Updated August 2014
In February 2013, at the beginning of the 113th 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 the February 2013 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 April 2013 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.
Representative Miller introduced H.R. 2572, the "Regulatory Relief for Credit Unions Act of 2013." The centerpiece of the legislation is a risk-based capital proposal that revives concepts supported by the credit union industry in previous legislative efforts such as the Credit Union Regulatory Improvements Act.
The provisions in H.R. 2572, as reflected in NAFCU's five-point plan, would:
- allow NCUA to grant federal credit unions a waiver to follow a state rule instead of a federal one in certain situations;
- authorize NCUA to step in where appropriate to modify a CFPB rule affecting credit unions;
- establish a risk-based capital system for credit unions;
- require that NCUA and CFPB revisit cost/benefit analyses of rules after three years so they have a true sense of the compliance costs for credit unions;
- require NCUA to conduct a study of the Central Liquidity Facility and make legislative recommendations for its modernization;
- give credit unions better control over their investment decisions and portfolio risk; and
- provide credit unions parity with FDIC-insured institutions when it comes to deposit insurance coverage on Interest on Lawyers Trust Accounts (IOLTAs).
In May 2014 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 IOLTA. NAFCU continues to advocate for Senate action on this issue.
In July 2014 David Clendaniel, President and CEO of Dover Federal Credit Union, testified on NAFCU's behalf before the Financial Services Financial Institutions Subcommittee to again make the case for much needed credit union regulatory relief. In addition to seeking relief from regulation stemming from the Dodd Frank Act, Mr. Clendaniel was able to update Congress on NCUA's risk-based capital proposal and encourage additional Congressional oversight as the rule making process moves forward. Read Mr. Clendaniel's testimony on the need for regulatory relief.
With Member Business Lending addressed as part of H.R. 688, the Credit Union Small Business Jobs Creation Act, and supplemental capital addressed in H.R. 719, the Capital Access for Small Businesses and Jobs Act, becomes the third major credit union specific proposal from NAFCU's five-point plan for credit union regulatory relief to be offered in the House this Congress.
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
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.
- 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.
- 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.
- 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.
Opinion Editorials & Articles
5 Points to Regulation Relief with NAFCU's Fred Becker...
(CUbroadcast, March 12, 2013)
Fred Becker Commentary: It's time for broad-based regulatory relief for credit unions
(The Hill's Congress Blog, March 4, 2013)
Fred Becker Commentary: Congress Needs to Enact Regulatory Relief Now
(Credit Union Times, February 27, 2013)
Fred Becker Commentary: The Time is Right for NAFCU's Five-Point Regulatory Relief Plan for Credit Unions
(CUinsight, February 26, 2013)
NAFCU Seeks Broad-Based Regulatory Reform From Congress
(CU Journal, February 25, 2013)
NAFCU Eyes Regulatory Relief Bill
(CU Journal, February 12, 2013)
Dan Berger Guest Opinion: Overregulation Is Killing the Recovery
(Credit Union Times, September 12, 2012)
Regulatory Relief Policy Letters
NAFCU Letter to the HFSC on Regulatory Relief Measures for Credit Unions
7-15-2014 Testimony from David Clendaniel from the House Financial Services Committee on Financial Institutions and Consumer Credit
5-6-2014 NAFCU's Letter in Support for Credit Union Regulatory Relief Measures
5-5-2014 NAFCU's Letter in Support of Insurance Parity on IOLTAs (H.R. 3468)
5-5-2014 NAFCU's Letter in Support of Changes to the CFPBs Rural Designation Process (H.R. 2672)
9-17-2013 NAFCU letter to Rep. Miller regarding Regulatory Relief
6-28-2013 NAFCU letter regarding Regulatory Relief Bill H.R. 2572
6-13-2013 NAFCU letter regarding regulatory relief
5-07-2013 NAFCU letter regarding importance of regulatory relief
4-10-13 Robert. D. Burrow's testimony on the HFSC Subcommittee on Financial Institutions and Consumer Credit
3-26-2013 NAFCU Comment Letter on Regulatory Relief for our Nation's Credit Unions
2-14-13 NAFCU's 5 point plan: Regulatory Relief letter to Senate Banking/HFSC
2-12-13 NAFCU Calls on Congress for Regulatory Relief for Credit Unions
3-15-11 Capito-Maloney Consumer Financial Protection Bureau Oversight Hearing Comment Letter
9-30-10 Frank-Bachus Regulatory Reform Technical Fix Comment Letter
9-30-10 Dodd-Shelby Regulatory Reform Technical Fix Comment Letter
5-11-10 Brownback CFPB Exemption Amendment Comment Letter
5-6-10 Murkowski CFPA Exemption Amendment Comment Letter
4-27-10 Dodd-Shelby Regulatory Reform Comment Letter
4-14-10 Dodd-Shelby Regulatory Reform Comment Letter
4-5-10 Dodd-Shelby CFPA Comment Letter
4-5-10 Pelosi-Boehner CFPA Comment Letter
4-5-10 President Obama CFPA Comment Letter
3-22-10 Dodd-Shelby Regulatory Reform Mark-Up Comment Letter
3-15-10 Dodd-Shelby CFPA Comment Letter
3-9-10 Dodd-Shelby CFPA Comment Letter
1-11-10 Dodd-Shelby CFPA Comment Letter