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GOP Congress Promises New Slant on Old Issues

Written by John McKechnie, Partner, Total Spectrum.

Following the landslide that gave Republicans the majorities in both the House and Senate for the first time since 2006, I can make some very preliminary, semi-educated guesses about the tack the GOP will take. 

For credit unions, I’d watch four issues for attempted action by the Republicans. I deliberately say “attempt” because it is important to note that, in Congress, there are majorities, and then there are majorities. President Obama is likely to veto the more ambitious parts of the GOP agenda, and attaining 2/3 of the House and Senate to override is mathematically, and politically, daunting. 

Here are the issues:

Tax reform

Much chatter has already circulated around Capitol Hill about Republicans making tax reform a priority. Incoming Ways and Means Chairman Paul Ryan (R-WI) has said he believes tax reform is “achievable and necessary,” but he has also complicated the road to passage by stating that reform means bothcorporate (which could mean the credit union tax exemption is on the table) and individual tax reform. Since the White House has indicated a preference for a corporate-only approach, that’s already an issue to be resolved before the next Congress is even seated. On the Senate side, staff for new Finance Committee Chairman Orrin Hatch (R-UT) say “bet the farm that we’re going to try a tax reform bill.” An issue this complex and multi-faceted needs consensus from all parties and will be difficult to achieve, even with only Republican hands on the legislative pen.

Dodd-Frank reform

If tax reform is contentious, efforts to repeal, or even tweak, the landmark Dodd-Frank law will be an all-out donnybrook by comparison. New Senate Banking Committee Chairman Richard Shelby will take aim at the Consumer Financial Protection Bureau, and will be joined enthusiastically by House Financial Services Chairman Jeb Hensarling. GOP staff is busily drafting bills to alter the structure of CFPB from a single Administrator to a 3 or 5 person board. Also, there are plans to subject CFPB to the congressional Appropriation process, a move that would result in more budgetary oversight. This will be strenuously resisted by the Administration. However, there may be a silver lining—controversy surrounding big ticket Dodd-Frank items may pave the way for regulatory relief issues of importance to credit unions and other small institutions. This is worth credit unions spending time proposing a variety of Dodd-Frank exemptions to ease our regulatory burden. Supplemental capital, anyone?

Housing finance reform

Similar to Dodd-Frank, Shelby and Hensarling are united in a desire to shrink the federal footprint in housing finance, eliminate Fannie and Freddie, and foster the flow of private capital into the system. However, they may be a minority in a majority, as significant numbers of Republicans want to maintain a robust government presence in the housing finance market. This is an issue that will receive attention, but I think ultimately will produce inaction in the 114th Congress. 

Data security

Although an important issue for credit unions, inertia surrounds data security on Capitol Hill. There’s a simple reason: Republicans and Democrats divide their loyalties between financial institutions and merchants. While there’s support on both sides of the aisle for progress on mandatory consumer notification for retailers, there is clearly an equal amount of opposition. Of all the credit union agenda items, the dynamic here is not going to be noticeably different in the 114th Congress than it was in the 113th. That doesn’t mean credit unions can’t work aggressively for passage of legislation; it just means that retailer opposition will remain constant, no matter which party is in charge. 

Meet the new boss, same as the old boss? Not exactly. Republicans will bring new emphasis and new enthusiasm to Capitol Hill in 2015, and will have very different priorities than their Democratic counterparts. But the reality of still-divided government, and a still-absent consensus on the size and role of government, means that familiar ideological battle lines will remain in place. At least until 2016. 

John McKechnie works with the Missouri Credit Union Association on federal issues. He previously worked for the National Credit Union Administration and the Credit Union National Association. McKechnie will present a national legislative overview with MCUA SVP of Advocacy Amy McLard at the Annual Advocacy and Business Meeting on February 9.