CUNA's 2013 Legislative Update
As the113th Congress begins, CUNA is outlining their legislative agenda for the coming year. In general, the legislative agenda will have four pillars: preserving the credit union tax status, reducing regulatory burden, engaging in housing finance reform and advancing credit union charter enhancements.
Preserving the Credit Union Tax Status
It is widely expected that comprehensive tax reform will be on the agenda next year. As part of this process, the credit union tax status is likely to be examined and could come under significant threat. We know the bankers will continue their paid media and lobbying barrage. We also expect the tax writing committees will examine a large number of tax preferences and exemptions, including the credit union tax status. This means that we will need to wage a public advocacy campaign in support of the tax status at a time when many other tax preferences are also under threat. Therefore, it will be critical for CUNA and the Leagues to develop and execute a comprehensive and deliberate grassroots, communication and legislative strategy. It will also be necessary for us to be prepared to make the case that credit unions are fulfilling their statutory mission of service to their members. Some of the work on this has begun, but it will be important for us to organize early in the year to discuss our long-game strategy.
Reducing Regulatory Burden
Credit unions regularly list regulatory burden at the top of their concerns. Over the last several years, we have called this the “crisis of creeping complexity.” A central part of our pro-active legislative agenda for the 113th Congress will be supporting legislation providing for improvements to the Consumer Financial Protection Bureau (CFPB) and seeking the enactment of legislation addressing specific reductions in regulatory burden. Despite the gridlock that has gripped Washington, we saw success in the 112th Congress when we pursued smaller regulatory relief measures. The ATM bill is a good example of this type of effort – it was a targeted piece of regulatory relief legislation that we were able to guide through the legislative process and into law. We had a similar plan with the privacy notification bill, but unfortunately ran out of time at the end of the year. These bills represent the recipe for success and we will continue to follow that recipe in the future.
Sometimes a bill does not need to become law to have a positive effect. This was the case with the examination fairness bill. The introduction of this legislation and the hearing that was held in the House Financial Services Committee gave Congress the opportunity to shine a spotlight on the challenges of and, sometimes, unfairness in the examination process. The regulators were made aware of Congress’ concern with these issues, and of course we also complained to the regulators directly. Following the hearing and our direct complaints to the regulators, we heard anecdotal reports of improvements. But we know the improvements are not uniform, so we will need to continue to keep the Congressional pressure on the regulators to improve the examination process – and we will.
Improvements to the CFPB
In the 112th Congress, the House of Representatives considered several reform CFPB proposals, and many of these will likely be reintroduced in the new Congress. These proposals included legislation to replace the director of the CFPB with a Board, to bring the funding of the agency under the appropriations process and to change the criteria and voting threshold by which the Financial Stability Oversight Council (FSOC) can overturn a CFPB regulation.
In addition to these proposals, we may seek the introduction of legislation that:
With respect to current and anticipated rulemakings, we may seek the introduction of legislation that
We also intend to continue to use our influence on the Hill to encourage Members of Congress to intervene where appropriate on credit unions’ behalf with the CFPB and other regulators. We found success in this approach during the 112th Congress on issues ranging from interchange fees to remittances; the anticipated barrage of regulations from the CFPB will provide ample opportunity for us to seek similar support from key Members of Congress next year.
Other Measures
In the event that the privacy bill is not enacted before the end of this year, CUNA intends to pursue its enactment in the new Congress. In addition, CUNA will work within its committee structure to identify other regulatory relief measures to pursue. One issue that we are actively considering is legislation eliminating the six transfer limit under Regulation D. There may also be Federal Credit Union Act clean-up measures that could be pursued.
Engaging in Housing Finance Reform
Working with our Housing Finance Reform Task Force, CUNA will be prepared to deeply engage with Congress’ efforts to reform Fannie Mae and Freddie Mac. We understand that this will be a top priority of House Financial Services Committee Chairman-designate Jeb Hensarling, who regularly says that one failure of the Dodd-Frank Act was that it did not address the “true cause” of the financial crisis, which he identifies as Fannie Mae and Freddie Mac. CUNA will be engaged in this issue as it moves forward in Congress.
