WASHINGTON—The House of Representatives has passed H.R. 3240, the Regulation D Study Act, a piece of legislation that had strong backing from both credit union trade associations, which have said it could bring about regulatory relief.
H.R. 3240 directs the Governmental Accountability Office (GAO) to conduct a study of the impact of the Federal Reserve's regulation setting reserve requirements for depository institutions.
In a letter to House leadership sent this week, CUNA CEO Jim Nussle said Regulation D impacts credit union members by limiting the number of automatic withdrawals from a member’s savings account to six transactions per month.
“The impact of this limit is to unnecessarily cause credit union members to overdraft their checking accounts when a debit draws the checking account balance below zero and the member has already had six automatic transfers during the month,” Nussle wrote. “When this happens, members who may have the funds in a savings account to cover the debit are hit with nonsufficient fund fees (NSF) from their financial institution and, when a check is involved, a returned check fee from the merchant. This is not a result of an overdraft protection program – this happens because of a regulatory cap on automatic transfers. It is difficult for credit union members affected by the cap to understand that this is out of the control of the credit union when the funds to cover the debit are sitting in their account at the credit union.”
CUNA called for the cap to be increased or eliminated, but in the meantime is urging that the study be conducted by the GAO to provide information on whether such changes can be made in the future.
H.R. 3420 is among a list of regulatory relief proposals that CUNA submitted to the House Financial Services Committee and Senate Banking Committee at the beginning of the Congress. CUNA testified in support of the legislation in July.