Regulatory Relief

Credit unions did not contribute to the financial crisis yet are still subject to increasing regulatory requirements mandated under the Dodd-Frank Act.  Accordingly, broad-based regulatory relief continues to be a top priority for NAFCU and its member credit unions. In addition to NAFCU's five-point plan for regulatory relief, NAFCU called on Congressional leaders to embrace bipartisan regulatory relief in a letter outlining top priorities for the 114th Congress, including:

  • Preservation of the Credit Union Tax Exemption
  • Capital Reform /Risk-based Capital
  • Data/Cyber Security
  • Housing Finance Reform
  • Member Business Lending
  • Patent Reform

NAFCU has also been urging NCUA to reduce unnecessary costs by reverting to an 18-month exam cycle. On September 3, 2015, NCUA responded to NAFCU's recommendation and indicated that the agency is open to the idea. 

Recent Activity on Capitol Hill

Regulatory relief for community based financial institutions has been a hot topic in the 114th Congress. NAFCU has already testified before the House Financial Services and Senate Banking Committees on regulatory relief priorities for credit unions including the impact of NCUA's second risk-based capital proposal, field of membership changes, and a plethora of other issues outlined in NAFCU's 5 Point Plan for Regulatory Relief.  The Financial Services Committee has held two markups (I, II) covering several NAFCU-backed, regulatory relief measures. Additionally, Chairman Richard Shelby (R-AL) and the Senate Banking Committee moved a comprehensive measure, the Financial Regulatory Improvement Act, which also contains several provisions directly impacting credit unions.  In late July, the Senate Appropriations Committee favorably reported the Financial Services and General Government appropriations bill for fiscal 2016 with the text of S. 1484 attached. By adding the relief bill to "must-pass" government funding legislation, Senators may attempt to forge a bipartisan agreement rather than allowing the bill to pass as-is.

Negotiations are ongoing and NAFCU is hopeful that regulatory relief legislation that would help credit unions will be taken up by the full Senate this Congress.

On April 13, 2016 the House Financial Services Committee favorably reported H.R.4894. Sponsored by Rep. Lynn Westmoreland (R-Ga.), the bill would repeal Title II – the orderly liquidation authority – of the Dodd-Frank Act.

On March 2, 2016, the Committee favorably reported H.R. 2896, the "Taking Account of Institutions with Low Operation Risk (TAILOR) Act of 2015". The bill, introduced by Representatives Scott Tipton (R-CO) and Andy Bar (R-KY), would require that rules promulgated by federal regulators, such as CFPB and NCUA, be tailored to fit financial institutions’ business models and risk profiles. The bill the would also require NCUA and CFPB to testify annually before the House Financial Services and Senate Banking Committees on specific actions taken to comply with the measure. The bill now awaits action by the full House.

On December 3, 2015, Congress passed NAFCU-backed legislation (H.R. 1259), introduced by Rep. Andy Barr (R-KY), as part of a transportation re-authorization package. The legislation, which has since been signed into law, is helpful to small creditors, including credit unions, as they deal with CFPB's definition of "rural areas" particularly as it is related to the ability-to-repay rule and QM definition.

NAFCU welcomes this step and supports other bipartisan initiatives to improve the CFPB's ability-to-repay rule including ensuring mortgages held in portfolio are automatically considered QMs.

Last Congress, the House considered and passed by voice vote a standalone measure (H.R. 3468) that amends the Federal Credit Union Act to require that pass-through share insurance coverage be provided when a credit union member holds funds on behalf of a nonmember in trust accounts, such as Interest on Lawyers Trust Accounts (IOLTAs). The Senate passed the House bill by unanimous consent, and the bill was signed into law by the President. NAFCU believes this bipartisan measure passed at the end of the 113th Congress is a good first step and will lead to larger regulatory relief in the 114th Congress.

NAFCU has testified before Congress on regulatory relief numerous times and looks forward to future opportunities before key lawmakers. Recent regulatory relief testimony includes:

Scott Eagerton, President and CEO of Dixies FCU before the House Small Business Committee Subcommittee on Economic Growth, Tax and Capital Access, "Financing Main Street: How Dodd-Frank is Crippling Small Lenders and Access to Capital." 9/17/2015

Peggy Bosma-LaMascus, President and CEO of Patriot FCU before the House Financial Services Committee, "Preserving Consumer Choice and Financial Independence." 3/18/2015

Ed Templeton, President and CEO of SRP FCU before the Senate Banking Committee, "Regulatory Relief for Community Banks and Credit Unions." 2/12/2015

