WASHINGTON—Ahead of the separate hearings by the House and Senate this week on oversight of financial institutions, NAFCU and CUNA wrote to the Senate Banking Committee stating it is “critical that the committee understand the immense pressure credit unions–big and small–are under in terms of compliance and operational challenges.”
The letter further calls on the committee to work with regulators to ensure credit unions can meet the needs of their 138 million members.
In the letter, NAFCU and CUNA raised concerns over NCUA’s proposed budget for 2024-2025, which is the subject of a hearing at the agency on Thursday. The letter reminds NCUA is funded by credit unions and their members, not tax dollars, and notes the “budget continues to increase despite industry consolidation, and the 2024-2025 draft budget once again overlooks opportunities to incorporate more efficient processes with potential cost-savings.”
The associations called on NCUA to limit its spending and further urged Congress to exercise its oversight authority “to demand further justification for such increases.”
Additional Requests
The associations also:
- Said there is a need to modernize of the Federal Credit Union Act, including updates to the member business lending cap and improvements to the NCUA’s Central Liquidity Facility.
- Said they are concerned “credit unions will be unnecessarily and unjustifiably obstructed in their ability to invest in appropriate technology and perform in the consumer finance sector” without field of membership reform.
- Reiterated their opposition to the Federal Reserve’s proposed rule to cut debit interchange fees under Regulation II, stating the Fed’s assertion that consumers will benefit from lower interchange fees is countered by its own data.
What the Research Shows
Regarding that last point, the groups wrote, “The Federal Reserve’s own research shows that only about 1% of merchants passed their savings onto consumers through reduced prices following the adoption of the Durbin Amendment, and in fact, over 20% of merchants increased their prices,” they wrote. “This behavior will not change with further cuts. Most importantly, it is not just covered issuers that would feel the impacts of this proposal, but rather all financial institutions would face pricing pressures and be forced to make difficult decisions that could negatively impact the communities they serve.”
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