NAFCU calls attention to CU priorities ahead of hearing with NCUA’s Harper
The Senate Banking Committee today will hold an oversight hearing with federal financial regulators’ leaders, including NCUA Chairman Todd Harper. Ahead of the hearing, NAFCU sent a letter detailing legislative priorities for credit unions to ensure they can effectively serve their members and operate in a fair regulatory environment.
NAFCU Vice President of Legislative Affairs Brad Thaler specifically noted six key issues for lawmakers to address:
- Serving underserved areas: The Expanding Financial Access for Underserved Communities Act has been introduced in both the House and Senate and would allow credit unions to apply to the NCUA to add areas abandoned by banks and other financial service providers to their fields of membership, should they meet the necessary criteria. It would also exempt credit unions’ small business loans made in low-income areas from the member business lending (MBL) cap. Thaler noted that banks have closed more than 4,000 branches since March 2020 – leaving banking deserts in their wake – and credit unions want to be able to fill those voids.
- Limiting NCUA’s authority over third-party vendors: NAFCU is opposed to proposed legislation – which has been introduced in the Senate and was also included in the House-passed version of the National Defense Authorization Act (NDAA) – that would grant the NCUA greater examination authority over credit union third-party vendors due to the extreme costs and regulatory burdens it would put on credit unions.
- Closing the ILC loophole: The association continues to support legislative efforts to close a loophole that allows industrial loan company (ILC) charters to skirt registration as a bank holding company and avoid consolidated supervision by the Federal Reserve, exacerbated by the FDIC’s lack of statutory authority to fully supervise certain parent companies of ILCs. “In other words, the ILC charter frustrates a core principle of prudential regulation: that a bank’s parent company should serve as a transparent source of strength rather than an opaque source of risk,” Thaler wrote.
- Extending CLF authorities: Amid the COVID pandemic, Congress extended the authorities of the Central Liquidity Facility (CLF) to ensure the credit union system had access to a critical contingent liquidity source. The NCUA and credit unions have supported legislative efforts to extend this flexibility; it also has bipartisan support in Congress and was included in the House-passed NDAA.
- Reforming the MBL cap: While pandemic-related relief efforts exempted certain small business loans from the MBL cap, NAFCU has long argued that the cap of 12.25 percent of a credit union’s assets is outdated and should be modified or removed to help provide economic stimulus without costing taxpayers. The NCUA and Treasury Department have been supportive of relief from the cap.
- Implementing section 1033: As the CFPB works to implement section 1033 related to consumer access to data, NAFCU has called on the bureau to coordinate with the NCUA and other regulators to ensure the availability of credit union services, competition within the financial services marketplace, and security of member data are not negatively impacted.
Today’s hearing begins at 10 a.m. Eastern and will be available via livestream. NAFCU will monitor the hearing and provide credit unions with updates. Harper will testify again tomorrow before the House Financial Services Committee.
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