WASHINGTON–Three members of Congress offered views on everything from unlocking opportunity to a bill on Beneficial Ownership to what the fate of Blockbuster means for credit unions and Congress.
Here’s a look at three different viewpoints shared with NAFCU’s Congressional Caucus.
Unlocking an Opportunity
A member of Congress urged credit unions to keep playing a role in serving members who are overlooked by Wall Street, which borders her district.
Rep. Nydia Velazquez (D-NY), chair of the House Committee on Small Business and member of House Financial Services Committee, told NAFCU’s Congressional Caucus that while banks have engaged in excessive risk taking, credit unions have remained invested in their communities, including doubling their small business lending between 2008-16 to $60 billion.
“For me, working with you is not just about policy, it’s about unlocking opportunity for aspiring entrepreneurs. It’s about ensuring working people can access fair, affordable products,” said Velazquez. “We must explore raising the member business lending cap. Raising the cap, or at least providing additional flexibility, will help more small business access the resources they need to grow and create jobs.”
The Upcoming Agenda
Looking to the upcoming agenda of the Financial Services Committee, Velazquez said the focus will remain on data security and housing reform.
“Comprehensive housing reform is the last remaining piece of the financial crisis,” said Velazquez. “I have a lot of concerns around the Treasury reform plan. But like you in this room, I believe credit unions must have equal access to the housing market, and access should be determined by quality, not volume.”
Rep Wants Support for Beneficial Ownership Bill
Rep. Carolyn Maloney (D-NY), chair of House Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets, urged credit unions to get behind her Beneficial Ownership Bill in Congress, which she said will provide significant regulatory relief.
“The problem the bill is trying to solve is very simple,” Beatty told NAFCU’s Congressional Caucus. “Criminals and terrorists have always used anonymous shell companies to finance their companies and hide their operations. They never have to disclose who owns the shell companies, meaning there’s no way for law enforcement to determine who is involved in a shell company. A member can come into your credit union and open an account for $100 and you have to know your customer. Someone can put a billion dollars in an anonymous shell company and you don’t know who’s behind it.”
Seeking to address that challenge, Maloney said FinCEN put in place its Beneficial Ownership requirements.
“But those put the burden on financial institutions,” she said. “FinCEN doesn’t have jurisdiction over all corporations and LLCs, so they had to go through financial institutions, instead. I fully agree this burden should not be on you, it should be on the companies themselves. My bill would take the burden off of you and off of all FIs and require companies to disclose their beneficial owners at the time the company is formed. It would save you billions of dollars in compliance costs. I hope you will lobby hard while you are here to pass this bill.”
Reaction to Housing Finance Plan
Separately, Maloney said her initial reaction to the Trump Administration’s recently released housing finance reform plan is that she is supportive of certain elements, but she also has “grave concerns.”
“It goes too far in rolling back affordable housing support, would raise costs of housing and would disrupt the housing market,” she said. “I am pleased the plan includes an explicit government guarantee. A notable feature is it lets Fannie and Freddie survive in a more limited form, and it allows for competition, which I support. Right now small credit unions and big banks have equal access to the secondary markets. The fear among small lenders is if we replace Fannie and Freddie with private actors and the big banks play this role of buying mortgages from lenders and turn them into securities, then small lenders would effectively be forced to sell their mortgages to the big banks. The fear is this would push many credit unions out of the market.”
The Blockbuster Lesson for Congress, CUs
WASHINGTON–Rep. Patrick McHenry (R-SC), a minority member of the House Financial Services Committee, said he is concerned Washington is stifling opportunities American businesses have to innovate.
“How many Blockbuster video stores are left in the world? The last one is in Bend, Ore. It took Netflix just 20 years to wind down Blockbuster, which had 10,000 stores, down to just one,” the eight-term congressman told NAFCU’s Congressional Caucus. “What the heck does this have to do with credit unions? Everything. It is my fear credit unions and all financial institutions are at risk of disruption. Financial institutions have gone from holding 30% of assets to holding 6.6%. The number of credit unions has steadily declined. This decline is hitting small towns in America, like those in my district. There are 35 counties in the U.S. without a single bank or credit union branch.”
The New Debates
McHenry said Washington must work with other stakeholders in helping to build a better financial system for the future.
“Our policy debates must consider how technology can help credit unions meet the demands and answer the calls members have of you,” he said. “The better technology-forward you are, the better able you are to compete. You and I know the future is happening regardless of inaction out of Washington. The future is here; it’s currently called fintech, but in the next few years we’ll think of fintech the way we used to talk about whether you have a web page.
“The foundational underpinnings of our financial system are fundamentally changing, and credit unions need to keep pace. That’s why we need alterations in regs and laws to meet that challenge.”
McHenry called for more partnerships between Washington, fintechs, and financial institutions. “We need to do everything we can to promote collaboration.”