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In addition to testifying before Congress on the need to find the proper regulatory balance for credit unions, other traditional financial institutions, and fintechs, NAFCU President and CEO Dan Berger shared the association's concerns on Fox Business. The Biden Administration and lawmakers are considering ways to address climate-related financial risks. And congressional committees are gearing up to hold hearings with big bank leaders. See details on these issues and more to know from this week.

ICYMI: Berger stresses need for fair, level playing field ahead of testimony

Berger joined Fox Business' Charlie Gasparino Tuesday on The Claman Countdown to share the association's concerns with fintech banks taking advantage of regulatory loopholes "that escape the oversight of federal financial regulators." Berger discussed how these issues are "bad news for consumers and taxpayers" and can create systemic risk in the financial system.

Berger's interview previewed the association's testimony yesterday – delivered by Premier Members Credit Union CEO Carlos Pacheco – before the House Financial Services Subcommittee on Consumer Protection and Financial Institutions as lawmakers discussed fintech chartering and regulatory approaches.

NAFCU is fighting to ensure fintech banks operate on a level playing field with credit unions and urging policymakers to make necessary changes to combat the risks posed to the financial system by fintechs applying to become a bank or acquiring a bank. The association has a new video, op-ed from Berger, and issue brief outlining potential chartering schemes, and recently wrote to the CFPB, the Office of the Comptroller of the Currency (OCC), and the House Financial Services and Energy and Commerce Committees on this topic.

Learn more about NAFCU's position on fintech banks and what this issue means for credit unions on the association's dedicated issue advocacy page.

Climate change takes center stage

The risks climate change poses to the economy and financial system have been a popular discussion in Washington in recent weeks, with the Senate Banking Committee holding a recent hearing and Federal Reserve Gov. Lael Brainard sharing her perspective on the issue. Thursday, Sen. Elizabeth Warren, D-Mass., and Rep. Sean Casten, D-Ill., introduced legislation that would require companies to report their financial exposure to climate risks, such as greenhouse gas emissions, fossil fuel assets owned or managed, and risk management strategies related to climate change.

In addition, President Joe Biden is reportedly drafting an executive order to combat climate-related financial risks that could create new regulations on businesses, including the banking industry. It is expected to require, among other things, that the Financial Stability Oversight Council (FSOC) coordinate and issue a report on climate risk to the financial system, specifically risks to housing, and that federal housing regulators consider integrating climate-related risks into underwriting standards and loan conditions.

NAFCU will engage with policymakers on these issues to ensure the credit union industry's voice is represented.

Big bank CEOs set to testify before Congress

The Senate Banking Committee and House Financial Services next month will hear from the CEOs of the six largest U.S. banks to review how their institutions responded to the economic downturn caused by the coronavirus pandemic and worked to help consumers. Lawmakers will also likely discuss the banks' efforts related to diversity, equity, and inclusion (DEI), and more.

The NCUA this week released its Office of Minority and Women Inclusion (OMWI) 2020 Annual Report to Congress, highlighting its efforts to promote DEI at the agency and within the credit union industry. DEI remains a priority for NAFCU among its own staff and in its advocacy with the NCUA and Congress to ensure credit unions can continue serving their communities. NAFCU is supportive of efforts to allow credit unions to expand their fields of membership to underserved communities, which has been encouraged by the NCUA and CFPB.

NAFCU also consistently highlights the credit union difference from banks, which have been fined more than $243 billion for consumer abuses and risky behaviors in the wake of the 2008 financial crisis. Amid the coronavirus pandemic, NAFCU has touted credit unions' efforts to support members facing financial hardships and the industry's support of the nation's smallest businesses through the paycheck protection program (PPP).

Treasury creates new office to oversee COVID relief

The Treasury Department is establishing a new office – The Office of Recovery Programs – to oversee the rollout of coronavirus relief measures included in the American Rescue Plan. It is intended to "help get relief distributed quickly and into the hands of those who need it most."

The office will manage $420 billion of assistance approved in the latest COVID-19 relief bill for state and local government aid, rental and homeowner relief, and small business assistance. It will also manage other relief programs approved in previous packages, but the IRS will still be in charge of the economic impact payments (EIPs) and tax credit provisions.

Federal reps discuss LIBOR transition

Representatives from the Treasury Department, Federal Reserve, Federal Housing Finance Agency (FHFA), Securities and Exchange Commission, and Office of the Comptroller of the Currency (OCC) testified before a House Financial Services subcommittee Thursday to discuss ways to ensure a smooth transition from the London Interbank Offered Rate (LIBOR).

Ahead of the hearing, NAFCU offered its support for these efforts, including legislation that would establish a process for legacy LIBOR contracts to be appropriately updated so they continue to function. NAFCU noted that member credit unions are no longer relying on LIBOR as a reference rate for new loan originations, but "some credit unions still have a small number of legacy LIBOR contracts in their consumer loan portfolios, some of which do not contain fallback language that would allow for the contract to be amended and continued when LIBOR sunsets."

During the hearing, lawmakers and witnesses were generally supportive of legislation to provide a smooth transition, though some raised potential legal complications related to contracts. NAFCU's letter was also entered into the record.