By Silla Brush - 07/28/09 07:10 PM EDT
With roughly 90 million members and thousands of credit unions across the country, the lobby and its grassroots forces would give the Obama administration instant credibility at a time when others have panned the legislation.
The two major associations that represent the industry have met with officials at the Treasury Department and White House, members of Congress and Elizabeth WarrenElizabeth WarrenWasserman Schultz: 'Sometimes you just have to take one for the team' Chelsea Clinton's big moment Kaine as Clinton's VP pick sells out progressive wing of party MORE, the Harvard University professor and watchdog over the government’s financial bailout package who is a strong proponent of the new agency.
Financial, real estate and some auto industry interests hit back hard and fast, saying the effort would stymie innovation and hurt consumer choice. Amid the backlash, House Financial Services Committee Chairman Barney Frank (D-Mass.) delayed consideration of the agency until after the August recess. Frank welcomes a broad debate with the industry and believes he has the votes in the House to pass what is a key part of President Obama’s plan to change the financial regulatory system.
As the battle over the agency heats up, the two major credit union associations — the Credit Union National Association (CUNA) and the National Association of Federal Credit Unions (NAFCU) — have steered clear of the loudest opposition.
“There is an advantage to being at the table and willing to talk about these things,” said Ryan Donovan, vice president of legislative affairs at CUNA. “If you stand in the corner shouting ‘No, no, no,’ this thing would happen and you would have no power to affect it.”
Dan Berger, executive vice president of NAFCU, said his group would like to see the proposal scaled back some: “We want to help get to yes, but it can’t be so broad-reaching.”
NAFCU has pitched an alternative that would increase consumer protection powers at existing regulators and leave federally insured credit unions outside the scope of the new agency. The agency, NAFCU believes, should not oversee federally insured depository institutions. “We support going after the bad actors,” Berger said.
Among other issues, CUNA said its members are concerned about the burden of additional examinations and that the operating budget of the agency should be paid for in annual appropriations. CUNA also believes that the examination, supervision and enforcement powers over credit unions should stay with existing regulators.
Frank and other Democrats are working to win over support from credit unions and community banks as some of the larger interests in the industry stridently oppose the plan.
“They don’t issue credit cards. They don’t do sub-prime mortgages. In fact, what the community banks have said directly and the credit unions have said is that if they were the only ones doing mortgage loans, we wouldn’t be in this crisis,” Frank said recently. “That’s a very clear fact.”
Both associations represent strong lobbying forces and major campaign contributors, and their support would give Democrats the ability to argue that parts of the industry support the new plan.
CUNA’s political action committee (PAC) spent $4.3 million on the 2008 election, a nearly fourfold increase over 1998. Already this year, the PAC has spent more than $700,000, with 64 percent of contributions to federal candidates going to Democrats. NAFCU’s PAC spent $420,000 on the 2008 election, up a similar percentage from 1998, according to the Center for Responsive Politics.
On the lobbying front, CUNA has spent more than $2 million so far in 2009, and NAFCU more than $1.1 million.
“I wouldn’t characterize it as peeling us away,” Donovan said. But lawmakers have been “very interested” in hearing their concerns, he said, and “very few things are off the table.”
The associations are staying away from some of the tougher lobbying campaigns against the proposal.
According to a draft of talking points circulated among the groups that was obtained by The Hill, the associations refer to polling that they believe shows opposition to the new agency. The talking points cite polling that 68 percent of Americans think a new agency should not receive too much power, and that 66 percent believe the agency would add “layers of bureaucracy and make government bigger.”
The groups have yet to name a formal coalition or set up a PAC, but credit unions say they have no desire to participate.
“None of them have approached us about forming a coalition,” Donovan said. “We were neither invited nor did we attend.”