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NCUA Acting Chairman J. Mark McWatters, in remarks given before the Senate Banking Committee Thursday, pressed the need for all credit unions to be able to add underserved areas to their fields of membership as a way Congress can act to provide regulatory relief to the industry.

This suggestion was in response to a line of questioning from Senate Banking Committee Chairman Mike Crapo, R-Idaho, on ways Congress can provide relief to credit unions. McWatters also expressed his support for the Financial Services for the Underserved Act (H.R. 5541), which NAFCU got introduced last Congress.

McWatters, throughout his testimony, said the agency is looking to provide the credit union industry with more regulatory relief and streamlined operations, and offered both regulatory and legislative ideas to make that happen.

McWatters testified Thursday as part of a Senate Banking Committee series of hearings on fostering economic growth.

"NAFCU thanks Chairman McWatters for his testimony and his ongoing commitment to providing the credit union industry with meaningful regulatory relief," said NAFCU President and CEO Dan Berger. "We look forward to working with him, the agency and Congress to bring about the relief outlined in his testimony."

Among the most notable ideas in McWatters' testimony are his legislative recommendations, which include providing the NCUA with enhanced flexibility to write rules to address situations, rather than imposing rigid requirements; and giving the agency greater discretion with respect to scale and timing when implementing statutory language.

Noting further changes to credit unions' field of membership – many of which are also sought by NAFCU – McWatters' suggested allowing federal credit unions to serve underserved areas without also requiring those areas to be local communities, permitting web-based communities to be considered for a credit union charter, and eliminating multiple common-bond credit union proximity requirements.

He also made NAFCU-backed regulatory relief suggestions regarding supplemental capital, member-business lending and the general 15-year loan maturity limit, among others things. McWatters also notes that he would like changes made to the agency's risk-based capital rule – as also urged by NAFCU.

Also during Thursday's hearing:

• Sen. Bob Menendez, D-N.J., asked McWatters if he thinks Congress should eliminate the Community Development Financial Institutions Fund as suggested in the president's budget; McWatters promptly responded no.
• Sen. Mike Rounds, R-S.D., asked McWatters about his bill, the TAILOR Act, which would require that rules be tailored to fit financial institutions' business models and risk profiles. McWatters said regulation should be done with a laser and not a shotgun, while noting that regulators should also have an in-depth understanding of the institutions they are regulating. Sen. Thom Tillis, R-N.C., echoed McWatters comments later during the hearing, noting that arbitrary thresholds should be done away with.