CFPA: political wrangling ahead.

Now comes the really hard part.

Although the legislation to create a Consumer Financial Protection Agency passed the House Financial Services Committee easily, the remainder of the process will likely be complicated and the fate of credit unions' concerns is anything but clear.

Given the Democrats' majority in the House (256-158 with two vacancies), the measure--which exempts credit unions with assets of less than $1.5 billion from the agency's direct purview-is expected to pass that chamber when it comes up for a vote later this month.

Lobbyists for CUNA and NAFCU both said they have met with committee staff members since the bill was approved by the panel last month and said they came away cautiously optimistic that lawmakers will make changes that will give credit unions more of what they are looking for.

"We think they would like to be helpful in addressing our concerns about examination and enforcement," said CUNA Vice President for Legislative Affairs Ryan Donovan.

NAFCU Executive Vice President for Government Affairs Dan Berger said there is a "good opportunity to leave the enforcement of consumer protection rules with the functional regulator."

Under the bill passed by the House panel, all credit unions would be subject to rules issued by the CFPA, but those with $1.5 billion or fewer assets wouldn't have to undergo an additional examination by the CFPA, though that agency could include a representative on the NCUA examination team if it had concerns about a credit union's products.

The Senate poses another set of challenges and opportunities for the interests of credit unions. Despite the presence of 60 Democrats (including two independents who caucus with the party), the agency's fate is far from clear in that chamber.

Some Democrats, such as Sen. Jon Tester of Montana, have expressed concerns about increasing certain regulatory burdens on financial institutions. The GOP, led on by Sen. Richard Shelby, the top Republican on the Banking Committee, is strongly opposed to the idea of creating a new agency. Those dissenting views could cause trouble for Democratic leaders such as Senate Banking Committee Chairman Christopher Dodd (D-Conn.) because Senate rules allow a minority of members to slow down or derail the process.

Bert Ely, a consultant to the financial services industry, said that "there is already strong pushback to CFPA in the Senate, and it will grow in part because it's always easier to block than pass something."

Dodd and Shelby have both talked about trying to reach a consensus on financial regulation restructuring, but Shelby has been as strongly opposed to the new agency as Dodd has been in support.

Shelby noted this summer that "risk cannot be eliminated from our financial markets. It is risk taking that generates return." He also expressed concern about the potentially mixed messages financial institutions could receive from CFPA and their safety and soundness regulator.

Action in the Senate could also be delayed because of Dodd's involvement in the health care overhaul. He has been one of the key negotiators on that bill, which the Senate is expected take up soon, and that has taken away time that he might otherwise have spent on regulatory restructuring.

Another difference between the chambers is that while the House has been passing regulatory restructuring legislation on a piecemeal basis, the Senate is likely to combine the measures into one bill. This creates additional opportunity for vote trading and bartering and might cause additional issues, such as regulating credit card interchange fees and placing limits on overdraft protection programs, to come into play.

"All those issues could become interconnected, and anything can happen when it gets to the Senate floor, where there are no rules," Ely said.

"The speed by which they [interchange and overdraft] move is a function of how CFPA is fairing," said CUNA Senior Vice President of Legislative Affairs John Magill.

Berger said he doubted changes to interchange rules will be included in the regulatory restructuring bill, but it's possible that overdraft will be included.

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