A number of NAFCU-supported bills have been introduced in the 117th Congress to help credit unions with regulatory burdens.
The Credit Union Governance Modernization Act of 2021, H.R. 2311, would make it easier for credit unions to expel members for illegal or abusive behavior. The House Financial Services Committee approved this legislation in November 2021 by a voice vote, and it has been introduced in the Senate as the Credit Union Employee and Member Safety Act of 2021, S. 1767. This legislation was included in the FY 2022 appropriations omnibus package, which passed the House on March 9, 2022, and passed the Senate on March 10, 2022. President Biden signed the bill into law on March 15, 2022.
The Member Business Loan Expansion Act, introduced in September 2021 as , would lift the definition of the lower end of the amount of a loan that would count toward the MBL cap from $50,000 to $100,000. Additionally, the legislation would allow the NCUA Board to set a loan maturity limit greater than 15 years and it would expand the definition of “community financial institution” under the Federal Home Loan Bank Act to include credit unions. The Veterans Member Business Loan Act, S. 3813, was introduced in March 2022 and would exempt loans made to veterans from the MBL cap. S. 762, the Expanding Access to Lending Options Act, would also allow the NCUA Board to increase the loan maturity limit to 20 years.
House Financial Services Committee Chairwoman Maxine Waters (D-CA) introduced H.R. 7003, the Expanding Financial Access for Underserved Communities Act, in March 2022. In addition to allowing all types of credit unions to add underserved areas to their fields of membership, this NAFCU-sought bill would expand the definition of “underserved area” to include banking deserts and exempt business loans in underserved areas from the MBL cap.
The Credit Union Board Modernization Act, H.R. 6889, was introduced in March 2022. This bipartisan bill would reduce the required number of annual board of directors meetings to six from 12 for credit unions in good condition. This legislation was previously introduced in the 116th Congress.
The Fair Hiring in Banking Act, H.R. 5911, would remove some restrictions on employment in the financial services industry for individuals with past minor criminal offenses. The House Financial Services Committee approved this legislation in November 2021 by a voice vote.
The Taking Account of Institutions with Low Operational Risk (TAILOR) Act was introduced in the Senate in March 2022, as S. 3745, and in the House in February 2021, as H.R. 766. It would require federal financial regulators, including the NCUA, to tailor their regulatory actions in order to limit burdens on the institutions they oversee, including a requirement to consider the cumulative effect a new rule will have on top of existing regulations. This legislation has been introduced in every Congress since 2015.
NAFCU has made providing credit unions with regulatory relief a vital part of its Coronavirus advocacy throughout 2020. Financial regulators have shown flexibility and understanding in working with credit unions during the unprecedented crisis so that they can help their members. Below are just a few of the measures that regulators have taken to assist credit unions and their members.
- Consumer Financial Protection Bureau (CFPB): On March 10, 2020, NAFCU sent a letter to the CFPB asking for a minimum of 60 days of broad compliance relief. On March 26, 2020, the CFPB announced that it will not expect quarterly Home Mortgage Disclosure Act (HMDA) or Regulation C filings, filings related to credit card and prepaid accounts reporting requirements under the Truth in Lending Act, Regulation Z, and Regulation E, and would work with credit unions in scheduling examinations and other supervisory activities to minimize disruption. On April 2, 2020, the CFPB lent its support to efforts by financial institutions to provide consumers with payment relief and provided that enforcement actions won’t be taken against credit unions “who furnish information to consumer reporting agencies that accurately reflects the payment relief measures they are employing.” On April 3, 2020, the Board of Governors of the Federal Reserve System, CFPB, Federal Deposit Insurance Corporation (FDIC), NCUA, and Office of the Comptroller of the Currency (OCC) (Federal financial regulators) issued a joint-policy statement providing needed regulatory flexibility for mortgage servicers regarding certain communications to consumers required by the mortgage servicing rules.
