March 27, 2023

This week: NAFCU set to testify on CFPB 1071 rule implications

US Capitol domeMike Wilson, chief experience officer of Members 1st Federal Credit Union (Enola, Pa.), is set to testify on behalf of NAFCU on Capitol Hill tomorrow to share with lawmakers the impact of the CFPB’s section 1071 rulemaking efforts on credit unions. NAFCU has consistently raised concerns about the compliance burdens credit unions will face under the small business lending data collection rule, as well as potential negative impacts on relationship banking.

The bureau’s proposed rule to implement section 1071 would require credit unions and credit union service organizations (CUSOs) that originated at least 25 covered small business credit transactions in each of the two preceding calendar years to collect and report small business credit application data, including data related to the ethnicity, race, and sex of small business applicants’ principal owners.

During his testimony, Wilson will reiterate the need for the bureau to adopt common sense definitions, right-sized thresholds, and a reasonable, phased mandatory compliance schedule for the rule to protect credit unions and their ability to serve Main Street small businesses.

The hearing before the House Small Business Subcommittee on Economic Growth, Tax, and Capital Access is scheduled for 10 a.m. Eastern Tuesday. Stay tuned to NAFCU Today for insights into Wilson’s testimony and the discussion.

Lawmakers will also hear from Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg, Federal Reserve Vice Chair of Supervision Michael Barr, and Treasury Department Under Secretary for Domestic Finance Nellie Liang on the failures of Silicon Valley Bank and Signature Bank. The Senate Banking Committee will meet tomorrow at 10 a.m. Eastern to discuss the collapses and regulatory response; the House Financial Services Committee will meet Wednesday at 10 a.m. Eastern.

Of note, Treasury Secretary Yellen Friday held an impromptu meeting with members of the Financial Stability Oversight Council (Council) who heard from staff of the New York Fed. Following the meeting, the council released a statement stating, “The Council discussed current conditions in the banking sector and noted that while some institutions have come under stress, the U.S. banking system remains sound and resilient.” 

In the wake of the failures, NAFCU has kept members informed of Washington’s response, and NAFCU President and CEO Dan Berger also joined Wharton Business Daily on SiriusXM to reiterate the strength of the credit union industry. NAFCU will monitor the committee hearings, which will likely cover calls for investigations and the possibility of raising the deposit insurance threshold, and update credit unions afterward.

Also happening this week: