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NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt said Tuesday that the House Financial Services Committee's hearing on the draft "Financial CHOICE Act" demonstrates the importance of striking the right capital balance so financial institutions may thrive.

The draft legislation, from committee Chairman Jeb Hensarling, R-Texas, includes a NAFCU-supported repeal of the Durbin amendment and relief for well-capitalized institutions from certain restrictions imposed by functional regulators. The draft bill contemplates a regulatory burden "off ramp" for institutions with capital ratios exceeding 10 percent.

"The crush of regulatory burden, primarily from [CFPB] rules, and the current rate environment have put a squeeze on credit unions," said Hunt. "As member-owned, not-for-profit cooperatives, credit unions are conservatively run institutions with strong capital. Credit unions deserve exemption from regulations designed to control greed, and they need capital rules tailored to recognize the credit union difference and business model."

During the hearing, Hensarling touted the urgency of Dodd-Frank reform, saying, "We need economic growth for all and bank bailouts for none."

Hunt thanked the committee in advance of Tuesday's hearing for its attention to regulatory reform and highlighted the association's initial thoughts on the legislation. "NAFCU believes that this proposal deserves careful and thorough examination to ensure the capital requirements in the ‘off-ramp' can work for various types of financial institutions, including whether one level fits all institutions, or if 10 percent is the proper level for credit unions," she wrote.

Hunt also reiterated that NAFCU was the only credit union trade association to oppose subjecting credit unions to CFPB authority under Dodd-Frank, and the association maintains that CFPB has the authority – and should be using that authority – to exempt credit unions from regulations aimed at bad actors.