- Federal Housing Finance Agency (FHFA): On March 19, 2020, FHFA directed the government-sponsored enterprises (GSEs) to suspend foreclosures and evictions of homeowners with GSE-backed single-family mortgages for at least 60 days. On March 24, 2020, FHFA announced changes to allow the GSEs to enter into additional dollar roll transactions, provide alternative flexibilities to satisfy appraisal and employment verification requirements, and suspend evictions for renters unable to pay rent due to the coronavirus. In its April 1, 2020, letter to FHFA Director Calabria, NAFCU ask for assistance with forbearance requirements because of capital concerns and other operational challenges, especially if nonbank mortgage servicers were to fail due to liquidity issues.
- National Credit Union Administration (NCUA): On March 16, 2020, NCUA released a Letter to Credit Unions outlining consumer relief measures that credit unions could provide their members without penalty during exams or enforcement action. Additionally, the NCUA mandated that all examination and supervision activities take place offsite and noted that examiners will be “mindful of the impact” of information requests. On March 25, 2020, NAFCU urged the NCUA to provide equivalent capital relief to that being offered to banks and detailed relief measures that the NCUA could take regarding subordinated debt, approval of secondary capital applications, and modification of stress testing and capital planning rules to provide additional capital flexibility. In its March 26, 2020, letter, NAFCU recommend the NCUA should temporarily cease all examination activity unless critical to the safety and soundness of the institution. Additionally, the NCUA has extended comment periods and delayed rulemaking not relevant to the Coronavirus. In its April 7, 2020, joint-policy statement, Federal financial regulators noted that examiners will exercise judgment in reviewing loan modifications, including troubled debt restructurings (TDRs), and will not criticize prudent efforts to modify existing loans for customers affected by the Coronavirus.
In the 117th Congress, NAFCU members have testified before various Congressional committees on behalf of the association to educate lawmakers on the pressing need to provide regulatory relief to the nation’s credit unions.
On February 9, 2022, Jetstream Federal Credit Union President and CEO Jeanne Kucey testified before the Senate Banking Committee’s Subcommittee on Financial Institutions and Consumer Protection at a hearing titled “The Role that Community Development Financial Institutions and Minority Depository Institutions Serve in Supporting Communities.” Kucey described the ways her credit union, which is a low-income Community Development Financial Institution (CDFI) and a Minority Depository Institution (MDI), has served its members in Florida and Puerto Rico during disruptions caused by the COVID-19 pandemic and Hurricanes Irma and Maria. Kucey also advocated for improvements to the CDFI and MDI programs, including special FHA and FHFA programs to support mortgages issued by CDFIs and MDIs, streamlining the CDFI certification process, allowing all credit unions to add underserved areas to their fields of membership, and increased funding for the CDFI Fund and the Community Development Revolving Loan Fund.
On September 1, 2021, Affinity Credit Union AVP of Commercial Lending Leslie Payne testified before the House Small Business Committee at a hearing titled “What Comes Next? PPP Forgiveness.” Payne described her credit union’s efforts to serve its members during the COVID-19 pandemic, especially those businesses that participated in the Paycheck Protection Program (PPP), and detailed difficulties with the Small Business Administration’s PPP forgiveness process. Payne also advocated for greater flexibility in PPP forgiveness for errors made in good faith.
On April 15, 2021, Premier Members Credit Union CEO Carlos Pacheco testified before the House Financial Services Committee’s Subcommittee on Consumer Protection and Financial Institutions at a hearing titled “Banking Innovation or Regulatory Evasion? Exploring Trends in Financial Institution Charters.” Pacheco described the value of technology partnerships to serve credit union members and urged Congress to level the regulatory playing field so fintechs do not evade supervision and gain an unfair competitive advantage over regulated entities like credit unions.
Agency Rulemakings and Actions
- NCUA: The NCUA is set to propose rules on quality standards for automated valuation models (AVMs), loan participations and other loan transactions, and on digital assets. NAFCU expects final rules related to Bank Secrecy Act compliance and overdraft.
- CFPB: The CFPB also lists a proposed rule on AVMs.
- SBA: The SBA plans to issue a final rule to streamline and modernize its 7(a) and 504 loan programs.
- Federal Reserve: The Federal Reserve lists further action on a proposed rule to modify Regulation II, which governs interchange.