CUNA Regulatory Advocacy Report

CUNA to Weigh-in on Second Part of CFPB’s Credit Card Market Review

In a May 18, comment letter to the CFPB, CUNA provided input on a number of issues related to the credit card market. As part of its review of the credit card market, the CFPB extended the deadline until June 17 for comments on online disclosures, grace periods, add-on products, and debt collection. In the coming days, CUNA will file another letter with the CFPB regarding these four areas as they relate to credit cards.

CUNA encourages the Bureau to explore the overall effectiveness of credit card disclosures, as well as ways in which disclosures can be simplified. However, we urge the Bureau to be mindful of the financial resources credit card issuers incur with each change to a required disclosure—even if that change is minor. We caution the CFPB from any changes to the disclosures for grace periods before conducting a thorough cost-benefit analysis of such changes.

As part of its review, the Bureau seeks to better understand debt collection practices within the credit card industry. Unlike many larger financial institutions, credit unions often go out of their way to work with members that are experiencing financial difficulties and are unable to make their monthly payments. The CFPB’s review should include a comparison of the delinquency and charge-off rates of banks to credit unions.

NCUA’s June Board Meeting Scheduled for this Thursday

The NCUA board will hold its June meeting this Thursday. There are six issues on its agenda with the member business loan proposed rule likely being the most impactful. Agenda items include:

  • Final interagency rule, Part 760, regarding loans in areas with having special flood hazards. NCUA, the Office of the Comptroller of the Currency (OCC), Federal Reserve Board, Federal Deposit Insurance Corp. (FDIC) and Farm Credit Administration are proposing to implement provisions in the Homeowner Flood Insurance Affordability Act of 2014 and possibly the Biggert-Waters amendment. The proposal establishes mandatory requirements on the escrow of flood insurance payments for loans made on or after January 1, 2016, and include exceptions to the requirement for credit unions with assets of less than $1 billion. Also, the plan would create an exception for home equity lines of credit, which was a concern detailed in CUNA’s comment to the 2013 proposed rule;
  • Board briefing, final interagency policy statement establishing joint diversity assessment standards. The statement, issued earlier this week, would establish joint standards for assessing diversity policies and practices of the institutions regulated by NCUA, the Federal Reserve Board, the Consumer Financial Protection Bureau, FDIC, OCC and the Securities and Exchange Commission. The statement is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010;
  • Final interpretive ruling and policy statement (IRPS) 13-1, minority depository institution preservation program. The Dodd-Frank Act requires NCUA to consider how goals such as the preservation of the present number of minority credit unions and their minority character can be accomplished in cases involving mergers or acquisitions. The act also directs NCUA to consider how to provide technical assistance to prevent insolvency of minority credit unions that are not currently insolvent; provide for the creation of new minority credit unions; and provide for training, technical assistance and educational programs. NCUA’s IRPS would establish a Minority Depository Institution (MDI) program. The program is reflective of ones established in 1989 under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) for the FDIC and the now-defunct Office of Thrift Supervision, in response to the failure of the Federal Savings and Loan Insurance Corp. Under the 2010 Dodd-Frank Act, FIRREA was applied to the NCUA, OCC and the Federal Reserve Board;
  • Notice and request for comment, regulatory review in accordance with the Economic Growth and Regulatory Paperwork Reduction Act (EGRPPA). This is the third NCUA EGRPRA regulatory review. Under EGRPRA, federal financial institution regulators, with the exception of the NCUA, are required to review their rules at least once every 10 years. The NCUA voluntarily participates in this process;
  • Federal credit union loan interest rate ceiling. By law, NCUA must review the rate ceiling annually. In January 2014, the board approved an 18% ceiling through Sept. 10, 2015. The Federal Credit Union Act generally limits the interest rate ceiling at 15% but can increase it after considering certain statutory criteria; and
  • Proposed rule, Part 723, regarding member business lending (MBL). NCUA has said in its regulatory review agenda that it is examining its MBL rules.

