What are the biggest regulatory or congressional issues that still need to be addressed this year?
This story is the first in an ongoing series about the outlook for the second half of the year. Look for more coverage throughout the month of June.
It's no secret that today's legislative environment is increasingly polarized compared to years past, but a gridlocked Congress isn't enough to halt credit union advocacy efforts. With just over half of the year left, Credit Union Journal reached out to credit unions and other industry leaders to gauge what regulatory and congressional issues are most at stake. From data privacy to robocalling, experts in the industry shared their priorities.
Some responses have been edited for length and clarity.
Marshall Boutwell, president and CEO of Peach State Federal Credit Union
"While there are many regulatory burdens for credit unions, one of the most concerning at this time is the proposed actions by the [Federal Communications Commission] to allow voice service providers to block calls on behalf of consumers. While we understand and agree that there is a need to stop robocalls as many times they are fraudulent and annoying, this action would obstruct our ability to communicate with our members. Compounding this with the fact that members may not be aware that a call from their financial institution has been blocked, they could face costly charges or fees from fraud or identity theft. We would like to see the FCC find a way to distinguish between illegal callers and calls from established business contacts."
Lucy Ito, president and CEO of the National Association of State Credit Union Supervisors
"NASCUS believes that any federal legislation addressing cybersecurity and data breach notification must apply cybersecurity requirements and disclosure obligations to merchants and others that handle consumers’ personally identifiable information or personal financial information. Furthermore, any federal legislation must preserve the authority of states to regulate and supervise cybersecurity and privacy protections for the benefit of their citizens by setting federal standards only as a floor, not a ceiling, for state specific protections.
"NASCUS supports federal legislation making it permissible for financial institutions to provide financial services to state-authorized cannabis businesses and to third-party businesses that serve the cannabis businesses. To reduce the public safety hazards of cash-intensive businesses, providing a safe harbor for banking legal cannabis businesses makes sense."
Randy Chambers, president of Self-Help Credit Union
"There are powerful forces working against financial equity, but Self-Help continues to believe in the power homeownership and creating economic opportunity to protect the generational wealth of low- and moderate-income families. We recognize that hard-won gains in fair lending and consumer protections are being threatened. The effects of the Great Recession still linger, magnifying racial inequities that ultimately weaken us as a nation.
"Because of this, legislative efforts to make homeownership and economic opportunity a reality for traditionally underserved communities continue to be critical concerns, including access to fair and affordable home loans, affordable housing availability, and curtailing predatory practices in areas such payday lending, overdraft fees and student loan debt. We are deeply concerned about the CFPB’s recent proposal to rollback the agency’s 2017 payday rule, especially its move to eliminate the commonsense requirement that a lender must check to see if a borrower can repay a small dollar loan before issuing it. Similarly, we urge the NCUA to make no changes to its payday alternative loan (PAL) program and to address abusive overdraft fee programs, to ensure credit union borrowers have access to affordable loans, not loans that trap them in long-term debt."
Brian Best, president and CEO of GTE Financial
"The smart chip technology (EMV chip) transition within the United States has taken longer than expected, creating major issues of identity theft and card fraud for consumers and millions of dollars of monetary losses for financial institutions. Banks and credit unions needed to comply with completing their conversion to EMV chip cards by October 2015. However, retailers (most notably gas stations) were given an extra three years to shift to the new technology.
"Unfortunately, the extra time granted by Congress to retailers, where the fraud is easily obtained, has caused financial institutions major losses and also hardship to the consumer. Having your card compromised due to fraud not once but up to three times a year can create a terrible member experience.
"Florida today is ranked the No. 1 state for fraud and fourth state for identity theft. Tampa, where GTE Financial resides, is in the heart of it all, ranked third for fraud. In 2018, Florida’s total fraud losses were $84.2 million. In 2017, GTE Financial installed anti-skimming ATMs in all of our community financial centers because we wanted to take an extra step to protecting our members’ information and help them feel confident when using one of our machines.
