WASHINGTON — The credit union lobby declined to support an amendment offered last week to the bill creating a Consumer Financial Protection Agency exempting small institutions, saying the bid would split the industry.
The amendment was offered by two credit union allies in the House, Rep. Brad Miller of North Carolina and Rep. Dennis Moore of Kansas, and would exempt banks under $10 billion and credit unions under $1.5 billion - more than 95% of all credit unions - from the new agency's oversight.
"We have concerns about the language because it would divide credit unions by asset size, setting a different standard for credit unions that are deemed large and small," said Ryan Donovan, senior lobbyist for CUNA.
Dan Berger, chief lobbyist for NAFCU, called the proposal a step in the right direction, but not one supported by NAFCU. "While well-intended, the amendment would impose an arbitrary asset limit on credit unions, one that is considerably lower than the $10 billion limit proposed for banks and thrifts. At the very least, credit unions should be given parity with other financial institutions," Berger said.
The two Democratic lawmakers saw the amendment as a way to hold together the Democratic caucus, which is split on the bill setting a new regulatory agency over mortgages, credit cards, investments and other financial services and products.
"Most community banks and credit unions did not take advantage of consumers the way some others did," said Miller. "They have a valid argument that separate examinations by CFPA would double their administrative burden. CFPA can still take over enforcement if any bank, no matter what size, violates consumer protection laws."
The House Financial Services Committee, which began debate on the bill last week, was expected to vote on the Miller/Moore amendment late last week. But its prospects were dim. The committee is expected to complete its work on the bill this week and send it to the full House.
The new consumer agency was proposed by President Obama who sees lack of regulatory oversight as one of the main causes of the subprime mortgage crisis.
The credit union lobby groups maintain that credit unions did not cause the crisis and should not be brought under a new regulatory.
NAFCU is lobbying Congress to allow NCUA and the banking regulators to create their own office of consumer protection, which would have jurisdiction, instead of the new agency, over credit unions. "We continue to push for a full exemption from this costly and unnecessary regulatory burden for credit unions with oversight by the NCUA," said Berger.
CUNA is pushing an amendment to the bill which would give an entity's current regulator, NCUA or state supervisors for credit unions, be responsible for examining credit unions for compliance with consumer rules and laws, instead of the new agency.
The prospects for the bill, which is supported by the Democratic leadership, were cloudy last week as most Republicans oppose the measure. Rep. Spencer Bachus, the leading Republican on the Financial Services Committee, said he opposes the bill because it will restrict consumer choice on financial services while adding a costly new layer of regulatory burden.
