Senate switch shakes up committee make-up

WASHINGTON-Senator James Jeffords (I-Vt.) announced he would leave the Republican party prior to the Memorial Day recess. He would return June 5 officially as an Independent caucusing with the Democrats. The move effectively broke the even split in the Senate to 50-49-1 in favor of the Democrats, and has implications for many Congressional committees. Particularly of interest to the credit union community is the switch between Senator Phil Gramm (R-Texas) to Senator Paul Sarbanes (D-Md.) as head of the Banking Committee. While Gramm is a credit union friend, Sarbanes has also been sympathetic to the credit union cause, helping out during the H.R. 1151, Credit Union Membership Access Act, struggle. So even with the shift in power, credit unions, which pride themselves on bipartisan support, remain in a good position. In fact, when Sarbanes announced his four main objectives for the Banking Committee, CUNA and NAFCU both said that it was very much in line with their own objectives. Among Sarbanes’ list of targets for the committee, he included studying the overall condition of the industries under the committee’s jurisdiction, financial education, predatory lending, and privacy. In reviewing the condition of the financial system, Sarbanes said, “I plan to invite the heads of the agencies under the committee’s jurisdiction to testify and tell us what their needs are and the condition of the industries they regulate. After that examination, the committee will consider any appropriate legislative response.” While credit unions have weighed in heavily in support of financial education and against predatory lending, financial privacy may prove to be an issue where they are at odds with the new Banking chairman. In January 2001, Sarbanes introduced the Financial Information Privacy Protection Act of 2001 (S. 30), which would require an “opt out” notice for affiliate data sharing; an “opt in” for sharing a consumer’s medical information or personal spending habits to either an affiliate or an unaffiliated third party; and consumer rights of access and correction. A consumer would be able to see the information to be released and correct material errors for a fee. CUNA and NAFCU have both said they would like to see the current laws and regulations stemming from the Gramm-Leach-Bliley Act work through the system before piling on additional restrictions to information sharing for financial institutions. CUNA Vice President and Senior Legislative Counsel Gary Kohn explained, “In some instances, sharing information can benefit consumers.” He listed check printing as one of those circumstances. He added that the term “affiliate” has several different legal definitions, and that depending on the definition used, Sarbanes’ bill could have absolutely no effect on credit unions. As far as how Jeffords’ switch will affect legislation already before Congress, lobbyists say it’s very unpredictable. It could help bankruptcy abuse reform (S. 420, H.R. 333) by getting the conferencing issue out of the way, or the change could hurt bankruptcy reform by giving the Democrats, many of whom oppose the legislation, control over the flow of legislation. The bankruptcy abuse reform legislation, which has been passed by both the House and Senate, has been stalled in conference because the parties could not compromise on the conference committee’s composition. In the four years it has been introduced into Congress, bankruptcy reform came closest to becoming law last year but was ultimately pocket vetoed by then-President Bill Clinton. “If Democrats control the floor, they control what happens,” NAFCU Lobbyist Murray Chanow commented. “It could cause a lot of problems for the Republicans.” Not only did Jeffords’ change of party affiliation change inter-party relations, it will also probably change the dynamics of the House and Senate. “There is still a very close margin in the Senate,” CUNA Senior Vice President of Government Affairs John McKechnie explained. “The House sees its role as trying to most aggressively push the president’s agenda.” Jeffords realized the turmoil his change of party affiliation could bring. On the home page of his Web site, he has posted, “My colleagues, many of them my friends for years, may find it difficult in their hearts to befriend me any longer. Many of my supporters will be disappointed, and some of my staffers will see their lives upended. I regret this very much. Having made my decision, the weight that has been lifted from my shoulders now hangs on my heart.” He explained that the crevice between his beliefs and the Republican party, particularly regarding President George W. Bush’s education plans, had grown too wide. Democrats were happy with Jeffords’ decision. Congressman John LaFalce (D-N.Y.), ranking members on the House Financial Services Committee, remarked, “Under Democratic control, the legislative environment in the Senate will be more responsive to the concerns of consumers, working families, the homeless, and workers living paycheck to paycheck.” LaFalce added that he was looking forward to working with Sarbanes on meaningful privacy initiatives and preventing predatory lending practices. [email protected]