WASHINGTON-The credit union lobby was working last week to limit the impact of a massive financial services reform bill that was expected to be approved by the House late last week.
Lawmakers had already approved an exemption for all credit unions from fees to finance a new regulator that would be charged with winding down huge financial firms at risk of failure. Credit unions were also hoping to convince Congress to agree to an additional exemption for all credit unions from the proposed Consumer Financial Protection Agency.
The huge financial services package runs almost 1,300 pages and combined eight different bills that would set a vast new regulatory scheme in response to the ongoing financial crisis by creating the consumer protection agency; developing a permanent plan to resolve large financial failures; setting new standards for trading of financial derivatives; allowing shareholder say on executive compensation; regulating Wall Street rating agencies; establishing a national office to oversee insurance companies and combining banking regulators.
The credit union lobby was particularly concerned about the rebirth of the so-called cramdown provision, which would allow at-risk homeowners to ask a bankruptcy court to amend the terms of their mortgages. A bill that would approve cramdowns was passed by the House earlier this year but was rejected by the Senate.
But the credit unions' main efforts were aimed at carving-out an exemption from the consumer protection agency.
CUNA representatives had apparently succeeded in convincing lawmakers to exempt all credit unions under $10 billion in assets from being examined by the new agency, leaving only three credit union giants — Navy FCU, Pentagon FCU and North Carolina State Employees' CU — under its examinations. Fred Becker, president of NAFCU, where Navy FCU and Pentagon FCU are among the most influential members, said his group continued to oppose splitting the industry and was concerned that as many as 10 other credit union giants could grow enough in the coming years to come under the proposed agency's purview.
As a result, NAFCU continued to push for an exemption for all credit unions from both the examinations and enforcement authority of the consumer agency, urging lawmakers to leave those duties instead to NCUA and state credit union supervisors. An amendment to the massive bill that would do that was being considered late last week.
"NAFCU continues to oppose CFPA for credit unions because we did not cause this crisis," said Dan Berger, chief lobbyist for the group. "Credit unions cannot afford any more unnecessary regulatory burden, whether the new CFPA rules are enforced by the CFPA or NCUA."
Hundreds of credit union executives and lobbyists blanketed Capitol Hill in the hours running up to last week's vote, as CUNA and its state leagues flew in more than 630 representatives to lobby their own congressmen. John Magill, chief lobbyist for CUNA, said he believes the group was successful in explaining to Congress how credit unions were not a cause of the financial crisis and would be harmed by many of the proposals being debated in the bill. "I think we were quite effective in stating our case," said Magill.
