State Regulator Worried About Fed Preemptions
NASCUS Chairman Roger Little told attendees at CUNA's GAC that "federal preemption of our state laws has not crept, but rather has leaped into the forefront, presenting a challenge that has the power to undermine the balance between state and federal chartering authority."
"The right of state legislatures to effectively represent their constituents is at risk," said Little, who is Michigan's state regulator. "This statutory prerogative must be protected."
Little said a new wave of federal preemptions has "wiped away" protections against predatory lending in several of states. "Overriding state law and concentrating power at the federal level threatens state autonomy, and I believe it also threatens consumer protections, most especially for lower income consumers of financial products and services," he said. "I am here today to draw your attention to this growing threat, and to seek your help in facing it down."
Little told credit unions the Unrelated Business Income Tax (UBIT) also has the potential to "fracture unity because federal credit unions are somehow exempted as being 'instrumentalities' of the federal government. Imposing UBIT liability on state-chartered credit unions, while exempting federal credit unions providing exactly the same products and services, is fundamentally unfair, and, understandably, could result in conversions to federal charters."