CUNA Regulatory Advocacy Report

It’s going to be another busy week in Washington with the House and the Senate returning to session.  They are joined by Massachusetts, Michigan and Ohio, which are in regular session and Illinois, New Jersey and Wisconsin which are scheduled to return from recess.

Here is what you need to know about credit union advocacy this week:

  • The House Financial Services Committee will hold a hearing this week on pending regulatory relief bills, including several CUNA/League supported bills.
  • The House Small Business Committee will hold a hearing on EMV deployment and data security.

Keep Sending Feedback and Questions

Thank you to everyone who contacted me after last week’s advocacy update with questions, comments and concerns. Please keep your feedback coming! I have always intended for the advocacy update to be a two way form of communication.  Please keep it up!

In Congress

The Senate returns today and will consider a motion to proceed to consideration of S. 2146, the Stop Sanctuary Policies and Protect Americans Act.  The House returns to session on Tuesday and will consider bills under suspension of the rules.  Later in the week, the House will consider H.R. 692, the Default Prevention Act, H.R. 10, the SOAR Reauthorization Act, H.R 1937, the National Strategic and Critical Minerals Production Act, and H.R. 3762, the Restoring Americans’ Healthcare Freedom Reconciliation Act.

As usual, we are following several hearings on both sides of the Capitol, including the following:

Wednesday

  • The House Financial Services Committee Subcommittee on Financial Institutions and Consumer Credit will hold a hearing on legislative proposals to reduce regulatory burden on Main Street job creators.  CUNA will submit a letter for the record of this hearing.
  • The House Small Business Committee will hold a hearing on the EMV Deadline and what it means for small businesses.  This is the second in a series of hearings on this topic.  CUNA submitted a letter for the record of this hearing late last week.
  • The Senate Budget Committee will hold a full committee hearing on “Reforming the Federal Budget Process: The Need for Action.”
  • The House Financial Services Committee Subcommittee on Housing and Insurance will hold a hearing to review reforms that create housing opportunities including H.R. 3700, the Housing Opportunities through Modernization Act.

Thursday

The House Financial Services Committee will hold a full committee hearing entitled, “The Future of Housing in America: 50 Years of HUD and Its Impact on Federal Housing Policy”

Friday

The House Financial Services Committee Subcommittee on Capital Markets and Government Sponsored Enterprises will hold an oversight hearing on the Securities and Exchange Commission’s Division of Investments.

Pending Regulatory Comment Calls

CUNA intends to comment on the following pending regulatory proposals.  For our comment letter to have the greatest impact, we need to hear from you.  Please consider whether and how these proposals would affect your credit union.  If you have feedback or questions regarding any proposal, please contact the CUNA staff listed with each proposal.

We encourage Leagues and credit unions to use PowerComment to file comment letters with regulators.  For more information regarding these proposals, please follow the links below:

Issue Comment Period Deadline Agency CUNA Staff Contact
OMB Request to revise existing information
collection regarding CUSOs
October 28, 2015 NCUA Andy Price
ALM/SAR filing requirements for financial
advisors
November 2, 2015 FinCEN Luke Martone
Request to develop survey on POS/ATM
overdraft disclosures
November 3, 2015 CFPB Luke Martone
Definition of “small entity” under the
Regulatory Flexibility Act
November 23, 2015 NCUA Lance Noggle

House Financial Services Committee Hearing

  • On Wednesday, the House Financial Services Committee Subcommittee on Financial Institutions and Consumer Credit will hold a legislative hearing on several bills aimed at removing barriers for credit unions and small banks to serve their members and customers.  This is at least the tenth hearing the committee has held on these types of bills since the beginning of the year; and, so far this year, 17 CUNA supported bills have been approved by the committee.  Three more will be subject to a hearing this week, ripening them for future committee consideration:  H.R. 2473, the Preserving Capital Access and Mortgage Liquidity Act; H.R. 2287, the National Credit Union Administration Budget Transparency Act; H.R. 2896, the Taking Account of Institutions with Low Operational Risk (TAILOR) Act.
  • H.R. 2473 would provide credit unions under $1 billion in assets parity with similarly sized banks with respect to membership eligibility requirements for the Federal Home Loan Banks (FHLB) System.  Under the Federal Home Loan Bank Act, credit unions do not qualify under the definition of “community financial institutions,” and as a result they are not exempt from an eligibility requirement requiring FHLB bank members to hold 10% of their assets in mortgages at the time of joining the bank.  This exemption has taken on enhanced importance given the Federal Housing Finance Administration’s proposal require bank members to meet eligibility requirement throughout their membership in the bank, not just when they join.  The bill is sponsored by Representatives Randy Neugebauer (R-TX) and Lacy Clay (D-MO), the chairman and ranking member of the subcommittee.
  • H.R. 2287, the National Credit Union Administration Budget Transparency Act, introduced by Representatives Mick Mulvaney (R-SC) and Kyrsten Sinema (D-AZ), would bring transparency and accountability to the National Credit Union Administration (NCUA) budgeting process by requiring the agency to hold a public hearing and allow for an open comment period where stakeholders can submit comments.  The agency held this type of hearing from 2001-2008, but the hearings were discontinued.  Some have criticized the hearings as ineffective or theatre, but we believe they were and would be critically important because they provide stakeholders with the opportunity to engage NCUA board members on the record regarding the agency’s budget – a budget that is funded through credit union resources.
  • H.R. 2896, Taking Account of Institutions with Low Operation Risk (TAILOR) Act of 2015, introduced by Representative Scott Tipton (R-CO), would require financial regulators to take into account the risk profile of the institutions that they regulate when promulgating regulations. CUNA believes credit unions are precisely the type of institutions for which this legislation is designed to help because they are well-capitalized, with a low risk profile and a long history of meeting their members’ credit needs– in good times and bad.

