ARLINGTON, Va.–NAFCU, CUNA and the Defense Credit Union Council have all sent numerous letters to Congress this week in conjunction with hearings that addressed everything from addressing postal service banking, robocalls, banks on military bases and more.
Here’s what the trade groups are telling Congress:
NAFCU Letter to House Committee on Oversight and Reform Regarding Post Office
NAFCU said it supports the U.S. Postal Service and is committed to identifying long-term solutions to ensure an efficient, self- sustaining, and affordable U.S. postal system, but it is opposed to the post office getting into the banking business.
“Although there have been a number of proposals over the past few years to turn the U.S. Postal Service into the world’s largest shadow banking system, NAFCU and our member credit unions are very concerned that allowing the U.S. Postal Service to provide banking services will be beyond its core competencies, will raise a number of serious regulatory and consumer protection questions, and will present significant competitive issues for private sector entities,” the trade group wrote. “We are pleased to see that the President’s Task Force agrees with NAFCU, concluding that ‘given the USPS’s narrow expertise and capital limitations, USPS should not pursue expanding into new sectors, such as postal banking, where the USPS does not have a demonstrated competency or comparative advantage, or where balance sheet risk would be added.’” Moreover, the U.S. Postal Service also opposes the authority to provide banking services, as expanding into this area would almost certainly not help its financial situation, NAFCU added.
NAFCU Letter to House Subcommittee on Communications & Technology, Committee on Energy and Commerce on Robocalls
The subcommittee held a hearing titled “Legislating to Stop the Onslaught of Annoying Robocalls,” and NAFCU said it wants to “ensure that these well- intentioned efforts do not impede legitimate calls from credit unions made using an automatic telephone dialing system (ATDS or autodialer).”
NAFCU said it supports the goal of thwarting unlawful actors who seek to defraud or commit other unlawful acts against consumers and praised the work done to date by the Federal Communications Commission’s (FCC), but said it continues to seek clarity on the ability of credit unions to place “valued and important calls to their customers using modern communications technologies.”
“In particular, NAFCU has concerns with the FCC’s continuing work on defining an ‘autodialer’ under the Telephone Consumer Protection Act (TCPA). Since the FCC issued its problematic 2015 Declaratory Ruling and Order (2015 Order), the risk of facing a costly lawsuit over inadvertent TCPA violations has kept many credit unions from freely communicating with their members,” NAFCU said. “The March 2018 ACA International v. FCC decision invalidated the 2015 Order’s overly expansive definition of ‘autodialer’ and the FCC’s approach to liability for calls to reassigned numbers under the TCPA. Following that decision, courts have taken a variety of approaches in determining what qualifies as an ‘autodialer’ – leading to a maze of judicial interpretations of Congress’s intent and meaning in passing the TCPA.
NAFCU noted it supports a broad definition of “autodialer” that only includes equipment that uses a random or sequential number generator to store or produce numbers and dial those numbers without human intervention.
“As such, NAFCU is concerned that some of the legislation in question during this hearing poses a threat to credit unions’ ability to make legitimate communications to their members,” the association said.
DCUC Comment on Banks on Military Bases
In a letter, the Defense Credit Union Council raised its concerns in response to potential legislation that would require the Department of Defense to accept the value of services provided by banks as full payment for any lease, services, and utilities cost for the space they occupy on military installations.
“The Defense Department has discretionary authority to waive all costs for defense credit union land leases along with administrative fees and logistical class provided that certain regulatory standards are met,” DCUC wrote. “This waiver is only open to defense credit unions when at least 95% of the membership served by the allotment of space or the facility built on the leased land is composed of individuals who are, or who were at the time of admission into the credit union, military personnel or federal employees, or members of their families.
“In return defense credit unions are able to continually provide quality financial products and services along with stronger community support as not-for-profit, member own financial institutions,” the DCUC continued. “Savings from this discretionary waiver are directly passed on to the members and their military communities as there are no third-party dividends limiting this support.”
DCUC said it would be “very concerned” with any legislative language that benefits banks by going beyond the defense departments discretionary authority in this area; “altering the status quo and thus putting defense credit unions at the disadvantage.”
CUNA Letters to Congress
CUNA has sent a number of letters to House and Senate subcommittees outlining credit union priorities following hearings on housing, payday lending, illegal robocalls, regulatory guidance and international development.
Among the Letters sent:
To House Financial Services Committee on Housing Issues
As Congress looks for solutions to the problems surrounding the increasingly limited housing stock, CUNA said it is rallying Congress to recognize the potential for credit unions to help alleviate the challenge by revisiting the arbitrary statutory cap that limits most credit unions to currently lending no more than 12.25% of their assets to businesses.
“Credit unions play an increasingly important role in the housing finance market and, as a result, have a vested interest in ensuring an adequate supply of housing stock,” CUNA wrote. “Many credit union members, throughout the United States, live in communities where the nation’s housing stock has become more limited and unaffordable.”
The full letter can be found here.
