WASHINGTON (2/27/13)--House Financial Services Committee Chairman Jeb Hensarling (R-Texas), speaking Tuesday at the Credit Union National Association's Governmental Affairs Conference in Washington, D.C., said he will help credit unions preserve their tax-exempt status.
House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said taxing credit unions is "bad policy." Hensarling spoke at the Credit Union National Association's Governmental Affairs Conference in Washington, D.C. (CUNA photo)
Hensarling blamed bad policy, specifically excessive taxation, as among the key reasons for feelings of doubt that many American feel toward their economic prospects.
"But if I have anything to do with it, it will not be taxation on our credit unions," Hensarling declared to the credit union audience. More than 4,200 credit union representatives are attending this year's GAC.
Hensarling also said that he "will not rest" until the U.S. Congress repeals a provision of the 2010 Dodd-Frank Act that caps the fees financial institutions and card networks can charge retailers when a customer uses a debit card.
"Federal price controls were wrong yesterday, federal price controls are wrong today, federal price controls will be wrong tomorrow," Hensarling said of the interchange fee cap.
New rules that allow retailers to assess "check out" fees or surcharges on credit card purchases took effect in many states on Jan. 27, and CUNA is watching to assess how these rules could impact credit unions. The surcharge rule change is one result of a 2012 interchange fee class action lawsuit settlement (News Now Jan. 29). CUNA has explained that the surcharging aspect of the settlement--as well as the provision that consumer-owned credit unions would see a reduction in interchange revenue--are signs that the settlement does nothing for consumers.
Hensarling also attacked the regulatory complexity created by Dodd-Frank. He said Dodd-Frank was based on the premise that regulators lacked the authority to prevent Wall Street from taking outsized risk, but that diagnosis, he said, was wrong.
"You can find very few instances of lack of regulatory authority contributing to the financial crisis," Hensarling said. "Instead at the epicenter of the crisis is a Federal Reserve that kept money too cheap too long because of the housing bubble and federal policy, particularly the affordable housing goals of the [government sponsored enterprises] that promoted and incented financial institutions that were lending to people to buy homes they could not afford."
Hensarling put Dodd-Frank regulations into two categories: "Those that create uncertainty and those that create certain economic harm."
Among the chief risks facing financial institutions today is federal regulatory risk, Hensarling said. "And ladies and gentlemen, with your support, I plan to end that," he added.
Hensarling, a critic of the authority that Dodd-Frank granted the Consumer Financial Protection Bureau, said the regulatory burden inflicted by the bureau will stifle innovation and curtail lending. "The way to protect consumers is through competitive, transparent innovative markets that vigorously police for fraud, and it's time to empower credit union members, not bureaucrats in Washington."