These bills, combined with the other 17 bills the committee has approved this year, cut to the heart of the problem that credit unions face in the aftermath of the financial crisis with respect to regulatory burden.  Policymakers from across the political spectrum acknowledge that credit unions and small banks were not responsible for the financial crisis, but the public policy response to the crisis without question fails to recognize this seemingly indisputable fact.  Credit unions have been subjected to tens of thousands of pages of new regulations in the last seven years; just last Thursday, the NCUA and the CFPB finalized more than 1,000 pages of new regulations for credit unions.  This hearing is part of the long process of bringing that to a stop.

House Small Business to Hold a Second Hearing on EMV Implementation

Also on Wednesday, the House Small Business Committee will hold a hearing on the effect of EMV implementation on small businesses.  This is the second in a series of hearings the Committee has held on this topic.  Late last week, CUNA joined with several other financial services trade groups in submitting a letter for the record of the hearing that sought to respond to questions that were raised at the first hearing several weeks ago.

In particular, the letter addresses the argument retailers are proffering that EMV is not effective because it is not being deployed with PIN security.  We told the Committee:

“The ‘PIN argument’ is a smokescreen used by retail trade groups to deflect attention from the high profile retail data breaches at big box stores over the past few years and their underlying causes. Rather than coming together to improve internal data security practices, the retail trades are fixating on a PIN technology that fights a small and declining share of today’s fraud and which would have been meaningless in breaches like those at Target and Home Depot. The reality is that if a merchant is EMV enabled and has their card readers turned on, they have the same protections whether PIN is used or not. Instead of fighting, we should embrace ideas like H.R. 2205, the Data Security Act of 2015, introduced by Representatives Neugebauer (R-TX) and Carney (D-DE), to apply meaningful and consistent data protection for consumers nationwide.

This hearing will very likely not be the last hearing on this matter.

Eye Toward 2016: Maine Credit Union League

While Maine’s 2016 legislative session officially kicks off January 6, the Maine Credit Union League (MCUL) has already taken steps to benefit credit unions by seeking solutions outside of the legislative process and proactively meeting with House and Senate leadership. Specifically, MCUL has hosted a wide range of events with legislators and has been a constant presence at political fundraisers on both sides of the aisle. The League will also meet with the Secretary of State’s Office regarding the repossession of vehicles by towing companies and with state credit union regulators and state-chartered credit unions to discuss regulatory barriers and potential resolutions. [Read More]

NCUA October 2015 Board Meeting Summary

At its October 2015 meeting, the NCUA Board issued a Final Rule on Risk-Based Capital Measures, delegated authority to the Office of Consumer Protection for approval of Community Charter Requests, issued a proposed rule making technical corrections for permissible Investment Activities, and received a quarterly report on the (National Credit Union Share Insurance Fund (NCUSIF). [Read More]

NCUA Finalizes Risk-Based Capital Rule

On Thursday, the NCUA Board voted 2 to 1 to finalize its second Risk-Based Capital (RBC2) proposal.  As proposed, this final rule is effective on Jan. 1, 2019.

Upon the NCUA’s final vote, CUNA President/CEO Jim Nussle said, “Make no mistake–CUNA firmly believes the NCUA’s risk-based capital rule is a solution in search of a problem. Since the initial proposal 20 months ago, CUNA and the leagues worked together to execute one of the most coordinated and successful advocacy campaigns in the past 15 years to ensure we significantly impacted the final rule to get the best possible results for credit unions. Without our advocacy efforts, there is absolutely no question that the final rule would have been much worse for credit unions.” [Read More]

CFPB Finalizes HMDA Rule

Last week, the CFPB finalized its Home Mortgage Disclosure Act (HMDA) rule. Since the rule was first proposed in July of 2014, we have strongly advocated for credit unions to be exempt from the numerous requirements under HMDA. Unfortunately the rule as finalized would add yet another layer of expense and burden to the mortgage process. [Read More]

CUNA Subcommittees Meet with Senior Regulatory Officials

Last week, members of CUNA’s Consumer Protection and Examination/Supervision Subcommittees met with top federal regulators in Washington DC. The first meeting occurred with NCUA Chair Debbie Matz directly following the agency’s finalization of its Risk-Based Capital Rule. The second meeting occurred with senior officials at the CFPB, including Kelly Cochran, Corey Stone, Mark Morelli and others. [Read More]

CFPB Holds Meeting of Credit Union Advisory Council

Last week, the CFPB held its second annual meeting of the Credit Union Advisory Council (CUAC).  This council is one of four that the CFPB voluntarily convenes several times a year, to hear input from external stakeholders. Before last week’s meeting, CUNA staff met with some council members for breakfast to discuss their regulatory concerns. The CFPB recently announced eight new CUAC members, six of whom are from CUNA affiliates.  [Read More]

Senate TCPA Briefing This Week

The U.S. Chamber Institute for Legal Reform and several other representatives are participating in a briefing on the Telephone Consumer Protection Act (TCPA) in the U.S. Senate next week. The briefing will take place on Thursday, October 22, 2015 from 3:00 – 4:00 PM in 253 Russell Senate Office Building. The briefing will include a discussion of recent developments under the TCPA, the FCC’s recent omnibus declaratory ruling and the importance in distinguishing between abusive telemarketers and companies contacting their consumers.  CUNA has been a leader in industry advocacy in opposition to the FCC’s ruling, including calling for hearings, organizing meetings and preparing legal advocacy efforts. [Read More]

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