WASHINGTON-Senate negotiators were working last week on a compromise on a consumer financial protection agency, one of the priorities of the Obama administration that has run into rough sledding in the Senate.
The Senate Banking Committee was working on a compromise that would water-down the initiative significantly, by scrapping plans for a new independent agency and instead putting it into one of the existing agencies, Treasury or the Federal Reserve, which are widely considered to have not acted quickly enough to mounting evidence of malfeasance by banks on subprime mortgages, credit cards and overdraft fees.
The credit union lobby has largely kept on the sidelines, hoping that their success in convincing NCUA to create a new Office of Consumer Protection with a $1.5-million expenditure will convince Congress that credit unions are adequately regulated for consumer compliance. NCUA has assiduously kept the new office under wraps, even as it touted its creation last fall, because it doesn't want to be seen as undermining the Obama administration's efforts.
The consumer office was the idea of thenNCUA Chairman Michael Fryzel and was immediately supported by NAFCU. The hope was that an expansion of NCUA's largely moribund efforts at consumer protection would dissuade Congress from bringing credit unions under the new agency. During congressional testimony last year it was revealed that NCUA fielded and investigated a mere 36 consumer complaints in 2008.
The House, which passed a bill creating the separate agency, agreed to exempt all credit unions under $15 billion from examinations conducted by the agency, largely leaving the exams function to NCUA and state regulators.
