IS THERE STILL HOPE FOR REG RE­FORM?

Credit Union Journal - - Contents - BY IAN MCKENDRY

Dis­cus­sions among mem­bers of the Se­nate Bank­ing Com­mit­tee may have bro­ken down, but a group of mod­er­ate Democrats may hold the key to sav­ing the reg re­form credit unions so des­per­ately want.

WASH­ING­TON — DIS­CUS­SIONS ON A REG­u­la­tory re­lief pack­age be­tween the top Demo­crat and Repub­li­can on the Se­nate Bank­ing Com­mit­tee broke down late Tues­day night, but mem­bers from both sides of the aisle re­main hope­ful that they can reach a bi­par­ti­san deal.

Chair­man Mike Crapo and Sen. Sher­rod Brown, D-ohio, the panel’s rank­ing mem­ber, have been dis­cussing ways to re­form parts of the Doddfrank Act since the be­gin­ning of the year with ini­tial op­ti­mism that they could come to an agree­ment. How­ever, it ap­pears that what Repub­li­cans wanted was too much for Brown, who is one of the Se­nate’s more progressive mem­bers.

“I care about help­ing the small banks and the credit unions, but I wasn’t will­ing to gut con­sumer pro­tec­tions to do it,” Brown said in an in­ter­view.

But now with talks be­tween Crapo and Brown be­ing scrapped, mod­er­ate Democrats on the bank­ing panel, in­clud­ing Sen. Heidi Heitkamp, D-N.D., plan to ne­go­ti­ate di­rectly with Crapo. Yet it still re­mains un­clear if they would be able to bring along other Democrats to sup­port such a deal. A cen­tral piece of reg­u­la­tory re­lief dis-

cus­sions is whether and how much to raise the $50 bil­lion as­set thresh­old qual­i­fy­ing “sys­tem­i­cally im­por­tant” banks for tougher su­per­vi­sion, or whether to aban­don a hard nu­meric thresh­old al­to­gether.

“I have long said that I am go­ing to do ev­ery­thing that I can to achieve a bi­par­ti­san anal­y­sis that helps my com­mu­nity banks and my credit unions and I have not elim­i­nated that goal,” Heitkamp said. “I con­tinue to have that goal, and look for­ward to on­go­ing con­ver­sa­tions.”

De­spite the break­down in talks, the mood in much of the credit union ad­vo­cacy com­mu­nity re­mained pos­i­tive -- or at least op­ti­mistic.

“This is dis­ap­point­ing but not sur­pris­ing,” said Ryan Dono­van, chief ad­vo­cacy of­fi­cer with the Credit Union Na­tional As­so­ci­a­tion. “And we hope it is not per­ma­nent. Bring­ing about com­mon-sense reg­u­la­tion is a process. We hope both sides will con­tinue to work to­gether to put forth bi­par­ti­san leg­is­la­tion that fo­cuses on many of the im­por­tant is­sues that im­pact con­sumers and small fi­nan­cial in­sti­tu­tions, in­clud­ing credit unions.”

ANY DEAL NEEDS 60 VOTES TO PASS

Some lob­by­ists doubted Brown would agree to a deal that would be amenable to Repub­li­cans and be­lieve a pack­age ne­go­ti­ated with mod­er­ate Democrats will prove to be more fruit­ful in rolling back Dodd-frank reg­u­la­tions. How­ever, any deal will need to thread a nee­dle be­cause it will re­quire the sup­port of eight Democrats to get the 60 votes needed to pass, not just the four mod­er­ates on the Bank­ing Com­mit­tee

Crapo said he and Brown “did both work hard and in good faith” but “we were un­able to reach an agree­ment.”

But he said he has al­ready started to ne­go­ti­ate with the mod­er­ate Democrats who have ex­pressed a de­sire to make some Dodd-frank re­forms. Be­sides Heitkamp, other Democrats said to be in­volved in the talks are Sens. Jon Tester of Mon­tana and Joe Don­nelly of In­di­ana.

It is un­clear if Sen. Mark Warner, D-VA., is also part of the dis­cus­sions, but he is seen as among the com­mit­tee’s more mod­er­ate Democrats.

“I in­tend to move for­ward to build a bi­par­ti­san so­lu­tion,” said Crapo, who added he still “hopes” a deal can be made by the end of the year.

Sen. Tim Scott, R-S.C., an­other mem­ber of the com­mit­tee and a for­mer credit union board mem­ber, sig­naled that Repub­li­cans and Democrats might not be too far apart on agree­ing on some re­forms.

“I think it is re­ally im­por­tant that we con­tinue to look for ways to work with our friends on the other side to de­liver re­lief from a reg­u­la­tory stand­point,” said Scott.

PO­TEN­TIAL OB­STA­CLES?

Some an­a­lysts sug­gested Brown’s lack of in­volve­ment in dis­cus­sions poses an ob­sta­cle to an agree­ment.

Ian Katz, a pol­icy an­a­lyst at Cap­i­tal Al­pha Part­ners, wrote in a re­search note the firm has been “con­trar­ian op­ti­mists” a Se­nate reg­u­la­tory re­form deal will in­clude a change to the Doddfrank thresh­old but that “Brown’s sup­port would have helped bring along a few more Democrats.”

How­ever, it could be easier to come to an agree­ment now that it’s be­come clear what Brown will and won’t sup­port.

Re­gard­less of the noise sur­round­ing this bill, Crapo said his ob­jec­tive re­mains un­changed.

“I want to build a bi­par­ti­san bill to achieve sig­nif­i­cant reg­u­la­tory re­form,” he said.

“I have long said that I am go­ing to do ev­ery­thing that I can to achieve a bi­par­ti­san anal­y­sis that helps my com­mu­nity banks and my credit unions and I have not elim­i­nated that goal,” said Sen. Heidi Heitkamp, D-N.D.

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