The banking industry is launching a last-minute bid against House legislation that would allow credit unions to greatly expand their membership into underserved areas, trying to derail the bill that was put on a fast track by Democratic leadership.
Banking lobbyists were caught off-guard when Majority Leader Hoyer announced Friday afternoon that he would bring up the measure to provide regulatory relief to credit unions. The House Financial Services Committee had one hearing on the measure, sponsored by Financial Services Capital Markets Subcommittee Chairman Paul Kanjorski, D-Pa., and Rep. Ed Royce, R-Calif., and it had not scheduled a markup on the legislation.
The bill is a slimmed-down version of a measure that would allow the industry to better compete with banks and thrifts — reigniting a long-running feud between the two groups.
It was to be considered today under suspension, which requires two-thirds support for passage, but House leaders decided Monday night to pull it from the floor.
A top Democratic aide said Monday that leadership had contemplated pulling the bill depending on the whip counts. “I don’t know we have the votes for it,” the aide said.
The banking lobby strongly opposes the Kanjorski-Royce bill, arguing that it would allow credit unions to stray from their original mission to serve lower-income and underserved in specific geographic areas, and provides them an unfair advantage over banks because they are tax exempt.
“This was not the procedure we expected,” said Floyd Stoner, executive director for congressional relations at the American Bankers Association. “If people focus on what the bill actually does, I think that the policy will concern people. This is a major expansion of geography and commercial lending, under the guise of serving the underserved.”
Under the bill, credit unions could expand into underserved areas regardless of their original field of membership, such as a common employer or specific part of town. Currently, credit unions must have multiple membership bonds for that expansion.
The bill also would exempt the cap on business loans to members in underserved areas.
The Independent Community Bankers of America argues that the bill would allow 2,700 credit unions to add entire cities — such as Washington, D.C., Philadelphia and Houston — to their membership field without any common bond.
It has 300 members in town lobbying against the bill, said Bill Grassano, ICBA spokesman. Financial Services Chairman Barney Frank is scheduled to speak to the group this morning.
Credit union lobbyists have stepped up their lobbying for the bill, noting that many of the provisions in the bill were contained in broader regulatory relief legislation that passed the House in the 109th Congress. But Brad Thaler, a lobbyist for the National Association of Federal Credit Unions, acknowledged the bill still represents the most significant expansion for the industry in a decade.
“After a series of meetings last week, it really came together. I think there is recognition in the financial services community that credit unions need regulatory relief; they have not been the bad actors in the recent subprime debacle,” Thaler said.
Thaler said banks and thrifts also are expected to see some of their priorities come to the House floor in a measure sponsored by Rep. Dennis Moore, D-Kan., that would remove some credit limits for thrifts and eliminate annual privacy notices for banks that do not share customer information. “We have not been as active on their bill as they have been on ours,” Thaler said.
The commercial banking industry has provided much more in the form of campaign contributions this cycle, sending $17.1 million to federal candidates, split evenly between Republicans and Democrats, according to the Center for Responsive Politics. The credit unions have contributed $1.6 million this cycle, with Democrats receiving 55 percent and the GOP 45 percent.
This article appears in the May 3, 2008 edition of NJ Daily.