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. 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.

    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.

    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)

    BANK GROUPS LOBBY SENATE FOR RELIEF (POLITICO Morning Money, September 10, 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)

    Dodd-Frank's Fifth Anniversary Is No Cause for Celebration (American Banker, July 21, 2015)

    5 years later, 5 things to know about Dodd-Frank (, July 21, 2015)

    Dodd-Frank Continues to Polarize 5 Years Later (Credit Union Times, July 21, 2015)

    Congress & Industry Leaders Discuss Dodd-Frank’s Progress on its Fifth Anniversary (The MReport, July 21, 2015)

    Dodd-Frank Anniversary Part I: NAFCU Says Legislation Has Led to ‘Demise’ Of Many CUs
    (, July 20, 2015)

    NAFCU Statement on Five -Year Anniversary of Dodd-Frank and Credit Unions (July 21, 2015)  

    Federal Advocacy More Important Than Ever Post Dodd-Frank (Credit Union Times, July 10, 2015)

    World A Better Place Post Dodd-Frank? NAFCU Says No (, July 9, 2015)

    Dissecting Dodd-Frank 5 Years Later (Credit Union Times, July 7, 2015)

    Recent Policy Letters

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

    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

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

    12-12-2014 NAFCU Letter to the President Urging Support for the Credit Union Share Insurance Fund Parity Act (H.R. 3468)

    10-22-2014 NAFCU Letter to Senator Crapo on Regulatory Relief for Credit Unions

    9-26-2014 NAFCU Letter to the Senate on Regulatory Relief for Credit Unions

    9-8-2014 NAFCU Letter to the Senate Banking Committee on the Importance of Regulatory Relief for our Nationals Credit Unions

    7-28-14 NAFCU Letter to the HFSC on Regulatory Relief Measures for Credit Unions

    7-15-14 Testimony from David Clendaniel from the House Financial Services Committee on Financial Institutions and Consumer Credit

    5-6-14 NAFCU's Letter in Support for Credit Union Regulatory Relief Measures

    5-5-14 NAFCU's Letter in Support of Insurance Parity on IOLTAs (H.R. 3468)

    5-5-14 NAFCU's Letter in Support of Changes to the CFPBs Rural Designation Process (H.R. 2672)

    View all NAFCU Policy Letters

    Updated September 2015