December 04, 2019

NAFCU outlines priorities for NCUA as Hood testifies before Congress

Capitol DomeNCUA Chairman Rodney Hood is among the financial regulators testifying today before the House Financial Services Committee. Ahead of the hearing, NAFCU's Brad Thaler sent a letter to the committee outlining the association's priorities and issues it would like addressed to provide credit unions with regulatory relief.

The hearing, "Oversight of Prudential Regulators: Ensuring the Safety, Soundness, Diversity, and Accountability of Depository Institutions?" is set to begin at 10 a.m. Eastern. In addition to Hood, the committee will hear from FDIC Chairman Jelena McWilliams and Federal Reserve Vice Chair for Supervision Randal Quarles. The same panel is set to appear before the Senate Banking Committee tomorrow.

Among the issues Thaler, NAFCU's vice president of legislative affairs, shared with the House Financial Services Committee are:

  • Exam modernization: The NCUA's efforts to modernize and improve its examinations were part of two NAFCU meetings at the NCUA last month featuring association senior staff and Board of Director members. Thaler reiterated to lawmakers the association's recommendations that the NCUA prioritize exam modernization initiatives that reduce burdens and expand eligibility for an extended 18-month exam cycle for all well-run, low-risk credit unions. He also shared NAFCU's support for NCUA's various progress made so far.
  • Risk-based capital (RBC) rule: NAFCU has urged the NCUA to work with Congress to amend the Federal Credit Union Act to achieve comprehensive capital reform. The association is a leading advocate against the agency's RBC rule, arguing that it is too restrictive and out of line with other financial regulators. A NAFCU-backed provision to delay the rule by two years from its original implementation date passed the House three times in 2018; the NCUA is considering a proposal to delay the rule to 2022, but its current effective date is Jan. 1, 2020. Thaler also reiterated the recommendation that the NCUA permanently grandfather "excluded goodwill" and "excluded other tangible assets" in the RBC calculation.
  • Current expected credit loss (CECL) standard: NAFCU has long argued that credit unions should be exempt from this standard due to their unique capital structure. As a result of NAFCU's many years of advocacy seeking an exemption or relief for credit unions under the CECL standard, the industry received a big win last month when a delay to its implementation date became effective. In the letter, Thaler requested Congress work with the NCUA to ensure credit unions and their members aren't harmed by the standard and have the resources they need to comply with it.

Thaler also encouraged committee members to support bipartisan legislation to allow the NCUA to raise loan maturity limits, exclude veterans' loans from credit unions' arbitrary member business lending cap, and allow all credit unions to add underserved areas to their fields of membership. These legislative changes would allow credit unions to better serve Americans; learn more about these issues through NAFCU's Grassroots Action Center.

NAFCU, as the credit union industry's Washington Watchdog, works closely with lawmakers and regulators to ensure credit unions' voices are heard at the highest levels of government. In addition to meeting with Hood recently, NAFCU's Board of Directors met at the Federal Reserve to share the association's annual Report on Credit Unions.