WASHINGTON—The Strengthening Cybersecurity for the Financial Sector Act has been introduced by Rep. Bill Foster (D-IL).
The bill gives both the Federal Housing Finance Agency (FHFA) and the NCUA additional third-party vendor examination authority, which NCUA has long sought.
NAFCU which noted it has previously opposed this legislation, is again expressing concernsabout the wide authority it would give the NCUA and potential costs to credit unions. The association said it believes that the NCUA should stay focused on regulating credit unions.
“While NAFCU appreciates sound oversight from the NCUA, we do not believe that the agency should have such wide authority over the vendors that credit unions engage with,” stated NAFCU Vice President of Legislative Affairs Brad Thaler. “NCUA’s expertise is with credit unions. The Strengthening Cybersecurity for the Financial Sector Act would grant the NCUA expansive vendor examination authority, which would likely lead increased costs not only for credit unions, but also for the NCUA as they divert time and resources away from credit unions to this new process.
“The agency has not been transparent on the costs and how they would use this new authority,” continued Thaler. “We believe they should instead focus on credit union regulation and working with the FFIEC to gain information on vendors already vetted by federal regulators.”
The bill is one of the measures under consideration to be included in next week’s full Committee markup on Wednesday, March 16.
HR 7003 Gets Support
Separately, the Defense Credit Union Council (DCUC) and NAFCU have each sent a letter to leaders of the House Financial Services Committee, sharing support for the Expanding Financial Access for Underserved Communities Act (H.R. 7003), introduced by HFSC Chair Maxine Waters (D-CA).
"This legislation is important for defense communities as there are many unbanked veterans, transitioning military, and remote communities that serve our nation's military,” stated DCUC President and CEO Anthony Hernandez.
Updating the Federal Credit Union Act to allow all federal credit unions to add underserved areas to their field of membership is important for military and defense communities,” Hernandez stated in his letter. “There are many unbanked and underbanked veterans who need access to the U.S. financial system. Particularly since the Veterans Administration still uses paper checks and prepaid debit cards which are both easily lost. Since H.R. 7003 includes underserved areas, this will help America’s credit unions in protecting our underserved veteran community while also starting them on a path toward financial wellness.
“As military members transition out of the service, exempting business loans made by credit unions in low-income areas from the credit union member business lending cap helps ease this transition while building and sustaining economic activity in the community,” continued Hernandez. “Business loans in low-income areas is an excellent start. In addition, DCUC has always supported veteran business lending exemptions as another legislative proposal to accomplish the same benefit in all defense communities.”
Hernandez added that expanding the definition of a low-income credit union to include any area that is more than 10 miles from the nearest branch of a financial institution allows safe, secure, and accessible access for many Americans.
“DCUC has always proposed a credit union alternative to postal banking initiatives for many of the same reasons. This legislation makes this possible, especially since most military members fit the definition for low-income credit union designation,” he said.
NAFCU: ‘Misguided’ Criticism
NAFCU’s Vice President of Legislative Affairs Brad Thaler, meanwhile, described opposition from banking trade groups as “misguided” when considering the vast decline of bank branches in rural areas over the last several years.
Thaler pointed to a Federal Reserve study published in 2019 that details banks closing branches and moving out of these areas.
"The study showed that seven percent of rural bank branches were closed between the years 2012 and 2017 and that number has grown to 11% through 2019," wrote Thaler. "Losses are not only concentrated among large banks, which shuttered 19 percent of their total rural branches, but also among community banks, which lost 5%.
"Credit unions, on the other hand, were the only financial institution type to add branches in both rural and urban areas, demonstrating credit unions' commitment to their members and serving underserved communities," stated Thaler.
Moreover, Thaler continued, public data show the number of bank branches in rural and underserved areas have declined by 10.8% since 2012 while the number of credit union branches in those areas have grown by 2.4%.
200 Branch Closures Per Month
Thaler told Congress these numbers have only grown over the last two years during the pandemic, as banks closed more than 4,000 branches since March of 2020, according to an independent National Community Reinvestment Coalition study.
"This is a pace of over 200 bank branch closures a month in the last two years," said Thaler.
Thaler challenged bankers' accusations regarding credit union-bank mergers, a so-called “lack of participation” in the Small Business Administration's Paycheck Protection Program, and the member business loan cap.
Thaler called on the committee to reject the banking groups' arguments and support the Expanding Access for Underserved Communities Act.
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