Newsroom

Obtaining examination and enforcement over third-party vendors – credit union service organizations and others – is NCUA's "top legislative priority," according to testimony delivered in a Senate Banking Committee hearing today by NCUA Director of Examination and Insurance Director Larry Fazio.

Fazio, testifying alongside federal and state banking regulators, said this authority is especially important given rising cybersecurity threats. NAFCU continues to oppose giving NCUA direct authority over third-party vendors, calling such authority unnecessary since the agency already requires credit unions to facilitate direct reports to the agency by vendors with which they maintain working relationships.

Two additional legislative priorities, he said, are enhanced access to emergency liquidity for the credit union system by making targeted changes to the Central Liquidity Facility and expanding NCUA access to the U.S. Treasury; and authority for NCUA to charge risk-based premiums for the National Credit Union Share Insurance Fund much like FDIC charges for the Deposit Insurance Fund.

Fazio, in other testimony, suggested more flexibility within the Federal Credit Union Act for the agency to write rules concerning supplemental capital, field-of-membership restrictions, curbs on investments in asset-backed securities and the 15-year loan maturity limit.

He asked that Congress modify the Federal Credit Union Act to give NCUA the authority to streamline field-of-membership changes and "permit all federal credit unions to grow their membership by adding underserved areas," action that NAFCU has long advocated.

He also said Congress can make adjustments to credit unions' member business lending cap by passing legislation such as last Congress' "Credit Union Residential Loan Parity Act," also supported by NAFCU. That legislation would have addressed a statutory disparity in the treatment of certain residential loans made by financial institutions.

Regarding credit unions' supplemental capital, Fazio recommended passing legislation to allow "healthy and well-managed credit unions to issue supplemental capital that will count as net worth."

Today's is the first of two hearings the Senate Banking Committee will hold this week addressing regulatory relief for credit unions and community banks.

In Thursday's hearing with industry representatives, Ed Templeton, NAFCU's chair and the president and CEO of SRP Federal Credit Union, will deliver NAFCU's perspective on what credit unions need in the way of regulatory relief in a hearing Thursday featuring financial industry witnesses. He will focus on the need to ease credit unions' burden under the Dodd-Frank Act and current chartering and field-of-membership restrictions, among other things.