CUNA Regulatory Advocacy Report

CUNA Submits Individual and Joint Comment Letters on CFPB Prepaid Cards Proposal

Today, CUNA filed two comment letters with the CFPB related to their proposal on prepaid cards. CUNA filed a letter on its own urging the Bureau to limit any new regulatory requirements on credit unions that offer prepaid accounts, so that such accounts remain accessible and so that credit unions and other issuers remain innovative in the payments space. The letter outlined a number of significant concerns with the proposed rule, including that the potential application of certain Regulation E requirements that may not be appropriate for the different risks and attributes of prepaid accounts. CUNA urged the CFPB to minimize compliance costs on credit unions that offer prepaid accounts. CUNA’s letter will be available here shortly.

In collaboration with the Electronic Transactions Association, American Bankers Association, Consumer Bankers Association, Financial Services Roundtable, National Association of Federal Credit Unions, and Online Lenders Alliance, CUNA also today filed joint comments with the Bureau. The Associations jointly noted that the proposed rule includes provisions that have the potential to increase the cost of prepaid accounts for consumers, limit consumer access to prepaids, and stifle the development of new and innovative products and services. The comment letter notes that the CFPB miss-categorizes innovative products such as mobile wallets, peer-to-peer payments, and digital currencies like Bitcoin under the “prepaid” umbrella. These products, still under development and with the potential to revolutionize and add real value to the financial services industry, are not prepaid nor are they used by consumers in a way analogous to prepaid. The Associations believe consumers will be best served and protected by a narrowly defined rule that provides appropriate protections while allowing for innovations beneficial to the consumer.

CUNA Requests Comments on NCUA’s Fixed Assets Proposal

CUNA has posted a Comment Call for NCUA’s latest fixed asset proposal, which would make two important improvements to the 2014 fixed assets proposal. The new proposed rule would only apply to federal credit unions and would:

  • Eliminate the 5% aggregate limit on investments in fixed assets that is currently in place for federal credit unions with $1,000,000 or more in assets. (CUNA urged the Board to remove the 5% limit in our comment letter on the 2014 proposal.) Instead of applying the current aggregate limit, the Board proposes to oversee ownership of fixed assets through the supervisory process and guidance.
  • Remove the waiver provisions regarding the aggregate limit.
  • Establish a single six-year time period for partial occupancy of premises and discontinue the 30-month requirement for partial occupancy waiver requests.

NCUA has indicated that if the proposal is adopted, it will issue new supervisory guidance on fixed assets to examiners, which will be available to federal credit unions. During the Board meeting, Board Member Mark McWatters cautioned that the guidance should not, in effect, impose additional limitations. CUNA applauds the new proposed changes but agrees that implementation of the rule will be critical. The proposal will have a 30-day comment period once published in the Federal Register.

CFPB Seeks Input on Credit Card Market

The CFPB is seeking public input on a number of aspects of the consumer credit card market. This will mark the CFPB’s second review of the credit card market, as required by the CARD Act of 2009. In response to the Bureau’s 2013 request for information, CUNA urged the Bureau to ensure “consumers continue to receive reasonable protections while minimizing regulatory burdens on credit unions that offer credit card services to their members.”

As part of the current request, the CFPB seeks input on 12 topics, the last two of which involve “specific areas of interest” identified by the Bureau after issuing its first report in 2013.

  • The terms of credit card agreements and the practices of credit card issuers;
  • The effectiveness of disclosure of terms, fees, and other expenses of credit card plans;
  • The adequacy of protections against unfair or deceptive acts or practices or unlawful discrimination relating to credit card plans;
  • Whether implementation of the CARD Act has affected (i) the cost and availability of credit, particularly with respect to non-prime borrowers; (ii) the use of risk-based pricing; or (iii) credit card product innovation;
  • Online disclosures;
  • Rewards products;
  • Grace periods;
  • Add-on products;
  • Fee harvester cards;
  • Deferred interest products;
  • Debt collection; and
  • Ability to pay.

Click here for more information and to share your comments with CUNA. The CFPB is accepting comments until May 18.

CUNA Comments on NCUA’s EGRPRA Review

Last week, CUNA filed a comment letter with NCUA on its Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) regulatory review. The comment letter addressed issues with agency program, capital, and consumer protection regulations. NCUA is currently soliciting comments on its annual one-third regulatory review. CUNA will be accepting comments for this regulatory review until July 13.

Positive Report on Condition of Corporate Stabilization Fund

During last week’s NCUA Board meeting, agency staff reported on the condition of the Temporary Corporate Credit Union Stabilization Fund. For 2014, year-to-date, the Fund’s total income was $60.3 million, which is down from $761.6 million for 2013 due primarily to a lack of special assessments in 2014.

However, outstanding borrowings from Treasury decreased to $2.6 billion as of December 31, 2014, from $2.9 billion outstanding at the end of 2013. Commenting on the positive trend of the Fund, Chairman Matz asked staff about the possibility of a refund to credit unions. Consistent with previous comments, staff indicated that any such refund would not come until 2021 when the Fund will sunset.

Current CUNA Regulatory Calls to Action

  • CFPB Proposes Prepaid Card Rule (comments due by March 23)
  • NCUA Proposes Changes to Schedule for Capital Planning & Stress Testing (comments due by March 27)
  • CFPB Issues Proposal on Rural and Underserved Areas (comments due by March 30)
  • CFPB Proposes Safe Student Account Scorecard (comments due by March 30)
  • NCUA Issues New Fixed Assets Proposal (comments due around April 22)
  • NCUA Issues New Risk-Based Capital Proposal (RBC2) (comments due by April 27)

For other items of interest, visit CUNA’s Regulatory Advocacy page.

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