WASHINGTON–CUNA and NAFCU have joined to submit an amicus brief in a case involving allegations related to non-sufficient funds (NSF) fees. NAFCU, meanwhile, is separately calling on the CFPB to exempt Cus from future rulemaking, while also responding to an IRS proposal.
Credit unions across the country have faced a wave of NSF-related lawsuits filed by law firms that have specialized in the cases and which have sought out plaintiffs nationally.
Lambert v. Navy Federal Credit Union was dismissed by the U.S. District Court for the Eastern District of Virginia in August 2019, but the plaintiff has appealed the granting of a motion to dismiss.
"CUNA and NAFCU stand with our credit union members and the need for a dependable, efficient, and convenient electronic payment system," said CUNA President/CEO Jim Nussle and NAFCU President/CEO Dan Berger in a joint statement. "We support the lower court's decision that upheld longstanding legal precedent by siding with Navy Federal Credit Union against a meritless lawsuit. The credit union mission is valued by millions of American consumers and supported by lawmakers, and such attacks on the industry serve no one but entities looking to pad their own wallets."
CUNA and NAFCU said they support the District Court’s dismissal, noting that if allowed to proceed the plaintiff’s claims could expose credit unions participating in the Automated Clearing House (ACH) system to legal and financial hazards.
NAFCU Presses CFPB
Meanwhile, NAFCU is again calling on the CFPB to exempt credit unions from future rulemaking, while separately responding to a proposed rule from the IRS it says would create “inequitable application” of certain rules.
While the CFPB works to assess compliance costs that would be incurred under Section 1071 of the Dodd-Frank Act––which remains unimplemented and requires collection of small business lending information––NAFCU is again calling on the Bureau to exempt credit unions from a future rulemaking.
The Bureau in November held a symposium on small business data collection, during which small businesses and financial institutions shared concerns about added regulatory burdens under a potential rule. Following the symposium, the Bureau outlined its rulemaking plan for Section 1071. The Bureau recently asked the Office of Management and Budget to conduct a cost survey; the Bureau is then expected to convene a Small Business Regulatory Enforcement Fairness Act (SBREFA) panel, NAFCU said.
NAFCU Senior Counsel for Research and Policy Andrew Morris said the trade association recommends the Bureau modify its survey to further include questions regarding future costs in conjunction with questions about future benefits. He also suggested that testing pre-rulemaking assumptions using additional surveys before assembling a panel of small business representatives would be beneficial.
‘Concerns’ Remain
“NAFCU remains concerned that future implementation of section 1071 may yield misleading information about credit unions and negatively influence future small business lending,” wrote Morris. “Given the unique characteristics of credit unions and their limited capacity to absorb additional regulatory costs, the CFPB should seek to exempt credit unions from any future rulemaking that compels disclosure of small business loan information.”
Morris also argued an exemption would allow for credit unions to maintain strong relationships with “women-owned, minority-owned and small businesses” that seek access to affordable credit.
Response to IRS
Separately, in response to the Internal Revenue Service's notice of proposed rulemaking to implement an amendment made by the 2017 Tax Cuts and Jobs Act (TCJA) to impose a 21% excise tax on certain executive compensation plans, NAFCU is reiterating its concerns over the “inequitable application” of employee remuneration regulations for not-for-profit entities and asked the agency to provide parity with for-profit corporations.
"Employee remuneration in the form of a deferred compensation plan helps attract talented executives with community-focused leadership skills to credit unions," said Regulatory Affairs Counsel Kaley Schafer. "However, the TCJA's changes to certain types of employee remuneration have caused concern over attracting and retaining such talent. In addition, assessing an excise tax on deferred compensation plans increases credit union expenditures."
Suggestions Offered
As proposed, the rule is applicable only to publicly-held corporations, also known as for-profit. In order to achieve parity, Schafer suggested that the IRS:
- Evaluate its authority to provide for the grandfathering of certain employee remuneration contracts, including nonqualified deferred compensation plans, executed on or before November 2, 2017
- Interpret the statute allowing the agency the authority to provide parity between not-for-profits and for-profit corporations, if the statutory authority is not clear
- Alternatively, support congressional efforts to introduce a technical corrections bill that would allow for parity