Congress Gives Credit Union Trades Wins Ahead of August Recess
Learn how CUNA and NAFCU reacted to the latest on credit card interchange, rent benefits on military bases and the CFPB's small business lending rule.
CUNA, NAFCU react to latest on credit card interchange, rent benefits on military bases and CFPB small business lending rule.
In a win for financial services trade groups, the Senate on Thursday passed an annual defense authorization bill that omitted a controversial credit card interchange proposal.
The massive defense bill, which passed the Senate 86–11, now goes to a House-Senate conference committee.
Further, the legislation, S. 2226, does not include a provision that would have given banks the free rent benefit that credit unions now receive on military installations.
The corresponding House bill also does not include those two provisions, so it would be difficult to add them during a conference committee.
Backstory and Context
Sens. Richard Durbin, D-Ill., and Roger Marshall, R-Kan., had been pushing an amendment that would require the Federal Reserve to issue rules to ensure that large credit unions and banks that currently use the four-party card processing system be required to use at least one affiliated network in addition to Visa and Mastercard.
Credit union and banking trade groups furiously lobbied against the provision, contending that it would increase costs for consumers. Supporters, on the other hand, argued that competition would drive down fees and benefit consumers.
Although the proposal was not included in the defense measure, it still could come up in other bills or as standalone legislation.
Reaction From Credit Union Groups
Following the Senate vote, CUNA President/CEO Jim Nussle said his organization will continue to voice its opposition and “push back against this bill at every turn to prevent it from moving forward.”
The defense bill additionally does not include the free-rent benefit for banks, a perennial issue with banking trade groups arguing that giving banks free rent simply would achieve parity.
Credit union trade groups, meanwhile, contend that the issue should have been put to rest when the Defense Department issued a study showing that servicemembers were satisfied with their financial services options.
CFPB Small Business Lending Rule
On the other side of the Capitol, the House Financial Services Committee approved H.J. Res 66, a resolution that would void the CFPB’s rule requiring large financial institutions to report their lending to women- and minority-owned businesses.
Credit Union Response
Credit union trade groups supported the resolution.
“We thank the committee for acting against this rule that has noble intent but would lead to harm and reduced access to credit for small businesses,” said CUNA Deputy Chief Advocacy Officer for Federal Government Affairs Jason Stverak, following the vote. “Community financial institutions and the businesses they depend on can’t afford the substantial increase in cost in borrowing this rule would create.”
Additionally, NAFCU Vice President of Government Affairs Brad Thaler had sent committee members a letter supporting the resolution.
“While NAFCU supports the intention of Section 1071, small institutions like community-based credit unions cannot afford the cost of complying with the wide scope of new regulatory burdens proposed by the CFPB,” he wrote. “These costs would result in fewer lenders supporting our nation’s small businesses, which would in turn result in less availability of credit for small businesses.”
Although the House panel approved the resolution and the Republican-controlled House may pass it, the resolution still may not pass the Senate.
And even if the Senate does pass it, the resolution likely would be vetoed by President Biden with Republicans unlikely to have the super-majority to override the veto.
Support From Nonprofit Organization
Jesse Van Tol, president/CEO of the National Community Reinvestment Coalition, said the resolution was simply the latest move by lawmakers who oppose the CFPB.
“This is an act of political theater from a group of people who oppose the CFPB’s very existence, not an earnest or thoughtful disagreement over policy,” he said. “Anti-consumer lawmakers have been attacking the CFPB since before it was even born.”
ESG Legislation Approved
The House committee also approved legislation intended to hinder financial regulators in their efforts to consider Environmental, Social and Governance (ESG) issues.