Advancing Charter Enhancements
Two major charter enhancements remain on our legislative agenda: supplemental capital and member business lending.
Supplemental Capital
Reintroduction of supplemental capital legislation in the House of Representatives is an important first step toward advancing the legislation; with new champions elected to the Senate, we should also pursue introduction in that chamber. For supplemental capital to have a chance of advancing, however, we must continue to educate and generate support for the issue within the credit union system and we must raise it in the context of Congress’ consideration of bank capital issues (Basel III). We should also be aware of and anticipate the challenges of advancing supplemental capital legislation while at the same time defending the tax status against a severe threat.
Member Business Lending
After several years of hard work, it is very disappointing that we have not succeeded in passing MBL legislation. Barring a compromise in the waning days of the 112th Congress, we will need to continue to pursue this in the next Congress. While our member business lending legislation enjoys support in both chambers with cosponsors numbering more than 140 in the House and more than 20 in the Senate, lack of support from key areas including the Chairman of the Banking Committee and many Senate Republicans combined with procedural gridlock in the Senate has prevented the bill from receiving a fair vote on its merits.
In 2013, we intend to seek the reintroduction of legislation in both chambers to permit experienced credit unions to continue to lend to their small business members; and we believe there is opportunity to broaden support for the bill among the rank and file in Congress. However, we also will consider whether there are legislative and regulatory alternatives that could achieve the same end.
Going forward, we have to take some lessons from the failure to raise the MBL cap, understand the realities of credit union vs. small bank influence in Congress, address those realities, and build a system that will allow the passage of important pro-credit union legislation in the future. This, of course, is a key goal of the Plan to Win. In the meantime, we need to continue to engage the key leaders in Congress, including those who oppose our efforts, to see what they would be willing to support that would have the effect of permitting credit unions to continue to lend to small businesses. And, we will retool our advocacy strategy on this issue to use the grassroots potential of our coalition partners to advance the legislation.
Preserving the Credit Union Tax Status
It is widely expected that comprehensive tax reform will be on the agenda next year. As part of this process, the credit union tax status is likely to be examined and could come under significant threat. We know the bankers will continue their paid media and lobbying barrage. We also expect the tax writing committees will examine a large number of tax preferences and exemptions, including the credit union tax status. This means that we will need to wage a public advocacy campaign in support of the tax status at a time when many other tax preferences are also under threat. Therefore, it will be critical for CUNA and the Leagues to develop and execute a comprehensive and deliberate grassroots, communication and legislative strategy. It will also be necessary for us to be prepared to make the case that credit unions are fulfilling their statutory mission of service to their members. Some of the work on this has begun, but it will be important for us to organize early in the year to discuss our long-game strategy.
Reducing Regulatory Burden
Credit unions regularly list regulatory burden at the top of their concerns. Over the last several years, we have called this the “crisis of creeping complexity.” A central part of our pro-active legislative agenda for the 113th Congress will be supporting legislation providing for improvements to the Consumer Financial Protection Bureau (CFPB) and seeking the enactment of legislation addressing specific reductions in regulatory burden. Despite the gridlock that has gripped Washington, we saw success in the 112th Congress when we pursued smaller regulatory relief measures. The ATM bill is a good example of this type of effort – it was a targeted piece of regulatory relief legislation that we were able to guide through the legislative process and into law. We had a similar plan with the privacy notification bill, but unfortunately ran out of time at the end of the year. These bills represent the recipe for success and we will continue to follow that recipe in the future.
Sometimes a bill does not need to become law to have a positive effect. This was the case with the examination fairness bill. The introduction of this legislation and the hearing that was held in the House Financial Services Committee gave Congress the opportunity to shine a spotlight on the challenges of and, sometimes, unfairness in the examination process. The regulators were made aware of Congress’ concern with these issues, and of course we also complained to the regulators directly. Following the hearing and our direct complaints to the regulators, we heard anecdotal reports of improvements. But we know the improvements are not uniform, so we will need to continue to keep the Congressional pressure on the regulators to improve the examination process – and we will.
