July 27, 2023

NAFCU provides CU perspective ahead of vote on CFPB small biz lending rule

CapitolNAFCU Vice President of Legislative Affairs Brad Thaler Wednesday wrote to the House Financial Services Committee ahead of the second day of its scheduled markup of several measures to express support for the joint resolution disapproving of the CFPB’s small business lending data collection rule, as well as concerns with the Clarity for Payment Stablecoins Act.

NAFCU has strongly advocated against the CFPB’s section 1071 rulemaking as its requirements would likely stifle credit unions’ small business lending. A similar disapproval resolution has also been introduced in Senate in an attempt to overturn the rule; the committee is set to vote on the House version of the joint resolution today.

“While NAFCU supports the intention of Section 1071, small institutions like community-based credit unions cannot afford the cost of complying with the wide scope of new regulatory burdens proposed by the CFPB,” wrote Thaler. “These costs would result in fewer lenders supporting our nation’s small businesses, which would in turn result in less availability of credit for small businesses.

Regarding the Clarity for Payment Stablecoins Act, Thaler noted the industry’s appreciation for the legislation’s definition of the term “insured depository institution” to include credit unions, but cautioned the committee to be careful not to unintentionally create an uneven playing field among credit unions, banks, and non-depository institutions by establishing chartering and enforcement provisions based solely on the Federal Deposit Insurance Act, with which the NCUA cannot comply.

“In order to operate most efficiently, regulatory frameworks for stablecoins should acknowledge the NCUA’s role as the primary financial regulator for credit unions,” wrote Thaler. “Establishing barriers to credit union engagement with digital assets would undercut many of the financial inclusion benefits that may be realized through related technologies

“The credit union industry has a long history of prioritizing the needs of underserved and low-income communities and desires to continue this important work,” added Thaler

In addition, Thaler expressed concerns with credit unions being subject to additional oversight from Federal Reserve. “NAFCU supports enforcement and examination being left up to existing regulators for insured depository institutions,” he wrote.

The association will monitor the markup and congressional action related to these topics to ensure credit unions are not unfairly burdened by regulation.