"The laws for financial institutions to help members navigate where consumers can expect fraud is currently way behind the times. Currently, financial institutions are not allowed to communicate to consumers about where the fraud is originated, even though they have all the data. This has helped perpetuate and compound losses while helping the fraudsters continue to be successful in their efforts. This is obviously not the right approach but neither is enabling retailers by extending their conversion time to 2020.
"The imbalance of accountability between the retailer and the financial institutions is at its greatest. If the laws are going to contribute positively towards those not being held accountable for the losses and millions of fraud cases, then maybe a quick way to fix this is by having retailers pay for their lack of privacy and security around the consumers’ information. Rather than the credit union paying for the loss, the retailers should be responsible. I’m sure if they were held accountable, the scales would change and in the end, the consumers who we all should be protecting would finally win a small battle against fraud."
Greg Sawyers, product compliance officer at Temenos
"One congressional or legislative item that we believe would be beneficial for financial services in 2019 would involve a strategy towards regulatory relief to enable and drive innovation. We can all agree that with the speed at which technology is advancing, we need to ensure that technology is safe for all consumers. However, we cannot fall behind the rest of the world when it comes to technological advancement. If we fall behind, we lose our competitive advantage, and financial institutions’ growth can be stifled. That would be a losing situation for all parties involved.
"On July 31, 2018, the Department of the Treasury published a report where they discussed how to create economic opportunities. A couple of items that stood out to us were streamlining the regulatory environment, facilitating an environment for experimentation to foster innovation, and modernizing activity-specific regulations such as service partnerships between banks and non-banks. As the Department of the Treasury outlined in the report, and we agree, these items can help financial institutions enhance their competitive edge. This should definitely be a priority for our country’s leaders."
Carrie Hunt, EVP of government affairs at the National Association of Federally-Insured Credit Unions
"One of the biggest issues that our members find is how they are going to manage or transition to the new CECL standard, so that's been a huge priority for us and continues to be one. We are working with the NCUA to try to see if there's additional education or things we can do to help credit unions with the transition. We are continuing to talk with FASB to see if there is any relief that can be given to credit unions specifically because credit unions have a unique situation in terms of how the Federal Credit Union Act defines capital.
"Credit unions are also unique in terms of how they are allowed to build capital to retain earnings and in addition, we still talk to Congress to see whether or not there's potential for delay so we can work these issues out. I do think that credit unions should plan for CECL to be effective in 2022, so they have to plan and we are still working to mitigate these impacts and to get the standard changed or delayed — so that's certainly one of our biggest priorities."
Anthony Hernandez, president of the Defense Credit Union Council
"In 2015, [the Department of Defense] extended MLA protections to a broader range of closed-end and open-end credit products. While DCUC supports the intent of the 2015 amendments, we see too many instances where effective small-dollar loans, debt consolidation packages, and GAP coverage for automobile loans have largely disappeared, leaving the field open to predatory lenders."
Ryan Donovan, chief advocacy officer of the Credit Union National Association
"In both the House and the Senate, we’ve worked with leaders on both sides of the aisle who are eager to ensure that credit unions serving (or interested in serving) cannabis businesses in states that have legalized such products can do so safely and effectively. We’re very hopeful to see something move this year on this front. We are also actively working with Senate and House leaders on ways to reform the housing finance system to ensure credit unions have equal access to the secondary market while ensuring a stable, safe system for consumers borrowing from their local financial institution. We’ll likely see more on this this summer and into the fall, and will continue to engage with these policymakers.
"On the regulatory front, our most pressing issue right now is the pending FCC rule on robocalls, which could not only limit credit unions’ ability to legitimately contact their members, but also threatens to deteriorate the trust relationship credit unions have built over the last century with their members. We’re very actively engaged with the commission to seek an immediate solution that meets the needs of legitimate business interests while protecting consumers from the scourge of robocalls. From a more big-picture standpoint, we continue to lean on the CFBP to delegate their exemption authority to the NCUA, while we engage with the latter to modernize, shifting toward technology-driving examination and supervision mechanisms while preserving its independent status."
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