CUNA Advocacy Update

Small Banks Sue NCUA Over MBL Rule:

The Independent Community Bankers of America (ICBA) filed a lawsuit on Wednesday against the NCUA over its revised member business lending (MBL) rule that was finalized in February. The lawsuit, ICBA v. NCUA, was filed in the U.S. District Court of the Eastern District of Virginia. 
 
ICBA’s main contention is that NCUA violated the MBL restriction in the Federal Credit Union Act (FCUA) by allowing all credit unions to exceed the statutory 1.75 times actual net worth limitations on MBLs. ICBA contends that NCUA did this by allowing credit unions to exclude nonmember loan participations from aggregate MBL calculations.   
 
We are confident that the 2016 MBL rule is consistent with the law, which still includes significant constraints on credit union member business lending. We also believe NCUA acted appropriately and followed all procedures when issuing the MBL rule, and the rule falls well within NCUA’s statutory authority to interpret the application of the MBL cap. We are exploring legal options to support the new MBL regulation and will continue to advocate for credit union regulatory relief. [Read More

Action Alert:  CFPB’s Small Dollar Loan Proposal: 

The Consumer Financial Protection Bureau’s (CFPB) released an extremely complex over 1300-page small dollar rule in early June. The proposed rule includes some reforms to predatory lending practices, which credit unions would support if narrowly tailored. Unfortunately, the CFPB’s proposed rule badly misses the mark of targeting predatory behavior, and instead threatens to limit consumer-friendly alternatives to short-term, small dollar loans. Share your story with the CFPB and tell them the negative impact this rule will have on your ability to provide services to your members.

Early exit?

As we mentioned in last week’s update, the Congressional calendar released by House and Senate leadership late last year projected the House would be in session until September 30 and the Senate until October 7. But 2016 being what it is, Congressional leaders (and certainly some anxious back benchers) are eager to wrap up work here so they can go home and campaign. From a strategic perspective, the chess pieces have been moving into place for some time. Unlike the past few years, there is no debt ceiling to worry about, and there is little to be gained by either party (or a subset thereof) to hold up government funding to score political points. Two priorities remain: funding the government past September 30, and providing some form of supplemental appropriations to address the Zika epidemic. If Congress can reach an agreement on these matters, there’s no reason to stay in DC to watch the leaves change.
 
Some have suggested that one or both chambers could wrap up business this week after a ping pong match involving the continuing resolution. The House would give conservatives the opportunity to vote on a six-month CR before passing a three-month resolution; the Senate would add Zika funding to the CR and send it back to the House for a final vote before the funding resolution is sent to the Senate. It’s a lot easier said than done. We’ll see what happens, but it’s possible (not probable) that Congress wraps up this week.  Next week seems a bit more likely.

But Before They Go… 

Aside from the eventual consideration of a continuing resolution, the House will consider the “Carl D. Perkins Career and Technical Education Reauthorization Act” (H.R. 5587); the “Regulatory Integrity Act of 2016” (H.R. 5226); the “Halt Tax Increases on the Middle Class and Seniors Act” (H.R. 3590); the “VA Accountability First and Appeals Modernization Act of 2016” (H.R. 5620); and H.R. 5351, to prohibit the transfer of any individual detained at Guantanamo Bay. It is also possible the House will consider a resolution impeaching the IRS Commissioner.
 
The Senate will resume consideration and vote on the motion to invoke cloture on the substitute amendment to the “Water Resources Development Act of 2016″ (S. 2848).” Consideration of a continuing resolution is expected later this week.
 
As usual, we are following committee meetings on both sides of the Capitol, including the following:
 
Tuesday
 
  • The House Financial Services Committee will hold a full committee markup of H.R.5983, the “Financial CHOICE Act.” 
  • The Senate Banking, Housing and Urban Affairs Committee will hold a full committee hearing on “The National Flood Insurance Program: Reviewing the Recommendations of the Technical Mapping Advisory Council’s 2015 Annual Report.”

