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Broad financial issues grab new Congress attention
WASHINGTON (1/7/09)—Barring something unforeseen, it is all but assured that the early days of the 111th Congress will be dominated by the same issues that seized the country’s attention before the beginning of the new year.
Click to view larger image During swearing-in ceremonies Tuesday for the 111th Congress, CUNA lobbyists greet an old credit union friend: Former U.S. representive and newly sworn-in U.S. Sen. Mark Udall (D-Colo.). Udall was a five-term congressman and co-sponsor of the Credit Union Regulatory Improvements Act (CURIA). From left: CUNA's Michele Johnson, Udall, and CUNA's Phil Drager. (Photo provided by CUNA)
There will be congressional investigations into the U.S. Treasury Department’s use of the $700 billion it was allotted by Congress last year to shore up the economy through such programs as the Troubled Asset Relief Program (TARP). One such session is the recently rescheduled House Financial Services Committee hearing on the use of TARP funds granted under last year’s Emergency Economic Stabilization Act (EESA). More such investigative sessions are likely. Beyond that, lawmakers in both the House and Senate are expected to fire up their efforts to hammer out more economic stabilization measures once President-elect Barack Obama is installed as President on Jan. 20. And, as a result of the economic turmoil launched by the subprime mortgage lending crisis, the Treasury’s plan to restructure the country’s financial services regulatory scheme is likely to get closer scrutiny as Congress parses what went wrong in financial regulations, and when and where. In fact, on Tuesday, the first day back in session, the House Financial Services Committee conducted a full committee hearing entitled, "Assessing the Madoff Ponzi and the Need for Regulatory Reform."
Click to view larger image During swearing-in ceremonies Tuesday for the 111th Congress, CUNA lobbyists Phil Drager (from left) and Michele Johnson greet U.S. Sen. Susan Collins (R-Maine), who was elected to her third Senate term. In the 110th Congress, Collins was a co-sponsor of the Senate version of the Credit Union Regulatory Improvements Act. (Photo provided by CUNA)
The hearing was intended to zero in on the alleged $50 billion investment fraud engineered by Bernard Madoff. However, Rep. Barney Frank (D-Mass.), who heads the panel, said in a release that the hearing will help to guide the work of the Financial Services Committee “in the 111th Congress in undertaking the most substantial rewrite of the laws governing the U.S. financial markets since the Great Depression.” When Treasury Secretary Henry Paulson last April unveiled his 212-page plan to overhaul the nation's financial institution regulatory structure, the Credit Union National Association (CUNA) quickly identified it as perilous to credit unions. Key to CUNA’s concern is that the Treasury plan operates on an assumption that financial institutions can be compared solely on the basis of the services they offer, without regard to structural and cultural differences between different types of institutions. CUNA President/CEO Dan Mica pointed out at the time that the result of that thinking is that Treasury does not acknowledge any unique contribution from credit unions based on their not-for-profit, cooperative structure. CUNA also noted that such an overhaul would require a lengthy timetable; passage of Gramm-Leach-Bliley took about 20 years. Even without the current crisis climate, it is unlikely that it would take as long to enact comprehensive regulatory restructuring if Congress determined it was in the country’s best interest. But under the gray clouds of the current economic environment, it can be expected that, at least in the short term, federal lawmakers will place this issue on their front burners, and it will remain a front-burner issue for CUNA on behalf of credit unions as well.


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