WASHINGTON—With credit unions in town for CUNA’s GAC, a number of credit union-supported pieces of legislation have been introduced, while another bill of interest to CUs has been marked up.
Sens. Mazie Hirono (D-HI) and Dan Sullivan (R-AK) have introduced legislation to exempt credit union loans made to veteran-owned businesses from the member business lending cap.
“This bipartisan bill would allow credit unions to get additional capital out to meet the needs of veteran business owners,” said CUNA President/CEO Jim Nussle. “Credit unions have a long history of service to servicemembers, and we thank Sens. Hirono and Sullivan for their bipartisan leadership to help credit unions do even more.”
With credit unions currently restricted in business lending by law to 12.25% of their total assets, the bill would amend the Federal Credit Union Act to exclude extensions of credit made to veterans from the MBL definition.
‘Equal Access’
“Alaska is known for being the highest veteran population per capita of all 50 states. These veterans need access to affordable business loans through a robust competitive environment” said Alaska Credit Union League President Dan McCue. “Veteran-owned businesses in every state should be provided equal access to business loans offered by credit unions like those offered by other financial institutions. We thank Senator Sullivan for cosponsoring this bipartisan legislation to ensure credit unions can serve the needs of veteran business owners.”
Added Hawaii CU League President Carol Marx, “Mahalo to Senator Mazie Hirono for her continued support of this bill giving Hawaii's credit unions greater business lending authority to help veteran entrepreneurs. Bipartisan legislation demonstrates collaboration with Senator Dan Sullivan to improve the financial well-being for many in Hawaii and across the nation.”
DCUC Response
“This is great news for America’s Credit Unions,” said Defense Credit Union Council President and CEO Anthony Hernandez. “DCUC is very grateful for Senator Hirono and Senator Sullivan working together in a bi-partisan manner to support our nation’s veterans. Legislation like this is very encouraging and sends the right signal to our veterans--that they are valued in our society and take an ongoing role in building America in the 21st Century.”
Bill Would Extend CLF Flexibility
In addition, Sens. Alex Padilla (D-CA) and Kevin Cramer R-ND) have introduced legislation that would allow credit unions to purchase central liquidity facility (CLF) capital stock for specific members for the next three years. CUNA, the California Credit Union League, and Dakota Credit Union Association said they coordinated with policymakers on the bill.
The legislation would extend authorities created with the CARES Act in 2020 that expired at the end of 2022.
“We thank Sens. Padilla and Cramer for taking action to ensure credit unions are able to deal with unexpected liquidity shortfalls,” said Nussle. “Extension of these enhancements will better protect credit unions from liquidity issues now and in the future as our economy faces recession and record inflation.”
Added Diana Dykstra, president/CEO of the California and Nevada Leagues, “Sen. Padilla and other members of Congress who support this crucial legislation realize that extending agent membership in the Central Liquidity Facility is a liquidity lifeline for thousands of credit unions across our nation — especially smaller cooperatives that have a harder time navigating cost-effective funds. The benefits of this type of extension are significant and relevant to credit unions and their member-owners, especially in a time of economic uncertainty, rising interest rates, and inflation. While the Senator’s introduction of this bill shows he understands what our industry needs, it also demonstrates his ongoing strong support for credit unions and their members as we strive to deliver affordable financial services.
Noted Jeff Olson, president/CEO of the Dakota Credit Union Association, “Thousands of credit unions lost an emergency liquidity backstop when the CLF flexibility expired at the end of 2022, and we thank Sen. Cramer for taking action to remedy this situation, Credit unions and their members need access to capital more than ever, and this is a positive step forward.”
"The Corporate Credit Union Alliance is very grateful for the introduction of Senate legislation to enhance the Central Liquidity Facility," said Jeff Merry, president and CEO of Volcorp and chairman of the Corporate CU Alliance. "This update of the CLF is both sensible and prudent -- the bill is a recognition that providing additional liquidity management tools is good public policy. Congress should move expeditiously to enact this into law, particularly given the widely-acknowledged liquidity strains beginning to show up in the economy. Now is the time for strong and decisive action by Congress, and the Corporate Credit Union Alliance stands ready to assist in strengthening the safety and soundness of this important sector of the financial services industry."
Privacy Act Marked Up
Meanwhile, the House Financial Services Committee held a markup this week and is set to consider a bill – the Financial Data Privacy Act (H.R. 1165) – from Chairman Patrick McHenry (R-NC) that would amend the Gramm-Leach-Bliley Act (GLBA) as it relates to data privacy.
Ahead of the markup, NAFCU Vice President of Legislative Affairs Brad Thaler outlined areas of support and potential improvement within the bill in the association’s view.
“Changes to the GLBA must be viewed with a cautionary eye,” wrote Thaler. “While some modernization of the GLBA for financial institutions may be in store, the system has generally been a success and should be a model for other areas. Making the system work best means expanding financial data protection requirements outside of just financial services. Retailers, merchants, and others who handle financial data should be subject to new requirements similar to those standards adopted for financial institutions.
“Moving legislation for one without the other, threatens to do more harm than good for credit unions. We urge the Committee to ensure a balance that recognizes the concerns of credit unions as Congress tackles the important issue of privacy reform,” Thaler concluded.
NAFCU Support
McHenry introduced the bill Friday; a subcommittee had discussed a draft of the bill earlier this month. NAFCU offered support for several areas of the legislation, including:
- Bringing data aggregators under the scope of the GLBA
- Excluding credit union service organizations (CUSOs) from the definition of a data aggregator, which protects CUSOs from unnecessary NCUA oversight
- Strengthening and clarifying the federal preemption of state laws
- Leaving in place existing GLBA enforcement provisions
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