Senate divisions could stall the legislation. While Banking Chairman Mike Crapo (R-Id.) has gained support from moderate Democrats, more progressive Democrats have opposed it.
Those progressive Democrats could attempt to block the bill—forcing supporters to find 60 senators to overcome a threatened filibuster.
During testimony before the Senate Banking Committee on Tuesday, Treasury Secretary Steven Mnuchin endorsed the bill, saying that it "is a balanced and thoughtful approach that better aligns our financial system to support economic growth in our communities."
Senate Banking ranking Democrat Sherrod Brown of Ohio disagreed.
"The Treasury has issued a steady drumbeat of reports suggesting hundreds of changes to our consumer protection and financial stability rules that will make the risk and severity of the next crisis much greater," he told Mnuchin at Tuesday's hearing.
The financial services trade groups disagreed, saying that the legislation is "a carefully crafted bipartisan bill that includes commonsense improvements to the nation's financial rules that will allow community banks and credit unions to better serve their customers and communities."
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