Banking industry blamed for canceled vote

Credit union lobbyists blamed the banking industry for scuttling a Tuesday vote on legislation that would allow them to better compete with banks.

House Majority Leader Steny Hoyer (D-Md.) said Friday that he would put the legislation to a vote this week, but the measure was pulled from the suspension calendar Monday night, catching credit union lobbyists off guard.

{mosads}A press release posted on the Credit Union National Association’s (CUNA) website fingered the banking lobby, asserting it had abruptly backed out of a deal to pair regulatory relief for banks with the credit unions measure.

“The bankers will sacrifice their own regulatory relief measure simply to ensure credit unions get absolutely nothing from Congress,” said CUNA’s president and chief executive, Dan Mica. “This behavior ultimately squeezes working Americans, who now more than ever should benefit from affordable financial services provided by credit unions.”

A Democratic leadership aide said the bill was postponed for now, and that it was unclear when it will be brought back.

The top lobbyist for the American Bankers Association , Floyd Stoner, attributed the bill’s yanking to his industry’s fierce campaign against the legislation along with the leadership’s circumvention of regular order. The House Financial Services Committee heard testimony on the legislation last month but never voted on the bill.

“I honestly believe that as members began to realize the intensity of the opposition by banks and began to actually look at the policy and realized that the bill was not voted out of committee … there was a lot of pressure on leadership to pull it from the floor,” Stoner said.

In its press release, CUNA acknowledged that the bill skirted regular order.

Eternal foes, the banks and the credit unions called a truce in the last Congress and supported legislation to relax restrictions on both types of financial institutions. The legislation was passed, but efforts to reprise the ceasefire in this Congress so far have failed.

When Reps. Paul Kanjorski (D-Pa.) and Ed Royce (R-Calif.) introduced the Credit Union Regulatory Relief Act last month, credit union lobbyists billed it as a scaled-back version of their perennial wish list legislation, the Credit Union Regulatory Improvements Act. But banking lobbyists pounced, decrying the bill as an unjustified expansion of credit unions onto their turf.

The bill would allow credit unions to offer alternatives to payday loans and to expand their geographic reach. But banks complain that, due to an overbroad definition of so-called “underserved areas” by the credit union regulator, credit unions would have free rein to lend throughout broad geographic areas like Washington, D.C., Philadelphia and Houston without requirements to serve low-income consumers.

Business loans made in such areas would be exempt from the usual credit union caps on business lending.

“They would have the ability to make unlimited business loans from Northwest Washington, D.C.,” said the vice president of congressional affairs for the Independent Community Bankers of America (ICBA), Ron Ence.

Speaking before the trade group on Tuesday, Financial Services Chairman Barney Frank (D-Mass.) said he wants the banks and the credit unions to work toward consensus on legislation that he can bring to floor, according to Ence.

Frank did not say whether his panel would consider such compromise legislation, or whether it would go straight to the floor.

Mica of CUNA said he and his team “would do our utmost to get [the legislation] back on the House schedule under regular order, if at all possible.”

The banking industry is pushing its own legislation, sponsored by Rep. Dennis Moore (D-Kan.), to loosen restrictions on thrifts and lift burdens associated with privacy laws for some banks. The legislation, along with the credit union bill, could form the basis of a compromise on regulatory relief this year. However, the rival camps have yet to meet face to face to hash out a way forward.