WASHINGTON-While credit unions lost some friends and added some new ones in last week's elections, the major impact of the widening of Democratic majorities in the House and Senate is expected to be an increasing focus on major consumer protection initiatives that have been opposed so far by credit unions.
That includes legislation to bar certain credit card practices, to limit fees on overdraft protection, to rein in credit card interchange fees and to give homeowners the ability to ask a bankruptcy court to amend the terms of their mortgages.
In fact, the spreading financial crisis has already turned the Congress against deregulatory initiatives, like the CU Regulatory Improvements Act, and prompted more calls for tighter regulation.
"Deregulation is pretty much off the table right now," said John Magill, chief lobbyist for CUNA. "The feeling of the day is the past [Bush] administration is too deregulatory."
He said the mood in Congress will give impetus to the legislation on interchange fees, overdraft protection and to reopen the bankruptcy laws to allow for the restructuring of mortgages, something that credit unions oppose. President-elect Obama, for example, has endorsed the measure on restructuring of mortgages for distressed homeowners through bankruptcy.
Those initiatives have all been put forward by Democrats in Congress and were narrowly stopped this year. But a broader Democratic majority in the House and Senate next Congress will enhance their chances of passage.
That doesn't necessarily mean that CURIA, or its sister known as CUBTRRA, have no chance in the next Congress, but the provisions will have to be repackaged, said Magill. He noted that an increase in business lending limits for credit unions is already being pushed as economic stimulus, something that both CUNA and NAFCU are stressing to Congress for the upcoming "lame duck" session.
Another issue sure to reel in credit unions in the next Congress is the restructuring of the financial regulatory system, something the Bush administration proposed last summer that would have combined NCUA with the bank regulators into the Treasury. The growing financial crisis has added momentum for a regulatory restructuring, with a consensus growing to combine certain agencies, such as the Securities and Exchange Commission and the Commodities and Futures Exchange Commission.
"There's going to be a lot of focus, at least initially, in the first session (of the new Congress) on the financial crisis and what the regulatory structure should look like," said Brad Thaler, senior lobbyist for NAFCU. The challenge for the credit union lobby, he said, will be to maintain the independence of NCUA and the National CU Share Insurance Fund.
