CUNA Regulatory Advocacy Report

CUNA Regulatory Advocacy Report: November 16, 2012

Good afternoon.  Here is an update on the issues that CUNA’s Regulatory Advocacy group has been pursuing this week.  

  • National Credit Union Administration Board Meeting
  • CFPB Delays Some Effective Dates
  • CUNA Comments to NCUA on the “Small Entity” Definition
  • CUNA Comments to SBA on the “Small Business” Size Standard
  • CFPB Launches Project Catalyst
  • CUNA Chart of Current Rulemakings: Updated 11/2/12

National Credit Union Administration Board Meeting

To follow up on the statement and summary I sent yesterday after the National Credit Union Administration’s (NCUA) meeting, below is some additional information about the agency’s 2013 budget.

CUNA remains extremely concerned about NCUA’s 2013 budget, which represents a 6.1% increase over the 2012.  This is the fourth straight year that the agency’s budget has increased.  Rest assured, we will be following up with key policymakers on Capitol Hill and within the Obama Administration to lodge our concerns, since the President has directed federal agencies to hold the line on expenditures.    

The 2013 budget is for $251.4 million. NCUA stated noted that this increase is a lower rate than the projected 6.5% increase in credit union industry assets.  However, this is not a comparison that provides a strong rationale for increasing the budget because the health of the credit union system is the strongest it has been since before the financial crisis which began in 2008. 

The total amount of the 2013 budget increase is $14.5 million, and $12.8M of this budget increase would go to possible staff pay increases, employee benefits, locality pay, and full funding for full-time employees that were only partially funded in 2012, according to the NCUA. The agency noted that this number could change if a federal employee pay increase is not approved for next year.

NCUA plans to add $150,000 in new administrative expenses, an increase in contract service expenses of about $980,000 and $800,000 for new travel expenses. Employee pay and benefits account for 73%, or $183.6 million, of the 2013 budget, which does not call for any changes in the number of full time employees (FTEs).

NCUA Chairman Debbie Matz’s view is:  “This is a realistic, responsible and prudent budget. It’s a sound investment for credit unions to protect their bottom lines and the Share Insurance Fund from any industry losses.” Matz said the agency’s 2013 budget also “sends a strong signal” that credit unions are improving, but we question that conclusion since the budget increases would seem to send the opposite signal – that additional funding is needed to address problems areas that current resources can’t handle.  

As I stated yesterday, this budget increase is exasperating, particularly as other federal financial institution regulators have held the line on their own budgets. I think the Board’s action must be subjected to greater oversight, accountability and transparency.

We will be talking in the coming days with key folks in the Obama Administration, as well as federal lawmakers regarding oversight of the agency’s budget.

Earlier this week CUNA urged the agency to provide more transparency to credit unions about its budget decisions, and NCUA said yesterday it will make the budget information easier to find on the agency’s website.

The 2013 operating fee for federal credit unions will increase by 0.24% as a result of the 2013 operating fee scale, which reflects an asset growth rate among federal credit unions of 6.5%.  The corporate federal credit union rate scale remains unchanged and natural person federal credit unions with less than $1 million in assets will not be assessed an operating fee for 2013.

The operating fee for federal credit unions, which will be assessed based on assets as of December 31, 2012, will be due to NCUA no later than April 30, 2013.

CUNA’s summary of the NCUA Board Meeting can be found here.  

CFPB Delays Some Effective Dates

In a statement I sent earlier today, we flagged a development from the Consumer Financial Protection Bureau regarding its extension of the effective date of several mortgage disclosures required by the Dodd-Frank Act that will be included with the new TILA-RESPA forms.  These integrated requirements are expected to be made final by early spring.  Without this delay, these provisions would have taken effect January 21, 2013 and would have required lenders to change their disclosure forms twice. As I mentioned in the statement, other CFPB rules we continue to be concerned about, such as mortgage servicing and ability to repay rules, are not delayed and are still expected by January 21, 2013.  The CFPB notice is here.

CUNA will be posting a Final Rule Analysis on this effective date extension early next week.

CUNA Comments to NCUA on the “Small Entity” Definition

Earlier this week, CUNA submitted a comment letter to the National Credit Union Administration (NCUA) regarding its “small entity” definition that applies to credit unions under NCUA’s regulations.  In our letter, we support changing the threshold for a “small entity,” and we also urge NCUA to revise its proposal in several significant ways.  First, for purposes of the Regulatory Flexibility Act (RFA) and similar analyses to assess the impact of a pending proposal, the agency should use the same level that bank regulators use for such determinations.  Under the RFA, the Small Business Administration has currently set the level for “small business” at $175 million and all of the federal financial regulators except for NCUA have adopted that level.  In addition, we believe NCUA should allow credit unions that have no more than $50 million in assets to be eligible for assistance and services from the agency.  We worked with CUNA’s Small Credit Union Committee, with input from Leagues and others, to develop this comment letter and the one mentioned below to the SBA on the “small business” size standard for credit unions.

CUNA Comments to SBA on the “Small Business” Size Standard

CUNA has submitted a comment letter to the Small Business Administration (SBA) regarding its “small business” size standard for credit unions.  We strongly support SBA’s current review that would raise to $500 million the “small business” size standard for credit unions, which is currently at $175 million.  If adopted, it would permit a greater number of credit unions, though still relatively small, to benefit from provisions that require federal agencies to assess and minimize regulatory costs for smaller entities, including the RFA and the Small Business Regulatory Enforcement Fairness Act (SBREFA), consistent with Executive Orders 13272, 13653, and 13579.  We urged the SBA and the Office of Advocacy to support a substantial increase in the threshold that NCUA uses to define “small entity,” NCUA’s equivalent of “small business.” 

CFPB Launches Project Catalyst

The Consumer Financial Protection Bureau (CFPB) has announced the launch of Project Catalyst this week, an initiative that will obtain data on consumer behaviors and trends. The CFPB views this project as a means to fulfill its mandate under the Dodd-Frank Wall Street Reform and Consumer Protection Act to give consumers access to fair, transparent, competitive, and innovative markets.  In the first phase of this project, three companies have agreed to provide the CFPB with data about consumer choices; the data does not disclose the consumer’s identity.  CUNA and our Consumer Protection Subcommittee continue to monitor developments with the CFPB and its regulations, including this new Project Catalyst initiative.

CUNA Chart of Current Rulemakings: Updated 11/16/12

Here is our updated chart on rulemakings.

Conclusion

As always, we appreciate the positive comments we continue to receive about this report and suggestions for items you would like us to cover are always welcome.  For any questions about this week’s report please feel free to contact Mary Dunn, Bill Hampel, or me.

Best regards,

Bill Cheney

Posted in Advocacy News.