WASHINGTON—CUNA has sent a letter to Congress in support of HR 5869, which would bring full transparency to NCUA’s overhead transfer rate (OTR) methodology, and also met with the CFPB over data collection related to business lending.
With the former, in a letter to the bill’s sponsors, Reps. Mick Mulvaney (R-SC) and Rep. Denny Heck (D-WA), CUNA President/CEO Jim Nussle said the “legislation would make sure any overhead transfer of agency expenses to the National Credit Union Share Insurance Fund would be legitimate, substantiated ‘insurance-related’ costs, consistent with fairness to state and federal credit unions and the Federal Credit Union Act.”
Nussle noted that the current OTR methodology has been in place since 2003, but with “changes in definitions and interpretations, the OTR has risen to 73.1% in 2016 from 52% in 2008. This rise has occurred despite a dramatic decline in the number of troubled credit unions.”
Nussle acknowledged that NCUA recently published its overhead transfer rate and operating fee methodology for public comment and offered an alternate OTR model that would result in a lower rate.
“CUNA has pushed for this transparency for a number of years and we appreciate Congress’ oversight on this matter,” wrote Nussle. “We appreciate that your legislation goes several steps further, by requiring that NCUA publish a detailed analysis of how its expenses are assigned between prudential activities and insurance-related activities and the extent to which those expenses are paid from the fees collected pursuant to Section 105, or from the Fund. Further, we support the language to require the NCUA to publish supporting rationale for any proposed use of amounts in the Fund contained in such budget, including detailed breakdowns and supporting rationales for any such proposed use, and requiring that NCUA make these reports available to the public.”
Meeting With CFPB On Small Biz Data
Separately, CUNA met here with the CFPB’s business lending team to discuss the collection of data on small business lending.
The business lending team is currently implementing section 1071 of the Dodd-Frank Act, which requires information gathering from financial institutions for credit for women-owned, minority-owned or small businesses.
CUNA reported that the team is currently in the formative stages of collecting information, conducting research and engaging in industry outreach, leading up to a formalized rulemaking process that will include a Small Business Regulatory Enforcement Fairness Act panel in late 2017 or early 2018, with a rulemaking likely in 2019.
“The team is currently grappling with how to define ‘small business’ and ‘small business loan.’ The group is also considering how to define ‘ownership’ of a business entity in the small business context,” CUNA reported, adding that these issues will likely influence the ultimate policy contained in the rulemaking.
The bureau has also indicated that it wants any data collection to be as unobtrusive as possible, and separate from the underwriting process, which is required under Dodd-Frank. According to the CFPB, it will explore the use of technology for possible solutions, CUNA noted.
“CUNA will continue to monitor this process as it moves forward, and will work with the Bureau as it formulates its rulemaking. CUNA will look to provide the Bureau with information on the potential credit union impact, from both a cost and operations perspective,” CUNA explained.
CUNA said it will also urge the CFPB to exercise its exemption authority under section 1071 that allows the CFPB to exempt financial institutions from the requirements of section 1071.