Senate Shift Brings CU Skeptic To Fore

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The Republican takeover of the Senate next year will bring with it another credit union skeptic to head the all-important Senate Banking Committee.

Three-term incumbent Richard Shelby of Alabama, who has expressed his misgivings about the vast growth and expansion of credit unions, is widely expected to take the helm of the banking panel when the GOP takes over the Senate in the 108th Congress.

"I think that's clearly what he intends to do," said Alabama CU League President Gary Wolter, who has known Shelby for more than 30 years, after speaking with Shelby's people after the elections.

Shelby, who switched to the GOP in the early 1990s after being elected to Congress as a Democrat, will succeed Democrat Paul Sarbanes of Maryland, who chaired the committee for less than two years; and before him, Republican Phil Gramm of Texas, who is retiring from Congress at year-end. While both Sarbanes and Gramm are self-proclaimed credit union supporters-each was instrumental in passing HR 1151, the landmark credit union bill-both have expressed concerns of the rapid diversification and growth of certain segments of the credit union industry.

"He (Shelby) has some strongly held ideas about credit unions; that they're not designed to become huge institutions. We'll have to deal with that. He's also against wide-open fields of membership, he believes strongly in the common bond," said Wolter.

That could mean trouble for credit unions for their main legislative priority, regulatory relief, for which they will need Shelby's help in getting a bill passed.

In addition, Sarbanes, who instructed the Government Accounting Office to study whether credit unions are adhering to their historic mission, will remain on the banking committee as its leading Democrat. The combination of the two some-time credit union skeptics will make it more difficult for credit unions to get their wish list approved for expanded powers in the Senate, as they did in the House.

A regulatory relief bill with more than a dozen credit union provisions was easily passed by the House Financial Services Committee as a preliminary step towards expected passage by the full House.

Shelby, who served in Congress during the S&L debacle, will most likely tread carefully on the regulatory relief initiative, especially where it pertains to credit unions, according to Wolter. "Most probably he'll be supportive of it," said Wolter, "but he will be vigilant on the safety and soundness issues."

CUNA President Dan Mica acknowledged the potential problems the new make up of the Senate committee could pose.

"The Senate Banking Committee offers a line-up where we're going to have to do a lot of hard work," said Mica, who served in the House with Shelby.

Shelby is also expected to push forward with efforts to expand privacy controls beyond the "opt-out" requirements of the Gramm-Leach-Bliley Act, sources said. According to Wolter, Shelby favors a tougher "opt-in" scheme which would require credit unions and other users of confidential consumers' information to require a consumer's permission before sharing or selling their information.

Shelby has had a mixed record on credit union issues in the past. On HR 1151, he favored stricter controls on member business loans (MBLs), at the behest of the banking lobby. "Clearly, he's been heavily supported by the bankers," said Wolter. But he also helped knock out a bank-supported measure which would have applied a Community Reinvestment Act (CRA)-type requirement for credit unions. He also ended up voting for the credit union bill.

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