Democratic Control Likely to Increase Focus on Consumer Protection

A more intense focus on consumer protection issues is likely to emerge as Democrats prepare to control both houses of Congress and the White House, former NCUA board members and credit union lobbyists told the CU Times Wednesday.

Sen. Sherrod Brown (D-Ohio) is all but certain to take over the Senate Banking Committee and may put consumer protection high on his agenda, said former NCUA Chairman Michael Fryzel.

“He will most likely will seek additional protection for consumers as it relates to loan restructuring and service charges,” Fryzel said.

Former NCUA Chairman Rick Metsger agreed that consumer protection issues will get elevated as Democrats take over both houses and the White House.

“It means a more consumer protection-oriented agenda will get floor votes in the Senate, but I don’t expect radical changes as the change in leadership will still be tempered by more moderate Democrats and Republicans,” he said.

He added that the ascension of Brown to the Banking Committee’s chairmanship will assist NCUA board member Todd Harper’s effort to increase consumer protection funding and staff at the agency. President-elect Joe Biden is likely to appoint Harper, a Democrat, to chair the NCUA board.

But any initiative is likely to be tempered by the close partisan margins in both houses, they cautioned.

With the victories of Democrats Raphael Warnock and Jon Ossoff in the runoff for the two Georgia Senate seats, the partisan split is startling—Democrats will control 50 seats and Republicans will control 50 seats. That means that when she takes office, Vice President-elect Kamala Harris will break any tie vote. And there could be many.

“The margins are so small that any big, incremental legislation is not going to happen,” former NCUA board member Geoff Bacino said. He said that while Democrats control the Senate, it will not take too many people to bottle up legislation.

“Everybody wants to think they’re a kingmaker,” he said.

However, the tight margin could help break the gridlock that has plagued the nation’s capital for years, Carrie Hunt, NAFCU’s executive vice president for government affairs and general counsel said. “With Democrats poised to control both chambers by tight margins, we see opportunity for bipartisan agreement to advance several key reforms important to credit unions,” she said.

“There are many areas where policymakers should be able to find agreement, including increased [Community Development Financial Institution] funding, member business lending reform, and allowing credit unions to include underserved communities within their field of memberships, among other important reforms,” said NAFCU President/CEO B. Dan Berger.

Legislation passed by a Democratic House is more likely to be considered by the Democratic-controlled Senate, CUNA Chief Advocacy Officer Ryan Donovan said. “Congress is likely to get more done than it has in a decade.”

Donovan added that President-elect Joe Biden’s nominees are likely to get a warm reception from a Democratic-controlled Senate.

As a result, Donovan said, he believes that Biden is likely to announce his selection for CFPB director “sooner rather than later.”

He said that the people chosen to head the Banking Committee’s subcommittees may signal the full committee’s priorities. For instance, if Sen. Elizabeth Warren (D-Mass.) becomes chairwoman of the Financial Institutions and Consumer Protection Subcommittee, the panel will have a more intense focus on consumer protection than if a more moderate senator chairs the panel.

Donovan and Metsger also said that the likelihood of cannabis banking legislation being enacted has increased significantly. The House passed that legislation during the 116th Congress. However, Banking Committee Chairman Mike Crapo (R-Id.) opposed it and so the bill never was considered by the committee. With Brown as chairman, the legislation is more likely to pass the committee and the Senate, Donovan and Metsger said.

“I see a real possibility that marijuana banking access and lifting of legal restrictions may become realities,” Metsger said. “On the flip side, it may come with greater federal regulation to supplant the patchwork of state legislation on the issue.”