Improvements to the CFPB
In the 112th Congress, the House of Representatives considered several reform CFPB proposals, and many of these will likely be reintroduced in the new Congress. These proposals included legislation to replace the director of the CFPB with a Board, to bring the funding of the agency under the appropriations process and to change the criteria and voting threshold by which the Financial Stability Oversight Council (FSOC) can overturn a CFPB regulation.
In addition to these proposals, we may seek the introduction of legislation that:
- Further clarifies the exemption authority for the CFPB; and,
- Codifying requirements for the Credit Union Advisory Council.
With respect to current and anticipated rulemakings, we may seek the introduction of legislation that
- Provides more directions to the CFPB on qualified mortgages;
- Minimizes the servicing requirements for regulated lenders; and,
- Prohibits “proxy factors” in the final mortgage loan originator compensation rule.
We also intend to continue to use our influence on the Hill to encourage Members of Congress to intervene where appropriate on credit unions’ behalf with the CFPB and other regulators. We found success in this approach during the 112th Congress on issues ranging from interchange fees to remittances; the anticipated barrage of regulations from the CFPB will provide ample opportunity for us to seek similar support from key Members of Congress next year.
Other Measures
In the event that the privacy bill is not enacted before the end of this year, CUNA intends to pursue its enactment in the new Congress. In addition, CUNA will work within its committee structure to identify other regulatory relief measures to pursue. One issue that we are actively considering is legislation eliminating the six transfer limit under Regulation D. There may also be Federal Credit Union Act clean-up measures that could be pursued.
Engaging in Housing Finance Reform
Working with our Housing Finance Reform Task Force, CUNA will be prepared to deeply engage with Congress’ efforts to reform Fannie Mae and Freddie Mac. We understand that this will be a top priority of House Financial Services Committee Chairman-designate Jeb Hensarling, who regularly says that one failure of the Dodd-Frank Act was that it did not address the “true cause” of the financial crisis, which he identifies as Fannie Mae and Freddie Mac. CUNA will be engaged in this issue as it moves forward in Congress.
Advancing Charter Enhancements
Two major charter enhancements remain on our legislative agenda: supplemental capital and member business lending.
Supplemental Capital
Reintroduction of supplemental capital legislation in the House of Representatives is an important first step toward advancing the legislation; with new champions elected to the Senate, we should also pursue introduction in that chamber. For supplemental capital to have a chance of advancing, however, we must continue to educate and generate support for the issue within the credit union system and we must raise it in the context of Congress’ consideration of bank capital issues (Basel III). We should also be aware of and anticipate the challenges of advancing supplemental capital legislation while at the same time defending the tax status against a severe threat.
Member Business Lending
After several years of hard work, it is very disappointing that we have not succeeded in passing MBL legislation. Barring a compromise in the waning days of the 112th Congress, we will need to continue to pursue this in the next Congress. While our member business lending legislation enjoys support in both chambers with cosponsors numbering more than 140 in the House and more than 20 in the Senate, lack of support from key areas including the Chairman of the Banking Committee and many Senate Republicans combined with procedural gridlock in the Senate has prevented the bill from receiving a fair vote on its merits.
In 2013, we intend to seek the reintroduction of legislation in both chambers to permit experienced credit unions to continue to lend to their small business members; and we believe there is opportunity to broaden support for the bill among the rank and file in Congress. However, we also will consider whether there are legislative and regulatory alternatives that could achieve the same end.
Going forward, we have to take some lessons from the failure to raise the MBL cap, understand the realities of credit union vs. small bank influence in Congress, address those realities, and build a system that will allow the passage of important pro-credit union legislation in the future. This, of course, is a key goal of the Plan to Win. In the meantime, we need to continue to engage the key leaders in Congress, including those who oppose our efforts, to see what they would be willing to support that would have the effect of permitting credit unions to continue to lend to small businesses. And, we will retool our advocacy strategy on this issue to use the grassroots potential of our coalition partners to advance the legislation.
