Regulatory Relief

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Updated May 2013

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Issue Overview

NAFCU's Five-Point Plan

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Issue Overview

In February 2013, at the beginning of the 113^th Congress, NAFCU called on lawmakers to enact broad-based regulatory relief for credit unions. Credit unions did not contribute to the financial crisis yet are still subject to increasing regulatory requirements mandated under the Dodd-Frank Act.

NAFCU believes the five-point plan outlined below and described in a recent letter to Congressional leaders is essential to give the credit union industry the continued ability to serve its member-owners in today's environment.

In early April Robert Burrow, President and CEO of Bayer Heritage FCU in Proctor, West Virginia, testified on behalf of NAFCU before the House Financial Services Financial Institutions Subcommittee. The hearing focused on the regulatory environment for credit unions and provided a critical opportunity for NAFCU and the credit union industry to educate members of Congress about the daunting challenges credit unions face. Read Mr. Burrow's testimony on the need for regulatory relief. In conjunction with the hearing Financial Services Committee Vice Chairman Gary Miller (R-CA) announced his intention to introduce a regulatory relief package for credit unions in the near future. NAFCU has been actively working to help shape this legislation.

Please be assured that NAFCU will continue to push for commonsense regulatory reform on Capitol Hill with an emphasis on the five areas outlined in our plan below.

NAFCU's Five-Point Plan for Regulatory Relief

Download NAFCU's Five-Point Plan for Regulatory Relief

Administrative Improvements to the National Credit Union Administration (NCUA)

Allow a federal credit union to petition NCUA for a waiver in favor of a state rule.

Provide NCUA the authority to delay implementation of CFPB rules that affect credit unions and to tailor those rules for credit unions' unique structure.

Require a cost/benefit analysis of all rules that includes a three-year look back and reevaluation of rules that cost 20 percent or more than their original cost estimate.

Enact new examination fairness provisions to help ensure timeliness, clear guidance and an independent appeal process free of examiner retaliation.

Improve the Central Liquidity Facility by removing the subscription requirement for membership and permanently removing the borrowing cap.

Capital Reforms

Direct NCUA to, along with industry representatives, conduct a study on prompt corrective action, and recommend changes.

Modernize capital standards to allow supplemental capital; and direct the NCUA Board to design a risk-based capital regime for credit unions that takes into account material risks.

Establish special capital requirements for newly chartered federal credit unions that recognize the unique nature and challenges of starting a new credit union.

Structural Improvements

Direct NCUA, with input from the industry, to conduct a study of outdated corporate governance provisions in the Federal Credit Union Act and make recommended changes to Congress.

Improve the process for expanding a federal credit union's field of membership by allowing voluntary mergers among multiple common bond credit unions, easing the community charter conversion process and making it easier to include those designated as "underserved" within a credit union's field of membership.

Operational Improvements

Raise the arbitrary cap on member business loans to 27.5 percent or raise the exemption on MBL loans from $50,000 to $250,000, adjusted for inflation, and exempt loans made to non-profit religious organizations, businesses with fewer than 20 employees and businesses in "underserved areas."

Remove requirements to mail redundant and unnecessary privacy notices on an annual basis, if the policy has not changed and new sharing has not begun since the last distribution of the notice.

Allow credit unions greater authority and flexibility in how they invest.

Provide NCUA the authority to establish longer maturities for certain credit union loans and greater flexibility in responding to market conditions.

Provide federal share insurance coverage for Interest on Lawyers Trust Accounts (IOLTAs).

Data Security Reforms

Establish national standards for safekeeping of all financial information.

Establish enforcement standards for data security that prohibit merchants from retaining financial data, and require merchants to disclose their data security policies to customers.

Hold merchants accountable for the costs of a data breach, especially when it was due to their own negligence; shift the burden of proof in data breach cases to the party that incurred a breach; and require timely disclosures in the event of a breach.