WASHINGTON Credit union executives called on Congress this afternoon to get the Consumer Financial Protection Agency to exercise existing powers to exempt credit unions from a growing list of new regulations being issued by the fledgling agency, or at least allow NCUA to override some of the new CFPB rules.
“Congress has conveyed exemption authority to the CFPB, and we believe that Congress should ensure that the CFPB is more proactive in its use of this authority as it pertains to credit unions,” said Pamela Stephens, president of $54 million Security One FCU, during a House Financial Services Committee hearing on regulatory relief this afternoon. Stephens was appearing on behalf of CUNA at the hearing.
Robert Burrow, president of $300-million Bayer Heritage FCU, told lawmakers that credit unions are getting dragged into a growing regulatory framework developed by the CFPB to address problems that occurred during the financial crisis.
Burrow, who is appearing on behalf of NAFCU, suggested that NCUA should have the authority to delay the implementation of a CFPB rule that applies to credit unions, if complying with the proposed timeline would create an undue hardship. “Furthermore, given the unique nature of credit unions, the NCUA should have authority to modify a CFPB rule for credit unions, provided that the objectives of the CFPB rule continue to be met,” said Burrow.
The NAFCU representative also suggested that the CFPB be required to perform a cost-benefit analysis on all new rules after three years to determine whether any of the rules can be eliminated after a time. “The regulators should be required to revisit and modify any rules for which the cost of complying was underestimated by 20% or more from the original estimate at the time of issuance,” said Burrow.
When asked about a top priority, both Burrow, and Mitchell Reiver, general counsel for Melrose CU, who was also appearing at the hearing, said they would like to see credit unions exempted from all CFPB regulations.
The credit union representatives are delivering dozens of recommendations to the House panel that is expected to use them to draft reg relief legislation. The bankers are scheduled to deliver their own wish lists next week, which will be combined with the credit unions’ in an overall bill.
The credit unions included numerous proposals that have been before Congress before, including lifting the cap on member business loans; allowing credit unions to raise supplementary capital, allowing all credit unions to add underserved communities to their fields of membership; increasing the investment limits for CUSOs; letting NCUA, instead of Congress, determine permissible investments for credit unions; allowing privately insured credit unions to join the Federal Home Loan Bank system; and creating an examination appeals ombudsman for credit unions and banks.
There are a number of new proposals, including:
- CUNA wants to expand the NCUA Board from three members to five members and reserve one seat for a representative of state chartered credit unions;
- CUNA wants to require NCUA to hold a public budget briefing each year, in lieu of the voluntary briefing scrapped by NCUA three years ago;
- CUNA wants to increase the maturity limit for private student loans issued by credit unions;
- CUNA wants Congress to let NCUA exempt credit unions from certain rules issued by the Financial Accounting Standards Board, such as a proposed measure on credit losses;
- NAFCU wants Congress to let NCUA grant parity to a federal credit union on a broader state law, if such a shift would allow them to better serve their members;
- NAFCU wants Congress to reform the Central Liquidity Facility by removing the subscription requirement for membership, and permanently removing the CLF borrowing cap.
- Both groups want Congress to amend current law to make all credit unions subject to risk-based capital standards.
