CU Issues Unresolved as Congress Returns for Legislative Sprint

Congress returns to Washington this week, with a huge number of issues—including some directly affecting credit unions—unresolved.

Here’s a guide to some of the issues to watch during the next few weeks.

Appropriations

The current Continuing Resolution funding much of the government expires Friday and while that will not affect most of the functions of the National Credit Union Administration and the Consumer Financial Protection Bureau, if Congress fails to act, much of the government will shut down. While Congress works to avoid a shutdown, there are some funding issues affecting credit unions that still must be hammered out.

The House has passed its FY22 Financial Services appropriations bill. The Senate has not considered its version of the bill, but Appropriations Chairman Sen. Patrick Leahy, D-Vt., has released a proposal that could serve as the starting point for negotiations with the House.

  • The House bill calls for $330 million for the Community Development Financial Institutions program, an increase of $60 million from FY21. The Senate Democratic plan calls for $300 million for the program
  • The House included $4 million for the NCUA’s Community Development Revolving Loan Fund program for FY22, a significant boost from the $1.5 million the program received in FY21. Senate Democrats included $2 million for the program in their version of the bill.
  • The House bill also provides $6 million for the United States Postal Service to test postal banking services. The Senate bill does not include a postal banking provision. The Postal Service is testing check-cashing services at four post offices. Customers may cash a check for up to $500 in exchange for a gift card.

Congress could pass several short-term spending measures while the House and Senate work to agree on final FY22 funding levels. Lawmakers also could pass a longer- term CR that punts the spending decisions into next year.

Budget Reconciliation

The budget reconciliation legislation, commonly known as “Build Back Better” has passed the House, but not the Senate.

  • When it passed the House, Democrats dropped a plan that would have required credit unions and banks to report to the Internal Revenue Service certain inflows and outflows from customer accounts. The proposal was intended to help close the tax gap by providing the IRS information needed to ensure taxpayer compliance. However, credit union and banking trade groups mounted a campaign against the provision, contending that it created a huge regulatory burden for financial institutions and violated customer privacy. While the provision was not included in the House bill, it still could be added to the Senate version in some form.
  • The House bill includes a proposal to provide the Small Business Administration with about $2 billion over ten years to make direct loans to small businesses. Financial services trade groups have called on lawmakers to drop that provision, arguing that the SBA should maintain partnerships with financial institutions to make loans. Credit union and banking trade groups are likely to mount a concerted campaign to ensure that the provision is not in the Senate bill or a conference agreement that might come later.

Defense Authorization

The House has passed its version of the annual defense authorization bill and the Senate is likely to consider its bill this week.

  • The usual fight over providing banks with the free rent benefit that credit unions now receive on military bases has not materialized yet. The House bill calls for a study of the rent benefits. The Senate version of the defense bill, approved by the Armed Services Committee is silent on the issue so far.
  • Since the defense bill is considered must-pass legislation, extraneous issues often are tucked into the measure. The House bill includes a provision that would provide credit unions and banks with a regulatory safe harbor if they do business with marijuana-related businesses. The Senate bill does not include it and Democratic leaders there say they want to consider the marijuana banking proposal as part of a wider decriminalization bill.
  • The House bill also contains a provision to allow remote notarization on a nationwide basis. The fate of that provision in the Senate is not clear.

Summary

The House and Senate were supposed to be in session for only the first two weeks of December, but that’s unlikely to happen when you consider the unresolved issues facing lawmakers. Congress will be lucky to adjourn for the year by Christmas—if then.

Related:

House Panel Approves Bill with CDFI Boost, Postal Banking Pilot

IRS Reporting Plan Dropped from Budget Reconciliation Bill

GOP Senators: SBA Shouldn’t Make Direct Loans; IG Alleges Waste

House Bill Requires Study on Financial Services Access on Bases

Defense Bill is Latest Forum for Marijuana Banking Fight

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