Uncertainty and Haste Creates an Age of Chaos
Welcome to the age of chaos. Adaptability and change are the new standards for everything. Uncertainty and haste are the new normal. Recent news reports say people are only willing to wait 250 milliseconds for a search on the Internet. Google and Bing offer replies in less than a second. And that’s still not fast enough for us.
Add to that a bottlenecked Congress and the unrelenting pace of new regulations being trotted out seemingly on a daily basis, and it’s no wonder those of you in the credit union industry are feeling overwhelmed. After all, how can you evaluate risk and opportunity when the fundamentals of your business may change suddenly?
Without question, our industry’s chief legislative concern has been and remains preserving the credit union tax exemption. So far, the exemption hasn’t been targeted directly (except from bankers) in discussions of deficit reduction, and significant efforts are being made to ensure credit unions don’t get swept up in proposals for tax reform.
At the same time, there are a number of legislative goals that would go a long way toward helping credit unions devote more of their limited resources to serving members’ needs.
For example, cultivating support for legislation to raise the credit union member business lending cap is a top priority. We have been working to advance H.R. 1418 and S. 509, the Small Business Lending Enhancement Act, and leveraging opportunities to promote this measure before Congress.
Fairness and consistency in the examination process has also been a top priority for the industry. The Financial Institutions Examination Fairness and Reform Act, (H.R. 3461) and a similar bill, S. 2160, address this.
Also high on the agenda is giving credit unions’ access to supplemental capital. We were pleased that the Capital Access for Small Businesses and Jobs Act (H.R. 3993) incorporates language agreed upon by NAFCU and CUNA.
Safeguarding credit unions’ interests in any housing finance reform legislation continues to be a vital issue. Changes to the Federal Housing Administration’s three-year strategic default policy and preserving credit union access to a secondary market are key to supporting credit union mortgage lending.
The Federal Housing Finance Agency’s recently unveiled plan for the conserved government-sponsored enterprises is a commendable starting point, but the plan’s silence on the future of an explicit government guarantee for mortgage-backed securities is worrisome for credit unions. In fact, it is essential to any housing finance reform package.
The plan’s potential impact of a single securitization platform, the role of pricing and the degree to which the secondary market will be controlled by for-profit private entities also remain troublingly unclear.
Since late 2010, NAFCU has urged the NCUA to improve its rules governing credit unions’ reporting of troubled debt restructurings. Despite the lengthy interim, there has been recent progress. And we are encouraged that the NCUA is also considering the association’s concerns regarding proposed rules on credit union service organizations, loan participations and emergency liquidity.
On regulation overall, the NCUA needs to retool its cost-benefit analysis for each of its proposed and final rules, incorporating both quantitative and qualitative factors. The agency must carefully assess the impact once a rule has been implemented to determine whether that analysis was accurate.
The recently established Consumer Financial Protection Bureau is also a significant part of the regulatory landscape for credit unions. The CFPB absorbed 14 different consumer financial protection regulations from other agencies when it assumed rule-writing authority under the nation’s consumer financial protection laws. Because the CFPB is actively seeking input on how it might streamline, revise or eliminate unnecessary or overly burdensome rules, your part in providing insight has never been more critical. We have already recommended that the CFPB eliminate the ATM placard required for fee disclosures.
Due to all the legislative and regulatory burdens the industry is facing, credit unions must maintain their efforts to advance the need for reform. We are calling for a comprehensive bill that will not only address these burdens, but we will go a step further and actually seek to enhance and strengthen the federal charter. It is time for this to happen.