WASHINGTON—Both NAFCU and CUNA sent letters to the Senate Banking Committee ahead of a hearing to provide oversight of federal financial regulators – including NCUA – urging the committee to keep credit union concerns in mind.
CUToday.info has separate coverage of NCUA Chairman Todd Harper’s remarks before the committee.
In the letter, Brad Thaler, NAFCU's vice president of legislative affairs, outlined the association's position on several key topics of interest, including:
- Opposition of any effort to extend debit interchange price caps or routing requirements to credit cards
- Support for allowing all credit unions the ability to add underserved areas to their field of membership, as has been proposed in draft legislation before the House Financial Services Committee
- Support for NAFCU-sought legislation that would improve existing language in the Federal Credit Union (FCU) Act related to expulsion in order to protect credit unions, members, and employees
- Support for making the temporary changes made by the CARES Act to the Central Liquidity Facility permanent
- Support for efforts to ensure new entities and financial technology companies (fintechs) have oversight and are properly regulated so that they compete on a level playing field with other regulated entities
Additional Points Raised
In addition, Thaler reiterated NAFCU's opposition of changes to the structure of the National Credit Union Share Insurance Fund (NCUSIF) and the assessment of a premium charge on credit unions, noting both are "not warranted at this time."
Instead, Thaler called for additional investment authorities to bolster credit unions' ability to manage their money and shares on deposit, as well as protect the equity ratio of the NCUSIF.
Thaler further expressed NAFCU's continued opposition to granting the NCUA oversight authority over third-party vendors, arguing that the NCUA should focus on regulating credit unions and reducing regulatory burdens and costs rather than adding to them.
NCUA Chairman Todd Harper and other members of the board have called on Congress to provide the NCUA with the authority.
CUNA Input
In its letter to the committee, CUNA called on NCUA to continue its COVID-19-related policy accommodations, and urged NCUA to provide additional regulatory relief by finalizing two outstanding rulemakings: the Capitalization of Interest in Connection with Loan Workouts and Modifications proposal, and the Transition to the Current Expected Credit Loss Methodology proposal.
CUNA also urged:
- PCA Flexibility. “While regulators across government took swift and appropriate action to implement accommodations to help regulated entities navigate the pandemic and ensuring economic crisis, in some cases, the COVID-19 pandemic exposed areas of law that do not provide sufficient crisis flexibility. Credit union prompt corrective action (PCA) requirements are one such area,” CUNA stated.
- No NCUSIF Premium: Saying the NCUSIF is healthy, as are credit unions, CUNA said, “Given the health of the fund and its historically favorable performance, we are troubled by the remarks of several NCUA officials, including Chairman Harper, suggesting that NCUA may need to charge a NCUSIF premium in the near future and advocating for statutory changes to the NCUSIF funding guidelines and normal operating level…While there is a statutory process in place to ensure the Fund is restored if it drops below 1.20%, the boards over the years have been able to actively manage the Fund to maintain it near or above 1.30%.”
- Dismiss Bank Criticism of CU Purchases of Banks. “Recently, the American Bankers Association (ABA) and other bank groups have become concerned with the relatively rare phenomenon of their member-banks choosing to sell assets to credit unions when they make a business decision to leave a market. The position that these organizations have taken is perplexing on many levels. In the first place, we question the long-term viability of membership organizations that openly oppose the ability of their members to make business decisions in the interest of their stakeholders. When a for-profit bank is ready to exit a market, its management has a fiduciary duty to seek the best deal for their shareholders. The opposition by the bank trade groups to their member banks selling to credit unions undermines that fiduciary responsibility.”
- Expanded Financial Access for the Underserved: “Rather than create a new government program or increase federal spending, we urge the committee to consider a market-based solution leveraging the success of the credit union model by reforming archaic field of membership restrictions. Such a solution can be found in H.R. - Expanding Financial Access for Underserved Communities Act, which has been considered by the House Financial Services Committee over the course of two hearings.”