WASHINGTON-There's no question where the new Congress' and the Obama administration's legislative priorities will lie-economic stimulus. The question is how credit unions can demonstrate that some of their pet projects, such as lifting the cap on member business lending and capital reform, fall right in line with those priorities.
"The Obama administration's priorities for 2009 will be economic stimulus right off the bat," said Ryan Donovan, CUNA's VP- legislative affairs. "What credit unions need to do to be successful is to make their priorities relevant to Congress. They're looking at economic stimulus, we're looking to lift the caps on member business lending, and in this economy there is a need for more business lending. This is something that doesn't cost the taxpayers a dime and is exactly the type of economic stimulus Congress is looking for to balance the spending initiatives."
Dan Berger, NAFCU's SVP-governmental affairs, agreed, noting that capital reform for credit unions is another such issue that would allow for additional lending and would stimulate the economy without any cost to taxpayers. "We are starting to get some positive traction on that," he added.
Another big issue expected to be taken on early by the Obama administration and the new Congress is regulatory restructuring and/or consolidation.
"In 2009, what doesn't happen will be just as important as what does happen," Donovan said, noting that credit unions do not want to see NCUA or the National CU Share Insurance Fund consolidated in any way.
"We have seen no indication from anyone about merging NCUA or the insurance fund," Berger said. "But that is something we are keeping an eye on."
In line with the idea that "what doesn't happen will be just as important as what does," some of the pro-consumer reforms being considered could end up hurting credit unions, even though they are largely pro-consumer themselves, Berger noted.
"Some of the credit card reforms, overdraft protection reforms, these are aimed at things that credit unions already don't do," he explained. "But there are some bad actors out there, and the efforts to rein them in could spill over onto the white hats. New disclosures, for example, could add unnecessary burden for credit unions."
Another top priority for Obama and Congress in 2009: preventing home foreclosures. Though lawmakers enacted a major bill designed to do just that, and federal regulators have talked about doing more, little has stemmed the tide of foreclosures, which could reach 10 million over the next five years.
Democratic leaders - with wider majorities on both sides of Capitol Hill and control of the White House - are expected to press for systematic loan modifications and a bill that would allow judges to rework mortgages in the bankruptcy process. Though there have been similar efforts before, lawmakers said they expect quick action next year.
"President-elect Obama has said that he is very much supportive and interested in getting loan modifications done and indicated that the bailout should have done that," Rep. Maxine Waters (D-CA) told American Banker, an affiliate of Credit Union Journal. "That is high on my agenda and I think high on the agenda of a lot of legislators who are just caught without being able to help their constituents who are in these home foreclosure problems."
Rep. Waters was one of many lawmakers who had expected the current administration to deal with the issue using the $700 billion Troubled Asset Relief Program. Despite requirements in the Oct. 3 legislation that the program offer its own foreclosure mitigation plan, however, it has not yet done so. The incoming administration is expected to quickly offer its own plan.
"The single biggest issue is going to be loan modifications," said Laurence Platt, a partner at the law firm K&L Gates. "They are going to throw the kitchen sink at it."
The incoming administration has already said foreclosure prevention is a top priority. According to the Obama-Biden transition team website, the administration will "instruct the secretaries of Treasury and Housing and Urban Development to use their existing authority to more aggressively modify the terms of existing mortgages." It is also developing "a plan to work with state housing agencies to coordinate broad mortgage restructurings," the site says.
What impact the shift to an Obama administration will have on policy is hard to gauge, since the president-elect is not sworn in until Jan. 20, but no matter what, time will fly.
"The first four months will go by very quickly, it will be action packed," Donovan suggested. "As we approach Memorial Day, I don't know how much will have been enacted, but there will be a very strong effort to so some very big things. The in-coming administration has a lot of momentum, and a lot of urgency."