Linda McFadden, President and CEO of XCEL FCU before the Senate Banking Committee, "Examining the State of Small Depository Institutions." 9/16/2014

David Clendaniel, President and CEO of Dover FCU before the House Financial Services Committee, "Examining Regulatory Relief Proposals for Community Financial Institutions" 7/15/2014

Daniel Weickenand, President and CEO of Orion FCU before the House Financial Services Committee, "How Prospective and Current Homeowners Will Be Harmed by the CFPB's Qualified Mortgage Rule" 1/14/2014

Robert Burrow, President and CEO of Bay Heritage FCU before the House Financial Services Committee, "Examining Credit Union Regulatory Burdens"4/10/2013

NAFCU's Position on Regulatory Relief

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 and available for download.

NAFCU's Five-Point Plan for Regulatory Relief - Revised February 2015

1. Capital Reforms for Credit Unions

Modernize capital standards for credit unions in order to reflect the realities of the 21st century financial marketplace:

  • Authorize a true risk-based capital system for credit unions that more accurately reflects a credit union's risk profile.
  • Give the National Credit Union Administration (NCUA) authority to allow supplemental capital accounts for credit unions that meet certain standards.
  • Authorize the NCUA to further establish special capital requirements for newly chartered federal credit unions that recognize the unique nature and challenges of starting a new credit union. (Given that very few new credit unions have been chartered over the past decade, and in order to encourage the chartering of new credit unions.)

2. Field of Membership Improvements for Credit Unions

Make improvements to the Federal Credit Union Act to help enhance the federal credit union charter:

  • Improve the field of membership (FOM) restrictions that credit unions face, including expanding the criteria for defining "urban" and "rural."
  • Allow voluntary mergers involving multiple common bond credit unions.
  • Allow credit unions that convert to community charters to retain their current select employee groups (SEGs).
  • Allow all credit unions, regardless of charter type, to add underserved areas to their field of membership.
  • Authorize the NCUA to grant parity to a federal credit union on a broader state rule, if such a shift would allow them to better serve their members and continue to protect the National Credit Union Share Insurance Fund.

3. Reduce Consumer Financial Protection Bureau (CFPB) Burdens on Credit Unions

Credit unions did not cause the financial crisis, but have been victims in the new tide of regulations aimed at those institutions who did, with over 1,000 institutions disappearing since the passage of the Dodd-Frank Act, primarily due to the new regulatory burdens.

  • Exempt all credit unions from CFPB rulemaking and examination authority, since NCUA once again has been given authority to write all rules for credit unions, tailoring new proposals to meet the special nature of the credit union industry.
  • Authorize the NCUA to delay the implementation of a CFPB rule that applies to credit unions, if complying with the proposed timeline would create an undue hardship.
  • Authorize the NCUA to modify a CFPB rule for credit unions, provided that the objectives of the CFPB rule continue to be met.
  • Require the NCUA and the CFPB to conduct a look-back cost-benefit analysis on all new rules after three years. The regulators should be required to revisit and modify any rules for which the cost of complying was underestimated by 20% or more from the original estimate at the time of issuance.

4. Operational Improvements for Credit Unions

Credit unions stand willing and ready to assist in our nation's economic recovery. Our industry's ability to do so, however, is severely inhibited by antiquated legislative restrictions.

  • Modify the arbitrary and outdated credit union member business lending (MBL) cap to help create American jobs. This can be done by raising the current 12.25% limit to 27.5% for credit unions that meet certain criteria or by raising the outdated "definition" of a MBL from last century's $50,000 to a new 21st century standard of $250,000, with indexing for inflation to prevent future erosion. MBLs made to veterans, non-profit religious organizations, businesses in "underserved areas," or small businesses with fewer than 20 employees should be given special exemptions for the arbitrary cap.
  • Eliminate statutory requirements to mail redundant and unnecessary privacy notices on an annual basis, provided that the credit union's policy has not changed and additional sharing of information with outside entities has not been undertaken since the distribution of the previous notice.
  • Give the NCUA greater flexibility in how it handles credit union lending, such as the ability to establish longer maturities for certain loans.
  • Enact new examination fairness provisions to help ensure timeliness, clear guidance and an independent appeal process free of examiner retaliation.