To the House Subcommittee on Consumer Protection and Financial Institutions Regarding Payday Lending
CUNA said it continues to urge the Consumer Financial Protection Bureau (CFPB) to further examine and revise its Payday Rule to avoid any negative effects on credit unions’ ability to offer competitive short-term, small dollar loan programs while still holding accountable non-depository payday lenders, especially those entities with histories of bad behavior.
“The federal shutdown is the latest example of the daily work credit unions do to go above and beyond to assist members in need,” CUNA said. “Individual credit unions have created short-term, small dollar lending programs that are specifically-designed to meet the financial needs and goals of their field-of-membership.”
The full letter can be found here.
To the Subcommittee State, Foreign Operations, and Related Programs Regarding the CDP
This year, CUNA said it is seeking to increase the funding for the Cooperative Development Program (CDP) programs to $17 million. The CDP is a global initiative that focuses on building capacity of cooperative businesses and cooperative systems for self-reliance, local ownership, and sustainability.
“A main source of funding for the World Council of Credit Unions (WOCCU) has been the CDP of the Development Assistance account in the State-Foreign Operations and Related Programs Appropriations bill,” CUNA noted.
The full letter can be found here.
To the Committee on Banking, Housing and Urban Affairs Regarding Delegation of CFPB Authority
In its letter, CUNA again maintained that the CFPB has the authority to delegate the supervisory responsibilities for credit unions with more than $10 billion in assets to NCUA, and should do so based on credit unions’ deep history of consumer protection, the support this action has received from NCUA, the protections in the Dodd-Frank Act that preserve the Bureau’s authority, and the opportunity this action presents to reallocate supervisory resources to other critical Bureau priorities, the trade group said,.
The full letter can be found here.
To Subcommittee on Communications and Technology and Technology Regarding Robocalls
CUNA joined with 16 other industry trade groups in a letter strongly supporting the shared goal of stopping unlawful actors that seek to defraud or commit other unlawful acts against consumers through illegal robocalls. The organizations are urging the Committee to support the Federal Communications Commission’s (FCC) unprecedented work to bring enforcement actions against illegal actors, while facilitating the ability of legitimate businesses to place valued and important calls to their customers using modern communications technologies.
The full letter can be found here.
Other Letters Sent
CUNA also sent a letter supporting two House resolutions, H. Res. 327, which supports the protection of elders through financial literacy, and H. Res. 328 which encourages greater public-private collaboration to promote financial literacy for students and young adults. Read the letter in full here.
NAFCU Letter to CFPB in Request for Info on Credit Cards
NAFCU’s Regulatory Affairs Counsel Kaley Shafer sent a letter to the CFPB regarding its request for information regarding the consumer credit card market.
Among the points raised in the letter:
On Effectiveness of Disclosures
- The CARD Act’s onerous credit card disclosure requirements do little to educate consumers on important aspects of the financial product they are using, said Shafer.
- According to a 2016 survey, 24 % of Americans never read credit card agreements, 22% hardly read credit card agreements, 27% sometimes read credit card agreements, and 26% regularly read credit card agreements.
- The Bureau should encourage effective credit card disclosures that are in a simple and easy-to-read format. Improvements to the disclosures, such as a more user-friendly format, would encourage greater readership of credit card agreements and disclosures, Shafer wrote.
- If a member applies for a credit card via a credit union mobile app and is provided with the required credit card disclosures that are compliant with the rules, the font and format may be difficult to read. NAFCU is recommending the Bureau ensure credit unions are given flexibility in providing the required disclosures via mobile banking platforms specifically for form and font size
Cost and Availability of Consumer Credit Cards
- Shafer noted the average interest rate at a bank is 13.62% for a classic credit card and 14.3% for a platinum card. Conversely, the average interest rate at a credit union is 11.69% for a classic credit card and 10.28% for a platinum card.
- The NAFCU letter pointed to NCUA 2018 data showing total delinquent loans were 0.57% at CUs, compared to 1.06% for banks, and 0.82% for community banks.
- Credit unions continue to meet the demands for vital consumer credit card products, and continue to act as responsible lenders and decrease costs in terms of interest, delinquency, and charge-off rates.
Safety and Soundness Issues – Data Breaches
- Shafer pointed to NAFCU’s 2018 Federal Reserve Meeting Survey, which showed 71.8% of respondents reported that maintaining a secure electronic environment presents the greatest challenge over the next three years.
- The survey also asked NAFCU members what issue they considered most critical to continued growth and success, and more than 84% responded that a financial marketplace with appropriate safeguards against fraud and data breaches is the most critical issue.
- Shafer cited a study by Pindrop found that voice fraud rates increased by 350% since 2013, with the banking industry seeing a 20% increase.
- The Identity Theft Resource Center found that the total number of data breaches was down 23% in 2018 from the previous year, but the amount of personal identifiable information compromised by a data breach was up 126%.
- Shafer said credit unions allocate a significant amount of resources to protect their members’ financial data and to educate their members on ways to protect themselves from data breaches. NAFCU has consistently advocated for a more stringent data security standard for retailers, the letter adds.