President and CEO Nussle Reiterates HMDA Concerns to the CFPB

CUNA sent a letter to the CFPB’s Director Richard Cordray last week, reiterating serious concerns with proposed Home Mortgage Disclosure Act (HMDA) Regulation C data reporting requirements. In the letter to Cordray, CUNA President/CEO Jim Nussle wrote that he has many concerns that the proposed rule could have particularly burdensome and prohibitive consequences on credit unions and their members.

In the letter, CUNA urged the CFPB to only require collection and reporting of those data points required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (The Dodd-Frank Act). The letter pointed out that only 17 of the 37 new data fields that must be reported under the proposed rule are prescribed by Congress in the Dodd-Frank Act. Further, he requested that only those required by statute should be applied to credit unions.

CUNA also took issue with the exemption threshold. Under the proposed rule, a depository institution would be required to collect and report data only if it originated 25 or more closed-end mortgage loans in the prior year. The letter noted that this “does not accurately reflect the current mortgage market, or go nearly far enough,” since there are few lenders in the past several years that have originated less than 25 mortgage loans per year. In the alternative, CUNA wrote that data collected illustrates that the threshold would be more appropriate if it were increased to 500 loans per year.

In the letter, Nussle took particular issue with the potential impact the proposed rule could have on small credit union mortgage lenders. He noted that the burden for reporting literally dozens of new data fields would be particularly great for these institutions, with the potential to even force them out of the marketplace. Furthermore, the letter stated that the projected costs of complying are simply unmanageable. Nussle wrote, “My concern is that the bureau has gone far beyond the purpose of the statute resulting in a proposed rule that would be detrimental to credit unions and their members.”

CUNA also urged CFPB to reconsider the proposal requiring mandatory reporting of home equity lines of credit, noting, “many credit unions, particularly small and medium-sized credit unions, will have extreme difficulties and overly burdensome expenses in compiling and aggregating the required HMDA data.”

Lastly, Nussle expressed concern that the proposed rule does not fully recognize the differences between credit unions and the other types of depository institutions, who not only are more closely linked to past lending problems but also have more extensive compliance resources. He urged the CFPB to reflect on these important distinctions, and further consider exemptions for credit unions when finalizing rules for HMDA.

The CFPB is expected to release its final rule later this summer.

CUNA Urges Congress to Consider TILA-RESPA Regulatory Burdens

CUNA in conjunction with other trade associations sent a letter to House Financial Services Committee Chairman Jeb Hensarling (R-TX) and Ranking Member Maxine Waters (D-CA) about the TILA-RESPA Integrated Disclosure Rule. The letter urged Congress to pass H.R. 2213, which would provide a reasonable hold-harmless period for enforcement of the of the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosures (TRID) regulation for those that make good-faith efforts to comply.

The letter stated, “We appreciate that the Bureau indicated it will be sensitive to the progress made by those entities that make good-faith efforts to comply. At the same time, industry needs more certainty that their good-faith efforts to comply while still meeting consumers’ expectations does not expose lenders and settlement service providers to litigation during the initial period after the regulation becomes effective.”

CUNA has been strongly advocating for the CFPB to delay the compliance date for several months, and will continue to seek Congressional support and directly engage with the CFPB about this issue.

Current CUNA Regulatory Calls to Action

  • CFPB: Request for Information on Certain Aspects of Credit Card Market (comments due by June 17)
  • Dept. of Education Seeks Comments on its Student Proposal (comments due by July 2)
  • Federal Reserve Seeks Comments on its Same-Day ACH Proposal (comments due by July 2)
  • Dept. of Labor: Proposed Rule Defining “Fiduciary” (comments due by July 6)
  • CFPB Requests Information on Student Loan Servicing (comments due by July 13)
  • NCUA: Proposal on Share Insurance/IOLTA Rule (comments due by July 13)
  • NCUA: Request for Comments on 2015 Annual Regulatory Review (comments due by August 3)

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

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