5. 21st Century Data Security Standards

Credit unions are being adversely impacted by ongoing cyber-attacks against the United States and continued data breaches at numerous merchants. The cost of dealing with these issues hinders the ability of credit unions to serve their members. Congress needs to enact new 21st century data security standards that include:

  • Paying costs associated with a data breach by those entities that were breached.
  • Establishing national standards for the safekeeping of all financial information.
  • Requiring merchants to disclose their data security policies to their customers.
  • Requiring the timely disclosure of entities that have suffered a data breach.
  • Establishing enforcement standards for provisions prohibiting merchants from retaining financial data.
  • Requiring the timely notification of the account servicer if an account has been compromised by a data breach.
  • Requiring breached entities to prove a "lack-of-fault" if they have suffered from a data breach.

Recent Media Outreach

NAFCU has stayed at the forefront of this issue and continued to champion credit unions in major media nationwide.

Obama Calls For Reg Relief In State Of Union Address (, January 13, 2016)

NAFCU Responds to President Obama’s State of the Union Address (January 12, 2016)

Trade Groups Plan New Push For Reg Relief (, January 5, 2016)

In Short Legislative Year, Focus Will Be On Cutting Reg Burden (, January 4, 2016)

GAO: Dodd-Frank regs weighing on community banks, credit unions (The Hill, December 30, 2015 - also picked up in Credit Union Times, Credit Union Journal,, HousingWire, Daily Business News, and TribLIVE. )

Reg Relief Provisions Now Go Before Senate As… (, November 9, 2015)

House Passes Bill Trades Hope Will Bring CU Reg Relief (, November 5, 2015)

Dodd-Frank Increases Compliance Costs Five-Fold: Eagerton (Credit Union Times, September 17, 2015)

CEO Shares Reg Burden Examples During Congressional Testimony (, September 17, 2015)

Championing Regulatory Relief and Data Security Legislation (Credit Union Times, September 11, 2015)


NAFCU posts its regulatory relief "top 10" wish list(HousingWire, August 4, 2015)

NAFCU Statement on House Financial Services Committee Approval of Regulatory Relief Bills (July 29, 2015)  

Credit Unions Fighting for Survival (Wall Street Journal, July 23, 2015)

NAFCU Statement In Response to Senate Appropriations Committee Mark-up of "Financial Services and General Government Appropriations" Bill (July 23, 2015)

View more of NAFCU in the News

Recent Policy Letters

Read recent letters from NAFCU to members of Congress on the important issue of regulatory relief for credit unions.

4-4-16 NAFCU Letter on Tomorrow's Hearing, "Assessing the Effects of Consumer Finance Regulations"

3-1-2016 NAFCU Letter on Wednesday's Markup of the TAILOR Act

2-23-2016 NAFCU Letter on Tomorrow's Hearing, "Triple Threat to Workers and Households: Impacts of Federal Regulations on Jobs, Wages and Startups"

2-9-2016 NAFCU Letter on Standing Ready to Assist in Reducing Regulatory Burdens Effort

1-5-2016 NAFCU Letter in Support of the SCRUB Act of 2015

1-4-2016 NAFCU Letter on 2016 Legislative Priorities for Congress

12-3-2015 NAFCU Letter on Privacy Notice and Rural Area Relief in H.R. 22 Conference Report

12-2-2015 Joint Trades Letter in Support of H.R. 3192, the "Homebuyers Assistance Act"

11-17-2015 NAFCU Letter in Support of H.R. 1210, the "Portfolio Lending and Mortgage Access Act"

10-27-2015 NAFCU Letter on Tomorrow's Hearing, "The State of Rural Banking: Challenges and Consequences"

9-29-2015 NAFCU Letter on Tomorrow's Full HSFC Mark-Up of Credit Union Regulatory Relief Legislation

9-14-2015 Joint Letter in Support of S. 2006, the "Regulatory Accountability Act of 2015"

9-8-15 Joint Trades Letter on Regulatory Relief for Financial Institutions

7-28-2015 NAFCU Letter on Regulatory Relief for Credit Unions in the REINS Act of 2015

7-27-2015 NAFCU Letter on Parity for Credit Unions in Section 928 of the FY 2016 FSGG Appropriations Bill

5-20-2015 NAFCU Letter on the Financial Regulatory Improvement Act 

4-22-2015 NAFCU Letter on Regulatory Burdens Faced by Credit Unions

4-13-2015 NAFCU Letter in Support of Regulatory Relief for Credit Unions

3-23-2015 NAFCU Letter on Legislation to Relieve Regulatory Burden on Community Financial Institutions

2-24-2015 NAFCU Letter on Regulators Using Exemptions to Provide Regulatory Relief to Credit Unions

View all NAFCU Policy Letters

Updated April 2016