WASHINGTON – Senate Banking Committee Chairman Christopher Dodd introduced a draft of a new regulatory reform bill yesterday that would combine the four banking regulators – but not NCUA, maintaining the credit union agency’s independence, for now.
The focus of Dodd’s bill is the consolidation of the alphabet soup of various banking agencies: the FDIC, Federal Reserve, Office of Thrift Supervision and Office of Comptroller of the Currency, and creation of a new agency to handle financial institutions that pose a risk to the financial system, as well as creation of a Consumer Financial Protection Agency.
The systemic risk regulator would be empowered to unwind huge entities that pose a potential risk to the financial system. It is not clear if that includes U.S. Central FCU, whose failure is trickling down and affecting thousands of credit unions across the country.
The credit union lobby was satisfied yesterday that NCUA is left untouched in the proposed bill, but expressed concern at the consumer agency, which it is fighting in the House. "We appreciate the NCUA being left independent, but since credit unions didn't cause this crisis, we continue to be opposed to being under the [consumer protection agency],” said NAFCU President Fred Becker. “Also, we're such a small portion of the financial services marketplace, we do not believe we should be under the 'systemic risk’ provision of the bill."
In a prepared statement, CUNA President Dan Mica said because credit unions are member owned and “have long advocated strong consumer protection,” they already operate in a consumer-friendly way.
The prospects of Dodd’s proposal are in doubt because during yesterday’s press conference where it was introduced he was joined by the banking panel’s eight Democrats – but not a single Republican.
Eventually the Senate bill will be combined with legislation moving through the House on a new consumer protection agency, consolidation of banking regulators and a systemic risk regulator.
