House Passage of Reg Relief Opens Door for Senate, but Bill Will Face ILC Issue Again

WASHINGTON-Now that the House has passed H.R. 1375, the Financial Services Regulatory Relief Act, the Senate may get the hint to begin working on their own bill. Credit union lobbyists are also hoping it could spur movement on the Credit Union Regulatory Improvements Act (H.R. 3579). They pointed out that with the reg relief bill out of the way in the House, the Financial Institutions and Consumer Credit Subcommittee can schedule a hearing for CURIA. “I think it opens the door for a hearing on the issue later this spring and also, the fact that reg relief contains many of the provisions in CURIA, a strong vote for the reg relief bill, I think, implies an endorsement by members of the House for many of the provisions in CURIA,” NAFCU Director of Legislative and Political Affairs Brad Thaler said. Because CURIA contains many of the same provisions, reg relief’s passage “lays the groundwork” for the credit union specific legislation. However, CUNA Senior Vice President of Governmental Affairs John McKechnie noted, “I think it’s important to remain focused on the fact that there are parts of CURIA that are not in Reg Relief and those are parts that continue to get attention from the House: member business lending provisions, capital provisions. That’s important in this whole process because it’s really elevating Congress’ understanding of those issues and I think that it makes it more likely that at some point in the future those provisions are going to get incorporated, into either in this bill by itself, or into another bill. That has been a part of our strategy all along and it continues to move pretty nicely, especially when you look at the number of co-sponsors CURIA is starting to attract.” CUNA Vice President of Legislative Affairs and Senior Legislative Counsel Gary Kohn emphasized that the lopsided vote was very important. “It was a significant vote for a lot of reasons,” he said. “In spite of the “controversies,” it was an overwhelming vote, 392-25, and it should not be lost that credit unions were a big victor in this whole issue, that the banks didn’t really care about the bill-in some respects didn’t want the bill.” While America’s Community Bankers and the Independent Community Bankers of America came around to supporting the bill despite the credit union provisions, the American Bankers Association did not publicly support or oppose H.R. 1375. ABA Public Relations Director Charlotte Birch indicated that the organization would be interested in working on the Senate’s bill. “We are interested in working for a bill we can support,” ABA Spokesperson Charlotte Birch said. She made clear the bill ABA would support would not include the credit union provisions from the House bill. Senate Banking Committee Chairman Richard Shelby (R-Ala.) has tasked Senator Michael Crapo (R-Idaho) with drafting the Senate bill, which will be independent of the House bill. According to credit union lobbyists, rumors are circulating that there could be hearings-and possibly a bill drafted-on the Senate side this spring. During a subcommittee hearing a few years ago, House Financial Institutions and Consumer Credit Subcommittee Chairman Spencer Bachus (R-Ala.) warned the banking trade groups to back off of their criticism of the credit union provisions in the bill. ACB and ICBA have heeded this warning. ACB Executive Vice President and Managing Director of Government Affairs Bob Davis explained that his organization preferred to take a “glass is half full” approach to the issue. ICBA’s letter to House Financial Services Committee Chairman Mike Oxley (R-Ohio) just prior to the bill’s passage only discussed the Industrial Loan Company (ILC) provision. The ABA still withheld its support from the bill. “A lot of community banks are very concerned about their futures when it comes to competing with the large, diversified credit unions.That was the decision of our bankers. Obviously, they take it very seriously,” Birch said. Credit unions not only scored a victory in getting their provisions past the bankers’ objections, but lawmakers are also taking note of their efforts. “If you talk to folks on the Hill, particularly with the committee, they’ll universally tell you that credit unions were the grassroots power behind this bill,” Kohn said. NAFCU’s Thaler pointed to Congressman Steven LaTourette’s (R-Ohio) statement on the House floor. “It is imperative that we allow credit unions to continue to change with the ever-expanding financial marketplace, just as we do with the banking and the thrift industry,” LaTourette said, according to the Congressional Record. “Credit unions do an excellent job of serving their members, a tradition we need to help protect and preserve.” He also congratulated the Financial Services Committee chairman and ranking member for crafting the bill and the credit union trades for their work to obtain a bill that includes “provisions with real teeth that benefit the credit union industry.” A `dear colleague’ letter, circulated by H.R. 1375′s primary sponsors Representatives Shelley Moore Capito (R-W.V.) and Mike Ross (D-Ark.), stated explained how a number of the provisions would ease the regulatory burden on the nation’s credit unions. However, it is still an up hill battle in the Senate over the Industrial Loan Company provisions and whether or not to allow them to branch over state lines. A compromise was worked out in the House, but it may be trickier in the Senate. Senate Banking Committee Ranking Member Paul Sarbanes (D-Md.) and the #2 Republican committee member Bob Bennett (Utah) hold diametrically opposite positions on the issue. Kohn said the question is whether Shelby feels strongly enough about passing a bill to impose a solution. “We’ve heard a variety of rumors, I suppose you would call them, about how they’re proceeding,” Kohn said. “We do know that they have met with all the regulators and received input that they’re going to get from the regulators, and certainly they’ve received input from us and other institutions as well. But my understanding is that they have not actually sat down and drafted anything. At this point, there is even some thought that the Senate Banking Committee may hold hearings prior to drafting a bill and if that’s the case, then obviously it leaves a lot less time to act in a shortened session of Congress.” Thaler said that Chairman Shelby has admitted that getting the bill out of the subcommittee is the best bet for it in the Senate this year. “This bill really took a few years to bring to fruition in the House and I don’t think there’s a lot of unrealistic expectations that the Senate may get a bill out this year,” he said. -