Reg restructuring hits some snags

Nov. 24, 2009 – Senate Banking Chairman Chris Dodd, D-Conn., is reportedly willing to consider alternatives to most of the provisions in the 1,139-page regulatory reform discussion draft he unveiled two weeks ago.

In an American Banker article Monday, Dodd said the discussion draft was just that. And while he had set a December timetable for committee action, the measure may not move that quickly, the report said.

Dodd took opening statements from committee members last Thursday. He is being pressed for a more bipartisan approach and, the Banker reported, will be taking more time to negotiate with members on both sides of the aisle on its contents.

On the House side, Financial Services Chairman Barney Frank, D-Mass., had to delay a final vote on his panel’s systemic risk package (H.R. 3996) because the Congressional Black Caucus wants to see more done to help poor and African-American communities. That could hold up the bill until the second or third week of December, the report said.

Credit unions were the subject of concern noted in some of last week’s opening statements in the Senate Banking Committee on Dodd’s discussion draft.

Democratic Sens. Jon Tester of Montana, Herb Kohl of Wisconsin and Tim Johnson of South Dakota each mentioned their concerns over the impact of the proposed Consumer Financial Protection Agency on the cooperatives. Sen. Kay Bailey Hutchinson, R-Texas, also said no credit union should be required to pay for the cost of the wind-down of large, non-bank financial firms.

Sen. Jim Bunning, R-Ky., didn’t like the fact there have been no hearings yet on the Senate package. He is also concerned about giving the Federal Reserve too much authority and said he is opposed to separating oversight of consumer protections from safety-and-soundness regulation. And Sen. Jim DeMint, R-S.C., sees the proposed CFPA as just another layer of bureaucracy.

Dodd, in his opening statement, sought to assure credit unions that they would see “very little” change in how they are regulated, and he pledged they would not pay any new fees for CFPA activities. Sen. Richard Shelby, R-Ala., opposes the proposed CFPA and doesn’t think the plan’s approach to firms considered “too big to fail” would do anything to end bailouts of such firms.

NAFCU continues to negotiate with lawmakers in both committees and their staffs on how to keep credit unions out of the CFPA. So far, the House panel has excluded those with more than $1.5 billion in assets from direct CFPA exams, but the regulation and enforcement provisions are unchanged.

As for systemic risk oversight, the panel last week approved a NAFCU-sought revision to the House package that effectively excludes all credit unions from paying for the wind-down of large non-bank firms, providing for fee assessments on only institutions with more than $50 billion in assets.

The Senate reconvenes next Monday; the House comes back Tuesday.