Calendar Impacts Dynamics of the CHOICE Act Mark-Up:

On Tuesday, the House Financial Services Committee will consider H.R. 5983, the Financial CHOICE Act. This legislation has been introduced by Chairman Jeb Hensarling (R-TX) and represents a large scale overhaul of the 2010 Dodd-Frank Act. 
The legislation weighs in at 513 pages, and includes several provisions that would help reduce the regulatory burdens credit unions currently face, and help mitigate future ones. CUNA has had a lot of opportunity to influence this legislation, and many of the provisions have been discussed in testimony delivered by CUNA witnesses over the last few years. Our CEO Jim Nussle testified in support of Title I of the CHOICE Act back in July; this part of the bill would reduce regulatory burden for institutions with a leverage ratio above 10%.  We outlined our support and concerns with this package in a July letter we delivered during a meeting with Committee staff.
 
We welcome the provisions that would make structural changes at the CFPB, repeal the Durbin amendment, address examination fairness, and reform the NCUA’s Board and budget process. For the many provisions that we support, Committee approval represents progress in a complicated legislative process– it puts them in a better position to move even further in the future. We appreciate Chairman Hensarling’s leadership and tenacity in addressing credit unions’ regulatory burden, and we support his effort to keep the conversation going. 
 
Nevertheless, the legislative process rarely produces comprehensive legislation that can be completely embraced. As they say, there’s a bad apple in every bunch; and this bill has two such provisions. One would permit savings and loans to choose to act as national banks, circumventing the statutory cap on business lending to which thrifts are subject, and the other would subject NCUA to the appropriations process. We oppose both of these provisions, and in the event that this or similar legislation moves forward, we will encourage Congress to remove them.
 
The late timing of this mark-up heavily impacts the strategies taken by all interested parties, including groups like CUNA. Republicans are not expected to offer any amendments to their chairman’s legislation; Democrats seem disinclined to engage in an effort to force tough votes for both parties on a bill that is going nowhere so close to the election. In other situations, and at other times, we might have tried to remove the problematic provisions or add more credit union provisions at mark-up. However, while there are very likely to be some amendments put forward at the mark-up, this session is not expected to resemble previous mark-ups on legislation of similar size and scope. The curtain is closing on the 114th Congress, and these fights can and will be taken up next year.
 
Check out this Removing Barriers blog for more information regarding the provisions we support and oppose.

NCUA Board Meeting on September 15:

The NCUA will be having its monthly Board meeting this Thursday. The Board will have no voting items, but will cover a briefing on cybersecurity and hear the customary quarterly update on the corporate stabilization fund. 

CFPB Debt Collection SBREFA Process Recognizes Distinction Between First and Third Party Debt Collection:

In response to a SBREFA panel focused on third party debt collection held in August, and discussion proposals released prior, we sent a letter to the CFPB expressing credit union concerns.  The letter thanked the CFPB for recognizing the very significant differences between the relationships consumers have with first party creditors versus third party debt collectors, as indicated by the exclusion of first party creditors in the initial debt collection SBREFA process. The letter also points out that when Congress enacted the FDCPA, and for decades since, it has clearly recognized that including credit unions in rules addressing abusive debt collection practices is not necessary. [Read More] 

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, and contact the CUNA staff listed with each proposal with your feedback.

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: Consumer Response Company Response Survey September 30, 2016 CFPB Luke Martone
Payday Loans October 7, 2016 CFPB Leah Dempsey
Single-Family Credit Risk Transfer October 13, 2016 FHFA Andy Price
Amendments to TRID under Reg Z October 18, 2016 CFPB Andy Price
CIP/AML & Beneficial Ownership Requirements for Banks Lacking a Functional Federal Regulator October 24, 2016 FinCEN Luke Martone
Request for Information: Payday Loans November 7, 2016 CFPB Leah Dempsey

Posted in Advocacy News, CUNA.